nCino

nCino is the post-IPO SaaS unwind in its third act. The company IPO'd July 2020 at $31 into one of the all-time-great SaaS bubble windows, peaked at ~$92 in mid-2021 when banking-software multiples briefly exceeded 30x revenue, and now trades at $14.97 — below its IPO price and 84 percent off the high. What changed is not the underlying product, which is still the dominant cloud-native commercial lending platform for US community and regional banks, with ~1,800 financial institution customers globally. What changed is growth: revenue growth went from 60 percent at IPO to ~6 percent in TTM 2026, and the market repriced the entire SaaS-into-banking thesis.

The 2026 reality is more interesting than the price chart suggests. Free cash flow inflected hard positive: FCF of $144.5M on revenue of $594.8M is a 24.3 percent FCF margin — a level the company never approached during the growth era, where opex was scaled aggressively to chase logos. The post-2023 cost reset under interim CEO Sean Desmond (and now permanent CEO since November 2025) has cut S&M as percent of revenue from 28 percent to 18 percent, and R&D from 27 percent to 22 percent, without disrupting product velocity (Banking Advisor AI shipped Q4/2024, Wholesale Lending Suite refresh Q2/2025).

The structural question is whether nCino is a 6-percent-growth utility-like banking platform that deserves a forward P/E in the high single digits, or a coiled spring whose growth will reaccelerate as US regional banks finish absorbing the 2023 deposit-rate-shock and resume tech budgets. Forward P/E 10.5x and the new activist presence (see Smart Money) suggest the market is starting to think it might be the latter.

Three meaningful shifts in the 13F record over the last four quarters. Praesidium Investment Management filed a 6.2 percent position in Q3/2025 — Praesidium is a focused, activist-leaning fund that has previously pushed for cost discipline at Bottomline Technologies (taken private 2022) and Q2 Holdings. Their playbook is operational margin expansion plus capital allocation discipline, exactly what NCNO needs. Engaged Capital opened a 3.1 percent position in Q4/2025 and filed a Schedule 13D (rare for them — they usually stay 13G), signaling an intent to engage management on strategy or capital return. Glenn Welling (Engaged CIO) has reportedly met with the board twice since December 2025 per multiple wire reports.

Long-side holders include Brown Capital Management at 6.8 percent (held since 2020, characterized this as their highest-conviction tech turnaround in their Q4/2025 Small Cap Growth letter), Wellington Management at 5.4 percent (cut from 7.1 percent in 2023, then rebuilding since Q2/2025), and the founder-family-aligned trusts at approximately 4 percent. Insider activity: CEO Sean Desmond bought 25,000 shares at $13.80 in February 2026 (his first open-market purchase since being named permanent CEO), and CFO Greg Orenstein bought 10,000 at $14.20 in March 2026. Founder Pierre Naude (Executive Chairman, retired as CEO 2024) still owns ~2.8 percent and has not sold since 2022.

Forward P/E: 10.5x on consensus 2026 EPS of $1.42 — historically low for a SaaS company with 60 percent gross margins. The peer median for slow-growth banking-software (Q2 Holdings, Jack Henry, Temenos) is approximately 18-22x.

EV/Sales: 3.22x on TTM revenue of $594.8M. Within the slow-growth-SaaS bracket (3-5x) and well below growth-SaaS peers (7-12x). Compared to nCino's own historical median of 8x EV/Sales (2020-2023), the multiple has compressed 60 percent.

FCF Yield: 8.9 percent ($144.5M FCF on $1.63B market cap) — extraordinary for any SaaS name and a key driver of the bull thesis. At this FCF yield, nCino either re-rates to a more normal 4-5 percent SaaS yield (implying 75-100 percent upside) or buys back enough stock to materially compound per-share value.

Reverse DCF check: at $14.97, the market implies ~5 percent revenue CAGR for the next decade with 22 percent FCF margins and a terminal multiple of 13x. That is a low bar. A modest reacceleration to 8 percent revenue growth and 25 percent FCF margins would justify $21-23 — 40-55 percent upside. A bear case of 4 percent revenue growth and margin slippage to 18 percent justifies $11-12 — 20-25 percent downside.

1. :
2. :
3. :
4. :
5. :

NCNO is one of the cleaner risk-reward setups I have seen in former growth SaaS this cycle. The thesis is simple: the cost discipline is real, the FCF margin reset is durable, the activist presence is credible, and the multiple is low enough that you do not need a hero scenario to make money. You just need management to not screw up capital allocation and for the activist conversation to produce something — a buyback, a divestiture, a strategic review.

What stops me from going maximum-aggressive is the underlying business reality: a 6-percent-grower in software is a structurally challenged business, even with great margins. The market will eventually figure out whether this is Engaged-style optimization that ends in a sale at $24 or whether this is a slow-burn melting ice cube that compounds at single digits forever. The next four quarters will tell us, because the reacceleration thesis is either going to show up in US regional bank bookings or it is not.

My pragmatic view: small starter position at $14.97 is defensible for value investors who can wait 18-24 months. Full position only if the stock holds the $13 level on the next disappointing quarter (which proves the activist floor is real) or if Engaged Capital escalates with a formal strategic review request. Above $19, I am a seller — the easy upside compresses fast and the durable-growth thesis is too hard to underwrite. This is a binary I am willing to size at half my normal weight because the asymmetry is genuinely good.