Q2 2024 nCino Inc Earnings Call
Participants
Gregory D. Orenstein; CFO & Treasurer; nCino, Inc.
Harrison Masters; IR Executive; nCino, Inc.
Joshua L. Glover; President & Chief Revenue Officer; nCino, Inc.
Pierre Naude; Co-Founder, Chairman & CEO; nCino, Inc.
Adam Charles Bergere; Analyst; BofA Securities, Research Division
Alexander Wexler Markgraff; Associate ; KeyBanc Capital Markets Inc., Research Division
Charles Joseph Nabhan; MD & Analyst; Stephens Inc., Research Division
Cristopher David Kennedy; Research Analyst; William Blair & Company L.L.C., Research Division
J.R. Herrera
Jackson Ader
James Eugene Faucette; MD; Morgan Stanley, Research Division
Jessica Wang; Research Associate; Raymond James & Associates, Inc., Research Division
Joseph D. Vruwink; Senior Research Analyst; Robert W. Baird & Co. Incorporated, Research Division
Kenneth Christopher Suchoski; US Payments and FinTech Analyst; Autonomous Research US LP
Nicholas William Altmann; Analyst; Scotiabank Global Banking and Markets, Research Division
Saket Kalia; Senior Analyst; Barclays Bank PLC, Research Division
Terrell Frederick Tillman; Research Analyst; Truist Securities, Inc., Research Division
Presentation
Operator
Good day, and thank you for standing by, and welcome to nCino Second Quarter Fiscal Year 2024 Financial Results Conference Call.
(Operator Instructions) Please be advised that today's conference is being recorded.
I would like to introduce your host for today's call, Harrison Masters, Director of Investor Relations. Please go ahead.
Harrison Masters
Good afternoon, and welcome to nCino's Second Quarter Fiscal 2024 Earnings Call. With me on today's call are Pierre Naude, nCino's Chairman and Chief Executive Officer; Greg Orenstein, Chief Financial Officer; and Josh Glover, President and Chief Revenue Officer.
During the course of this conference call, we will make forward-looking statements regarding trends, strategies and the anticipated performance of our business. These forward-looking statements are based on management's current views and expectations, entails certain assumptions made as of today's date and are subject to various risks and uncertainties described in our SEC filings and other publicly available documents, the financial services industry and global economic conditions. nCino disclaims any obligation to update or revise any forward-looking statements.
Further, on today's call, we will also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results. A reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our website and as an exhibit to the Form 8-K furnished with the SEC just before this call as well as the earnings presentation on our Investor Relations website at investor.ncino.com.
With that, I will now turn the call over to Pierre.
Pierre Naude
Thank you, Harrison, and thank you for joining us this afternoon to review our second quarter fiscal 2024 performance.
We are very pleased with the results and the momentum we saw both throughout the quarter. Both total and subscription revenues increased 18%, while we again outperformed on profitability posting a 10% non-GAAP operating income margin for the quarter. We saw strength in sales activity across all parts of our business. We said last quarter that we expected a recovery in the second quarter, and we certainly saw that with second quarter sales up 22% year-over-year. Our solid results mirror what we are hearing from customers.
The U.S. banking industry has largely stabilized with the liquidity crisis behind us. Essentially, banks have caught their breath and most have refocused on their long-term strategy, which includes optimizing their technology infrastructure and providing a superior customer experience. The nCino platform was architected for just these purposes. It provides banks and credit unions of all sizes a 360-degree view of the customer, allowing them to create a personalized differentiated experience on a single platform. Leveraging this holistic view of the customer, nCino facilitates gathering deposits, originating any loan product, onboarding customers and portfolio management all from one platform.
In addition, our nIQ products such as commercial pricing and profitability allow financial institutions to broaden their customer relationships, cross-sell and optimize for profitability. This, of course, ultimately enhances their ability to successfully compete in an evolving market by balancing risk and reward.
With high interest rates still in effect, financial institutions are seeing pressure on net interest margins. The most effective way to offset margin compression, while maintaining credit quality is by driving greater efficiency. nCino's platform was built to drive efficiency, while the automation at the core of the platform helps accelerate the industry's move to increased self-service. Building out the capabilities of the platform has always been a key growth driver. With many of our new products now reaching maturity, we are pleased by the increased number of products utilized per customer. In fact, over 40% of bank operating system new logo deals in the second quarter included more than one solution.
Another focus has been building out our footprint with current customers. This quarter, over 60% of sales were cross-sell and upsell within the installed base. As we continue to expand the functionality of the platform, I can't overstate the value of our satisfied and referenceable installed customer base. We are also seeing this expanding footprint reflected in our sales pipeline. As of the end of the second quarter, more than 50% of the pipeline is for products other than commercial lending.
Let me reiterate that point. Retail, small business, treasury, mortgage and nIQ, all of the products we have created to supplement our additional commercial lending business now represent over 50% of sales opportunities in the pipeline. I cannot tell you how excited we are to reach this level of demand for nCino's technology beyond commercial lending.
