nCino stock under pressure despite solid Q2 results

The shares of the fintech company nCino are experiencing a significant decline today. Shortly after the start of trading, the stock was down 12.4%, according to data from S&P Global Market Intelligence. nCino had released its results for the second quarter of the current fiscal year, which ended on July 31, after the market closed. Despite exceeding expectations for both revenue and earnings per share, the forecast for the third quarter disappointed investors. The company reported second-quarter earnings per share of $0.14 on revenue of $132.4 million, surpassing the Wall Street analyst consensus of $0.13 earnings per share and $131.04 million in revenue. Total revenue increased by 13% compared to the same period last year, while subscription revenues grew by 14% to $113.9 million. The adjusted operating margin on a non-GAAP basis was 15%, which represents an increase of approximately 500 basis points compared to the same period last year. The company reported strong demand from the retail banking and loan account sectors in the U.S. market and observed encouraging trends in the national corporate sectors as well as the regional and local market segments. Additionally, the demand for nCino's 'Banking Advisor,' a generative artificial intelligence (AI) solution, positively boosted performance in the last quarter. Despite ongoing macroeconomic headwinds in the U.S. mortgage market and international markets, the company expects solid performance in the second half of the year. Declining share prices are attributed to disappointing outlooks for the third quarter. nCino expects third-quarter earnings per share between $0.15 and $0.16 on revenue of $136 million to $138 million. Analyst estimates were $0.16 earnings per share and $138.63 million in revenue. For the full year, however, the company's forecasts are close to Wall Street's average estimates. The company plans for earnings per share between $0.66 and $0.69 on revenue between $538.5 million and $544.5 million. Analysts had an average expectation of $0.67 earnings per share and $541.72 million in revenue. Apparently, the market is overreacting to the slightly weaker forecast for the third quarter. For investors looking to enter the stock, the current decline might represent an interesting buying opportunity. Before buying shares of nCino, consider this: The analyst team at Motley Fool Stock Advisor recently identified the 10 best stocks investors should buy right now – and nCino was not among them. The 10 selected stocks could achieve significant returns in the coming years. For example, Nvidia has increased 786-fold since it was recommended in April 2005. The Stock Advisor offers easy-to-understand guidance for success, including portfolio-building recommendations, regular analyst updates, and two new stock recommendations per month. The service has more than quadrupled the return of the S&P 500 since 2002.