Loss-Making nCino, Inc. (NASDAQ:NCNO) Expected To Breakeven In The Medium-Term

We feel now is a pretty good time to analyse nCino, Inc.'s (NASDAQ:NCNO) business as it appears the company may be on the cusp of a considerable accomplishment. nCino, Inc., a software-as-a-service company, provides cloud-based software applications to financial institutions in the United States and internationally. On 31 January 2024, the US$3.6b market-cap company posted a loss of US$42m for its most recent financial year. As path to profitability is the topic on nCino's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for nCino

Consensus from 14 of the American Software analysts is that nCino is on the verge of breakeven. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$2.5m in 2026. So, the company is predicted to breakeven approximately 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 98%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of nCino's upcoming projects, however, bear in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one aspect worth mentioning. nCino currently has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on nCino, so if you are interested in understanding the company at a deeper level, take a look at nCino's company page on Simply Wall St. We've also put together a list of essential factors you should further research:

1. Valuation: What is nCino worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether nCino is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on nCino’s board and the CEO’s background.

3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.