As a reminder, the SAM outside of commercial is twice as large, so we have a significant opportunity ahead. But in nCino, we diversified beyond products and customers. We have also diversified geographically. This has been particularly important with the uneven macro recovery. For example, in the second quarter, we saw solid demand in EMEA and APAC, including adding another large ESG customer, in this case, a U.K.-based global bank. While many of the challenges bankers face outside the U.S. are universal, our ability to develop products specific to the needs of respective regions has been a key differentiator.
Switching to the U.S., and in particular, our continued progress with the nCino mortgage suite. The integration of the nCino and SimpleNexus teams continues to accelerate our penetration of the banking channel. This quarter, we saw 7 cross-sells in addition to 6 competitive takeaways. We also closed a number of large pipeline deals we noted last quarter, including a 7-figure upsell deal with a top 10 mortgage lenders.
We ended the second quarter with another strong pipeline of mortgage deals as mortgage lenders understand the need to become more efficient in order to compete in this market. I couldn't be prouder of the mortgage team for their continued revenue growth, again, both year-over-year and quarter-over-quarter in this difficult and volatile mortgage market.
I will let Josh provide additional details around U.S. mortgage. But first, I want to highlight our data capture and analytics capabilities are key differentiators for our mortgage offering. When surfaced through our compensate and Nexus vision products, one upsell deal with a top 100 mortgage originated this quarter involved adding these analytics offerings to round out the mortgage suite from existing SimpleNexus point-of-sale customer, increasing ACV by over 50% for that account. But this is just one area where our data analytics expertise is core to our product road map.
Let me spend a minute reviewing our ongoing nIQ strategy around intelligence, including AI, machine learning and analytics. With our single platform, we process vast amounts of data, including customer onboarding, loan origination, account opening and bank customer financial information, and we continue to invest to further automate every stage of production across the platform.
As we've done with auto spreading, where we removed layers of manual work to accelerate the underwriting process for loans, we'll continue to develop solutions to help bankers make faster, more informed decisions. Our team has deep domain expertise in banking and is hard at work developing thoughtful solutions to the most complex issues our customers face. Recent internal demonstrations highlighted numerous use cases, including interactive virtual assistance and automated portfolio reviews.
With our philosophy of an open ecosystem enabled by our API strategy, we are also attracting an impressive group of partners that are augmenting the nCino customer experience. Together, we are developing thoughtful solutions powered by AI, data and analytics to automate an increasing number of workflows within our single platform, allowing financial institutions to eliminate reliance on legacy point solutions and become more and more efficient.
We were pioneers when bankers were reluctant to embrace the cloud. We prove that value proposition. And today, cloud banking is considered the industry standard. Our original vision continues driving the evolution of financial services as we anticipated the demand for AI and data when we launched our nIQ initiative over 4 years ago. It is exciting to see the industry embracing this technology as we continue on our journey to embed intelligence throughout our platform and change the financial services industry once more. To quote one of our customers, Ron Nix, CTO at VeraBank "What's important for technology vendors is not to evaluate your needs today, but to predict where you are going to be in 5 years. We know in 5 years, nCino is going to be at the forefront of lending and we'll be right there with them."
VeraBank, a community bank headquartered in Henderson, Texas, partnered with nCino to modernize its lending processes and streamline employee and customer experiences. The bank has taken a full platform approach, adopting deposit account opening, portfolio analytics retail lending and commercial lending, including order spreading. We see them as a textbook example of how nCino can be adopted across an organization to drive operational efficiency, and we appreciate their trust in our vision for where the industry is headed.
The makeup of our sales pipeline proves that nCino's influence now extends far beyond commercial lending. With the continued expansion and maturity of our platform, we are poised to extend our market leadership to retail, small business, mortgage, data, analytics and AI, matching our success in commercial loan origination. Our progress and positioning reinforce our optimism for the second half of fiscal 2024 and the years to come.
Now let me turn the call to Josh to provide specific examples of our solid execution in the second quarter.
Joshua L. Glover
Thank you, Pierre. We're very pleased with our second quarter results. In the United States, we saw customers coming back to the table with a renewed focus on digital transformation projects. One such example is an expansion within a top 4 U.S. bank who added additional users for small business lending. This deal is a great example of the white space we see in even our largest accounts to add additional lines of business and to expand user bases within our existing footprint.
We closed a retail lending add-on in conjunction with the merger of equals between 2 community banks. The combined bank will standardize in nCino for retail and commercial lending. Their deployment will also include auto spreading, deposit account opening and treasury onboarding. As we have experienced with many past M&A transactions within our customer base, nCino platform's ability to extend across multiple products and lines of business while scaling with the bank as it grows, will combine lending operations for the new bank.
