nCino (NCNO 0.06%) stock is sinking in Wednesday's trading. The company's share price was down 12.4% as of 1:30 p.m. ET, according to data from S&P Global Market Intelligence.
After the market closed yesterday, nCino published results for the second quarter of its current fiscal year, which ended July 31. The fintech specialist actually posted sales and earnings results that beat Wall Street's expectations, but the stock is losing ground today because management's third-quarter guidance came in softer than anticipated.
Despite the sell-off, nCino delivered solid Q2 results
nCino delivered earnings per share of $0.14 on sales of $132.4 million in fiscal Q2, beating the average Wall Street analyst's target for per-share earnings of $0.13 on sales of $131.04 million. Total sales in the period were up 13% year over year, and subscription revenue increased 14% to reach $113.9 million. The company also posted a non-GAAP (adjusted) operating margin of 15% -- an increase of roughly 500 basis points compared to the prior-year period.
nCino said it was seeing strong demand for consumer banking and lending accounts in the U.S. consumer market and also stated that it was seeing encouraging trends for its domestic enterprise and community and regional segments. The company also noted that demand for its Banking Advisor generative artificial intelligence (AI) solution had been a positive performance catalyst in the quarter. nCino indicated that some macroeconomic headwinds have continued to persist in U.S. mortgages and international markets, but it expects solid performance in the second half of the year.
Is this an opportunity to buy nCino stock?
Despite the Q2 beats, nCino stock is losing ground today due to forward guidance that has disappointed investors. For the third quarter, the company expects per-share earnings between $0.15 and $0.16 on sales between $136 million and $138 million. Meanwhile, the average analyst estimate had called for the business to post per-share earnings of $0.16 on sales of $138.63 million.
On the other hand, full-year guidance actually came in roughly in line with the midpoint Wall Street forecast. For the full-year period, the company is guiding for per-share earnings between $0.66 and $0.69 on sales between $538.5 million and $544.5 million. The average analyst estimate had guided for per-share earnings of $0.67 on sales of $541.72 million.
With full-year earnings guidance coming in slightly ahead of Wall Street's target and full-year sales coming in slightly below the estimate, the market seems to be overreacting to Q3's guidance miss. For investors looking for an entry point in the stock, today's pullback could be a worthwhile buying opportunity.
