Cloud banking provider nCino plans to go public

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The cloud technology company nCino said Monday that it is planning to go public and intends to use the proceeds for working capital and perhaps to acquire another business or the rights to new products.

The firm was started in early 2012 by Live Oak Bancshares in Wilmington, N.C., as a way to help banking clients transition away from a paper-intensive loan process to one that is mostly online. It was spun off in 2014 when Live Oak went public.

Santander and TD Bank are among the banks that have used nCino’s platform to adapt their legacy systems to a digital one for their commercial banking clients. The system handles loan originations, account openings, and customer relationship functions.

Executives at nCino are forging ahead with the initial public offering even as financial markets have been rocked by the coronavirus pandemic.

The company warned in its regulatory filing that the pandemic could “have the effect of heightening many” of the risks it faces, including its ability to reach profitability. The economic downturn that has resulted from the shutdown to curb the spread of the virus may force some existing financial industry customers to cut spending on technology, which could hurt nCino’s bottom line, according to the filing.

So far, nCino’s customers have not delayed or canceled subscriptions in a big number as a result of the economic slowdown, the company said in its filing.

The company has yet to earn a profit as it has ramped up its operations and spent more to hire employees. It lost $27.5 million in its fiscal year ending Jan. 31, up from a $22.3 million net loss the year before, according to the filing.

Total revenues for nCino’s fiscal year increased 50% from a year earlier to $138.1 million.

It warned that the severity of the pandemic and its impact on financial institutions it counts as clients is “unknown and unpredictable at this time,” according to the filing.

“These institutions are the financial lifeblood to their local communities and through COVID-19, have been a critical part of keeping funding flowing to small businesses and individuals at a time when many physical locations were shuttered,” nCino co-founder and CEO Pierre Naudé wrote in a letter to investors announcing the IPO.

The company did not give an estimate for how much it hopes to raise through the IPO. An $80 million funding round was closed in October to increase research and development.

Though it hinted at acquisitions or strategic partnerships in the regulatory filing, it said no deals are in place.

The number of shares and the price of the IPO has not been determined yet. Shares will trade under the stock symbol “NCNO.”

Bank of America and Barclays Capital landed the deal as lead book-running managers. KeyBanc Capital Markets, SunTrust Robinson Humphrey, Piper Sandler, Raymond James and Macquarie Capital will also be book-running managers on the proposed offering.

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IPOs Cloud computing Fintech Live Oak Bank