Integrating credit cultures and portfolio management are key to the success of a bank merger, and we're proud to see another growth-minded bank leveraging nCino to help with these mission-critical merger activities. We believe and the market has validated that financial institutions using a single platform have the tools to grow more efficiently while also delivering great differentiated customer experiences. For example, one of our regional bank customers saw a 291% increase and average monthly new deposit accounts opened online after implementing nCino. An expansion opportunity in over $10 billion bank that added retail and commercial lending provided another proof point of our single platform strategy. These products join an existing small business lending deployment, bringing all the bank's lending operations onto one platform with nCino.
The State of Colorado was quite good to us this quarter. nCino was selected by yet another foreign credit institution for commercial lending, and we did an expansion within a community bank for deposit account opening and treasury onboarding. This Colorado Community Bank already used nCino for commercial lending and for the mortgage home-buying journey.
As Pierre noted, our U.S. mortgage business continues to benefit from nCino's well-established brand and market presence within financial institutions. Our 19 new mortgage logos in the quarter were primarily with depository institutions, proving the value of our approach. We are particularly pleased by 2 net new logo deals where our mortgage suite was included in greenfield bank operating system deals.
The first is a community bank retail lending deal that included portfolio analytics and mortgage. The second was a community bank committing to nCino for commercial lending, portfolio analytics and mortgage. We're excited to see our customers look to nCino as the single trusted vendor across all their business lines as they also incorporate our nIQ solutions to accelerate the value they receive from our products.
We'll continue to see our product strategy focused on the value nCino delivers across 3 pillars of intelligence, automation and experience. These multi-solution greenfield deals illustrate the impact that strategy is providing for nCino's customers. Our global footprint continues to provide stability to our growth profile. This quarter, we added another new logo in Australia. This time, a top 10 Australian bank that will be deploying nCino's market-leading commercial lending solution.
nCino was selected to help the bank simplify their operating model, reduce cycle times and improve the customer experience. I'm particularly excited to note that this greenfield commercial loan origination deal also included nIQ's commercial pricing and profitability solution. This is yet another proof point of the opportunity for this solution in banks worldwide.
Another recent area of focus for us has been addressing demand from the world's top 500 financial institutions beyond nCino's established geographic footprint. With great partnership from Accenture, our emerging markets team signed one of the largest banks in the UAE and our first customer in the Middle East for commercial lending. Our global partner ecosystem is a true force multiplier not only in delivering customer success, but also in our go-to-market efforts. System integrator ecosystem's unique combination of global reach and local relationships is helping nCino uncover sales opportunities in both new and emerging markets.
Expansion within existing customers made a strong contribution to nCino's international success in the second quarter. An enterprise bank in the Netherlands expanded their adoption of our commercial lending solution and renewed their agreement with nCino for another 5 years. Also, beyond the borders of the Continental U.S., we had an over $10 billion asset, Caribbean subsidiary of a global bank for commercial lending. We also signed a community bank in the U.S. territory for retail lending, portfolio analytics and for the mortgage home buying journey, an exciting multisolution deal.
Sustained success in any market requires happy, referenceable customers. We are pleased to take another early customer from the Japanese market live on nCino's commercial lending solution. We are appreciative of the opportunity early adopters have provided us in Japan, and we look forward to highlighting more examples of success in that market.
We also proudly celebrated go-live milestones in other markets for commercial, retail, small business, commercial pricing and profitability and deposit account opening. As a customer-focused organization, we have continued appreciation for client feedback. We're extremely proud in the second quarter to receive the highest NPS score in company history at an average score of 74%.
In addition to the talented customer success teams we feel around the globe, the maturity and stability of our single platforms are yielding demonstrable business value and our recent investments in intelig and usage analytics are allowing nCino's customers to benchmark and accelerate their own success.
Greg, over to you for the financials.
Gregory D. Orenstein
Thank you, Josh, and thanks, everyone, for joining us this afternoon to review our second quarter fiscal '24 financial results.
Please note that all numbers referenced in my remarks are on a non-GAAP basis, unless otherwise stated. A reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our website and as an exhibit to the Form 8-K furnished with the SEC just before this call.
Total revenues for the second quarter of fiscal '24 were $117.2 million, an increase of 18% year-over-year. Subscription revenues for the second quarter were $99.9 million, also an increase of 18% year-over-year and representing 85% of total revenues. Subscription revenues benefited from strong sales in the quarter with some of those deals contributing to revenues in the services quarter. Professional revenues were $17.3 million in the quarter, growing 14% year-over-year.
Revenue growth outside the United States accelerated this quarter as a result of increased sales momentum that began in the second half of last year. Non-U.S. revenues were $21.9 million or 19% of total revenues in the second quarter, up 47% year-over-year or 48% in constant currency.
Non-GAAP gross profit for the second quarter of fiscal '24 was $76.5 million, an increase of 18% year-over-year. Non-GAAP gross margin was 65%, compared to 65% in the second quarter of fiscal '23. Non-GAAP operating income for the second quarter of fiscal '24 was $11.2 million compared with a $2.8 million loss in the second quarter of fiscal '23.
Our non-GAAP operating margin for the second quarter was positive 10% compared with negative 3% in the second quarter of fiscal '23. We exceeded non-GAAP operating income guidance with continued solid execution against expense budgets and from our revenue performance.
Non-GAAP net income attributable to nCino for the second quarter of fiscal '24 was $9.9 million or $0.09 per diluted share compared to a net loss of $4.9 million or negative $0.04 per basic and diluted share in the second quarter of fiscal '23.
Our remaining performance obligation, or RPO, increased to $928.6 million as of July 31, 2023, up 2% over $907.4 million as of July 31, 2022, with $636.2 million in the less than 24 months category up 8% from $588.8 million as of July 31, 2022. In addition to a strong sales quarter, RPO also benefited from a solid renewal quarter. As Josh noted, there were significant expansions, meaning an increase in annualized subscription revenues that accompanied several renewals.
As we regularly highlight, we do not manage the business to RPO, but I do want to reinforce what Pierre mentioned earlier, it was a strong sales quarter with sales achievement up 22% year-over-year. Note that sales in the second quarter were greater in June and July, so some corresponding billings will occur in the third quarter.
We ended the quarter with cash and cash equivalents of $103.4 million, including restricted cash. Net cash provided by operating activities was $12 million compared to $9.5 million in the second quarter of fiscal '23.
Capital expenditures were $859,000 in the quarter, resulting in free cash flow of $11.1 million for the second quarter. Please note that we expect to generate positive free cash flow through the balance of the fiscal year. Also note that we repaid the outstanding balance of $15 million on our $50 million revolving credit facility and have no amounts outstanding thereunder.
Finally, please note that in July, through mediation, the company and the plaintiff and a putative class action complaint filed on March 12, 2021, in the United States District Court for the Eastern district of North Carolina reached a settlement agreement in principal of approximately $2.2 million that remains subject to court approval. The company has accrued for the proposed settlement agreement which is included in accrued expenses and other liabilities as of July 31, 2023, on the company's unaudited condensed consolidated balance sheets. We have excluded this expense from our non-GAAP results as it is outside the ordinary course of our business.
Now turning to guidance. For the third quarter of fiscal '24, we expect total revenues of $120 million to $121 million, with subscription revenues of $102.5 million to $103.5 million. This guidance assumes year-over-year subscription growth of 17% at the midpoint of our range. Non-GAAP operating income is expected to be approximately $13 million to $15 million and non-GAAP net income attributable to nCino per share to be $0.10 to $0.12 for the third quarter. This is based upon a weighted average of approximately 115 million diluted shares outstanding.
Churn in the second quarter was in line with our expectations, but we are conscious that the IMB segment of our U.S. mortgage customer base continues to navigate the heightened interest rate environment. Accordingly, we intend to be prudent with full year expectations by raising the low end of our revenue guidance for both total and subscription revenues while maintaining the top end of our guidance for both. Despite this conservatism, our strong performance in the second quarter, the market stabilizing following the liquidity concerns earlier this year and the opportunities we see in our pipeline drive our optimism for the second half of the year.
For fiscal '24, we expect total revenues of $475 million to $478.5 million, with subscription revenues of $406 million to $409 million. This full year guidance assumes year-over-year subscription growth of 18% at the midpoint of our range.
We are increasing both the low and top end of our non-GAAP operating income guidance for fiscal '24 to $51 million to $54 million. Non-GAAP net income attributable to nCino per share is expected to be between $0.38 to $0.41 and based upon a weighted average of approximately 115 million diluted shares outstanding. The top end of our subscription revenues and non-GAAP operating income guidance reflects our continued commitment to the Rule of 30 objective for the full fiscal year.
With that, I'll open the line for questions.
Question and Answer Session
Operator
(Operator Instructions) And our first question comes from Terry Tillman from Truist Securities.
Terrell Frederick Tillman
Usually on these calls, when we have important new lighthouse accounts in different regions, but I tried to stay higher, some sort of greeting in local language. I've done it in German and French. Arabic, I don't know if it's Holon, but I tried my best. But great to see the UAE win. Maybe the first question for Pierre or Josh, is 22% sales growth, I'd like to unpack that a little bit more. Is that like an ACV bookings? And do you think that coming out of the thawing out that the business can keep picking up momentum versus 2Q sales activity, I'm talking about the second half of the year? And then I had a follow-up for -- as well.
Pierre Naude
Terry thanks for that question. Yes. Just a reminder that 22% is year-over-year, okay? And not quarter-over-quarter, which makes it more remarkable. I think it shows the pent-up demand, and that also shows the momentum we see in the market. As I look at the global markets, including the U.S., I would say the only place where people are still careful is the U.S. enterprise market, where the regional and big banks are strategically aligned and moving forward, but very careful to buy.
Apart from that, in the rest of the segments, community region in the U.S., we see strong demand. And internationally, we see very strong interest. I believe the current economic environment for net interest margin squeezes is truly a driver for [our view] to efficiency. And as we mentioned, we've got the platform, and that's being reconfirmed as we visit customers and drive around.
Josh, anything to add?
Joshua L. Glover
No, nothing to add to that.
Terrell Frederick Tillman
That's great to hear. And I guess maybe the follow-up question for Greg. Greg, I mean, I think what you said is that some of the activity in June and July really doesn't show up much in RPO. But then you did talk about the sales activity up year-over-year. People are going to be thinking about what you've done year-to-date and then what might happen in the second half of the year as we start to foretell how revenue looks next year. But I'm just kind of curious, as it relates to the metric because we do look at it, the RPO or CRPO, do you feel like based on what you see, just those reported metrics are troughing in 2Q and they could start perking up in the second half of the year?
Gregory D. Orenstein
Terry, my comment around the activity and the heightened activity towards the end of the quarter was related to billings where we got some deals signed that would have been reflected in RPO, but ultimately, from a billing standpoint, that would have happened post quarter end.
But overall, to Pierre's comments and what you heard in our prepared remarks, we definitely saw momentum pick up as the quarter progressed. And going back to my comments when I was kind of on the investor circuit last quarter, we said that we expected second quarter to be better than first quarter. And obviously, we demonstrated that, and we expected the second half of the year from a sales/bookings perspective to be better than the first half and the momentum we're seeing right now reinforces that belief.
Operator
And our next question comes from Charles Nabhan from Stephens.
Charles Joseph Nabhan
It's good to see the momentum in the mortgage business cross-selling into the FI customer base. But just curious, given the recent uptick in rates, if you're seeing any stabilization in churn within the legacy IMB base for SimpleNexus?
Gregory D. Orenstein
Yes. We -- again, as I mentioned in my remarks, the churn was in line in the second quarter with our expectations. We're not seeing increased churn from a forecasting or guidance perspective. We did really roll some of our overperformance not through really to account for, I'd say, unexpected churn in the second half of the year. There's nothing as we sit here today that has us or leads us to believe that we'll have heightened churn beyond our forecast. But ultimately, just in this market, going back to your comments around mortgage rates, we wanted to take a conservative view.
I think what's amazing about that business is despite the challenge of the mortgage market, the fact that they've continued to grow year-over-year and quarter-over-quarter since we acquired the business and I think that positions us incredibly well when the market ultimately does stabilize and then ultimately rebounds, particularly as we've aligned with a lot of the larger, better capitalized IMBs and as we've had additional sales into the nCino financial institution customer base.
So I think -- while we're focused a little bit on churn now, I think as we think into the future, as things settle down, I think that's going to be a significant opportunity for us from a growth standpoint.
Charles Joseph Nabhan
Got it. And as a follow-up, just looking at the full year guide for '23, it looks like you're well on track to hit that Rule of 30 target exiting the year. But you've also talked about hitting the Rule of 40 at some point as well. So my question is, given the shift in the pipeline away from commercial and momentum and cross-sell activity, I'm curious how we should think about the long-term trajectory of the margin of -- just progress towards that Rule of 40 and how we should think about that from both a margin and a revenue standpoint?
Pierre Naude
Yes. We look forward to share our future models at our Investor Day and actually explain how we see the future. It's been 3 years since we've been public. The business mix has changed. We made some acquisitions and all those impact the models. I can just tell you from purely looking at sales activity and performance as well as the pipeline size as well as the pipeline mix, which to me is very interesting. I want to make sure that there's not a pullback in commercial. It's more of the adoption of newer products across the platform as well.
So we are full speed here to maintain our market leadership in commercial, while we are rolling out the additional platform products, which is really showing up now in our sales as well as in our customer base. Just that for clarification.
Gregory D. Orenstein
Yes. And Charles, just one other thing to add. Again, we said Rule of 30 was kind of a stake in the ground this year, but the expectation should be that we'll increase that as the years progress to get to Rule of 40 and beyond. And so from our perspective, this is really the first step in that journey. We again put that stake in the ground this year and kudos to the whole team in terms of how we've been executing through what's been a difficult first half of the year from a [end] customer standpoint.
Operator
And our next question comes from James Faucette from Morgan Stanley.
James Eugene Faucette
I guess for me, I'm looking at kind of this cross-sell and some of these activities, and you mentioned that you've had an increase in customers that are adopting more than one product. Historically nIQ module adoption tends to result in around 20% uplift to ACV in an existing commercial customer. Given the potential for differences in seed count and pricing between commercial and retail, I'm curious to learn if you've run similar math on ACV uplift of the existing commercial customer adopts retail. Just trying to get a sense of potential leverage there on that cross-selling opportunity.
Gregory D. Orenstein
We've not disclosed or really commented previously on that. Again, I think as we gear up for our first Investor Day at the end of September, our intent is to provide different cuts of the business and provide additional details so that you guys can have a better understanding about how this platform story is truly playing out and really the white space we have within our customer base and beyond.
James Eugene Faucette
Got it. And then quickly on kind of large deal impacts as one of your European competitors has spoken about improvements in large deals. How would you characterize the demand environment in those larger asset bases and opportunities particularly given the lumpiness in the RPO metric for large deals and renewals. Just wondering how that could be impacting and how you're thinking about that going forward?
Joshua L. Glover
This is Josh. We're pleased with the engagement that we're seeing. We called out a few exciting larger opportunities that we formalized this last quarter. And those span a variety of geographies. You had a nice win in Australia and one of their top 10 banks. We had a nice expansion in a global bank with our ESG solution out of the U.K. We had that win in the Middle East. So we're pleased with where we are. We also had an expansion within a large account in the Netherlands. So we saw that market impacted last year, kind of early. They came back early and those proof points show the continued engagement momentum that we're seeing here.
Operator
And our next question comes from Nick Altmann from Scotiabank.
Nicholas William Altmann
I wanted to ask a quick clarification question on the 22% sales achievement growth on a year-over-year basis. Is that quota attainment? Is that net new ACV? Can you just maybe comment on what you mean by that 22% number?
Joshua L. Glover
So that's a 22% increase in bookings year-over-year as we look at the Q2 compare.
Nicholas William Altmann
And is that on a ACV basis?
Joshua L. Glover
The overall gross booking. Yes, on an ACV basis.
Nicholas William Altmann
Okay. Okay. And then I guess my second question is, I think you had mentioned 60% of the bookings in the quarter were cross-sells I guess when you look at the pipeline for the second half, how much of the pipeline is sort of net new versus existing? And then just as a follow-up, you mentioned 50% of the pipeline is for products outside of commercial lending. So can you maybe just talk about whether retail and SMB is acting more of a front door in terms of your pipeline? Or are these sort of more expansion-oriented deals?
Gregory D. Orenstein
I'll get the first question. Josh, if you want to take the second. Yes, from a pipe perspective, there's a healthy mix between new and leveraging current customers are selling back into the base. So we're excited about that mix, which we think is important. But as Pierre noted in his comments, our customer base is an incredible asset. And as our newer products continue to mature, and we see them adopt more, there's a tremendous amount of opportunity we have there in addition to going to net new customers.
Joshua L. Glover
And that commercial customer base, obviously, being where we started for a while, that would be the entry point. We would try to add other solutions like retail or deposit account opening. Those solutions have matured. And so we're seeing situations where if a customer's priority is to start with retail or account opening or something else, they're able to do so, and we get them live with confidence.
You still see some accounts. We spoke about Vera in prior quarters. We've talked about Johnson Financial Group for those accounts to make a large multi-solution commitment. Obviously, those are quite exciting. But it's our job to present the solution show the broad single platform vision and then we're going to show a customer a path to success based on what makes sense for them at the time. We'll bet on nCino, we'll bet on our ecosystem. We'll get them live and then hopefully expand with the other solutions later.
Gregory D. Orenstein
And with the maturing of the products, our ability to enter anywhere to Josh's point that the bank has an issue that they're trying to address, we think, is really exciting as we look forward.
Joshua L. Glover
On the other side of the liquidity reality from earlier in the year, though, we do see these banks coming back to the idea that the best -- most stable path for the future to grow and to grow in an efficient manner is to provide a broad set of products that fulfill a variety of customer needs to fulfill them very well across multiple channels, and that brings you back to a single platform vision, and we're seeing that continue to be adopted by the market.
Really excited about that stat that Pierre referenced, where we have 40% of new logos committed to more than one solution on day 1. But we believe that's not just a validation of our product maturity, but really us being nicely aligned to what's on bankers' minds today.
Operator
And our next question comes from Chris Kennedy from William Blair.
Cristopher David Kennedy
Just going back to the pipeline comment. Over 50% of the pipeline is outside of commercial lending. Can you just rank order the importance, whether it's nIQ, treasury, retail et cetera?
Joshua L. Glover
So we're pleased with the volume of pipe that we see in the consumer side of these banks. That may be retail, it may be account opening or it may be our mortgage solution. When you see the stat, 19 new logos for SimpleNexus, I commented on it, but more than half of those were actually in depositories. So that's really resonating well. It's aligning nicely with the accounts that we've worked hard to sign and show a path to success over the years, the brand that we've built there. So it's a mix of those. I would say, at a high level, the most significant components of the pipe in the consumer side of our product portfolio, our retail lending and SimpleNexus and then also account opening.
Cristopher David Kennedy
Okay. And then just a follow-up. You just mentioned that 40% of new logos are using more than one solution. How has that trended over time? What was that statistic maybe a year or 2 years ago?
Joshua L. Glover
So we -- yes, to clarify, in the last quarter, we saw 40% of our new logos committing to more than one solution on 1 day. We've seen an increase on that across the full product portfolio as well. We're now looking at 27% of our platform customers using more than one solution. That's a year-over-year increase as well.
Gregory D. Orenstein
And that excludes nIQ. You're talking pure platforms.
Joshua L. Glover
27% of pure platform, 49% if you include one -- at least one nIQ solution.
Operator
And our next question comes from Joe Vruwink from Baird.
Joseph D. Vruwink
Pierre, you mentioned in a previous answer, just wanting to be appropriately resourced so that you maintain leadership in core commercial, but then certainly exploit and pursue the other areas. Can you maybe just go into a bit more detail on what that all means just relative to the previous long-term operating model and some of the expense ratios and margin targets you've outlined? And does it suggest that maybe expense ratios could counterbalance higher over the midterm time frame, just relative to what's obviously been a great expense leverage this year?
Pierre Naude
Yes. No, what I would say is I wanted to make sure that people understand, we are still investing in that commercial product, and we still see a massive global opportunity. To remind you, we just (inaudible) 400 accounts in the U.S. There's over 2,000 that we're targeting right now, but there's over 4,300 banks. There's over 5,000 credit unions. We've got the mortgage product now that goes after IMBs as well, it's over 4,000 institutions. So you're talking about over 10,000 institutions that we can target, okay? Obviously, commercial does not go after IMBs.
But with this deal in the Middle East, we're opening a new front where we are going outside of our core countries, along with our SIs to sell these on what I would call named account deals. So we've got a list of accounts globally we're targeting. And those are very exciting deals. And it shows you how we can take that thing and take it across borders and it doesn't need much changing to actually run in these countries. And that's why I want to make sure people understand we will continue to invest not only in the product itself, but into nIQ elements around the credit underwriting and the driving of efficiency in the commercial base. That is the profit center of many, many of these banks.
The second profit center if we go outside the U.S. is the mortgage balance sheet. They keep all those mortgages on balance sheet because it's a variable rate product with a great piece of collateral attached, which is your house, which you don't want to lose and so you keep on paying. So I think we are well positioned to actually address the core issues that banking has in the foreseeable future, drive efficiency and a heavy load of self-service. And so from that perspective, I wanted to make sure there's a balanced view of commercial growth, maintaining market leadership because we work hard to get there. And then as these other products mature, they're all coming up to pull their weight down.
Gregory D. Orenstein
Yes. And Joe, just to add, all of this is part of our plan. Again, we've made a lot of investments over the last couple of years, both in expanding geographically as well as expanding our product portfolio whether it's retail or again, everyone is talking about AI. We've been investing in AI now for 4 years in machine learning and analytics. And so this is all part of continued execution versus any net new investments if I heard your question.
Joseph D. Vruwink
Yes. No, that's good. And then on the careful approach being taken by the U.S. enterprise segment. When that spending comes back, do you think it comes back in the product areas where decisions have maybe been put on a bit of a pause? Or just given some of the strategic things you've been speaking of today, thinking about focus on net interest margin, ESG, credit quality portfolio, visibility, what's on the books? Do you think engagement and the scope of what a bank might consider nCino for changes for better or worse when that spending comes back?
Joshua L. Glover
We think we're just going to see them with a more dedicated focus to providing that robust set of products so they can use to fulfill a variety of customer needs. So they're always going to want to do their commercial and business purpose lending well because, obviously, that's really important to their business, and it's where a lot of other assets sit. But we see increased engagement in the other offerings as well. And then within all of our solutions, they're going to want to look to leverage intelligence at the point of execution as well as they can to take that optimized process and make it even better.
Pierre Naude
I've been traveling around the country to meet with customers. And there is clearly a rethinking of the old strategy. For the longest time in banking, I've always had, we love consumer deposits -- and I'm talking about the U.S. now, we love consumer deposits, but we like commercial lending. Now if you look at deposit trends across the banking sector, a lot of these deposits and consumer accounts moved to the big 4, which has been for years a problem, but it wasn't as magnified as we've seen lately.
And one customer commented to me that there was always a big benefit for them to have these low interest rate, big customer deposits that were seen as an asset. And when Silicon Valley Bank happened, all of a sudden, the atmosphere around that change and people said, "You should have consumer deposits." And what that is doing now is that people are rethinking their relationship with the customer, okay? And they realize that if you want a good relationship with a consumer customer, you need to provide the technology, the self-service and the ease of use that you can expect from companies with big brands like JPMorgan, National Bank of America, where they have a brand around their technology.
And then nCino can fill that void because we're so client-centric. We provide the account opening, we provide the low origination, et cetera, from consumer up to the small business and all the way up to commercial. And I think that is what's going to drive that IT simplification and that renewed strategy and focus on the customer as opposed to the siloed way of going to market inside these banks. And I've heard that echoed as I traveled around the country.
Operator
And our next question comes from Alex Sklar from Raymond James.
Jessica Wang
This is Jessica on for Alex. Start off with, I was just wondering, when you're considering your R&D investments and product road map? What are your ongoing R&D priorities? For example, are you thinking about like for developing, enhancing nIQ versus your other distinct or possibly new products?
Pierre Naude
Yes. So if you look historically at the company, we went public in 2020. It's just 3 years ago. And these are probably materials. We spent $34 million on product. And this year, we spent around $100 million. So it's not that we need to incrementally spend a lot more now. We've literally bulked up the situation so that we are ready because remember, we've been doing nIQ for 4 years, okay? So this is not some new revelation to us that, "Oh, we all of a sudden have to move to intelligence." We've been working for years on the daily basis. The analytics on acquiring companies to get us there faster, okay?
So what we're doing now is we always evaluate all the product suites. We look at customer needs, broadening of the markets because when you launch these products, it may be a subset of customers who can use them. And then over time, as you add feature functions or integrations or different elements, you can broaden that customer appeal.
And so what we're doing now is we evaluate the opportunity ahead of us, and we will shift money around. But there's clearly an emphasis on driving nIQ because nIQ and all those products underneath that intelligence umbrella, will actually differentiate us through the point where it will be difficult to compete with us in the market. If you combine the intelligence with the platform and client-centric approach, we feel pretty good about our competitive position.
Jessica Wang
Got it. And I've got a follow-up question. When you're looking at different lines of growth opportunity, like it's been really great hearing about the big wins you've had nationally, what are you thinking as -- like where are you most confident in your business today? Is it more international, again, you said it was nIQ the differentiation you have or there is something else?
Joshua L. Glover
Yes. As you think about the various markets that we serve in the United States is continuing to grow our single platform presence. We've thrown out a few sets earlier that show increased adoption of customers there. In some of our international markets, we're just focused on continuing to add logos and build that great customer base that we continue expanding and intelligence as part of the conversation in every market that we serve.
Operator
And our next question comes from Brent Bracelin from Piper Sandler.
J.R. Herrera
This is J.R. asking on behalf of Brent. Touching on CRPO once again, how should we think about the 2024 growth rate with current RPO growth of 10% in Q1 and 8% in Q2, is low double-digit growth doable? Or could we be looking at high single-digit growth?
Pierre Naude
Let me first make a comment about RPO. Remember, depending on the seasonality of bookings, renewals could play a significant distorting impact on RPO. In other words, we could have low bookings but a big renewal quarter and all of a sudden, RPO jumps 20%. So I will be very careful to make too much of a deal about RPO. It is, to me, an indicator, but I think you should carefully listen to the additional comments and data we provide you to actually come to a conclusion with that.
Greg, do you have anything else to add?
Gregory D. Orenstein
I think, again, we do try to consistently remind folks that we don't manage the business to RPO. And again, there's a lot of moving parts in it and really point to the guidance that we provide with the visibility that we have in the model, both on the top and bottom line, and that's what we point you to J.R.
Operator
And our next question comes from Jackson Ader from MoffettNathanson.
Jackson Ader
The first question is for you, Pierre. The rate environment outside of the U.S., I mean, I guess, specifically in Europe, it's a little behind where we are in the state, but still, I think, maybe some room to go higher. And so I'm just curious if the U.S. enterprise segment at the moment is kind of being the most cautious as you look around, what are your expectations maybe for how European banks will react once we get maybe to kind of the peak rate cycle in that geography?
Pierre Naude
Yes. I would always remind people that all problems are relative. And if you look at the starting of the shock of the war last year as well as the energy crisis. The rate complexity today looks like Sunday school picnic compared to what they dealt with last year, okay? And then you add the Swiss Bank who also had liquidity problems and then got taken over.
So what I would tell you is that it's relatively good. It's not ideal and everybody in banking would like to see declining rates coming forward again. But normally, there's a cycle that you have to get through where your loan rates, in other words, your income can raise as well because your current portfolio sits there stable and your deposit rates go up, so that's a squeeze on adding those margins. But over time, as you renew those loans and you jack the rates up. As long as the economy stays healthy, you don't see a lot of problems in the credit book. I think these banks will come through this fine.
It's -- I'm always amazed about good bankers are to manage the credit side. I think the surprise was the liquidity angle was a big surprise and it came out of left field as well as the ease of withdrawing money today in an Internet-enabled world versus the previous time they saw this, you literally have to stand in line to get your money and they could close the door, okay? So -- but what we're hearing is there is a renewed focus on strategy and how they would like to move forward.
I will also tell you that, as I mentioned before, in Europe, there's a lot more regulation and government involvement in these banks. And that's why ESG is a great play for us there. As a matter of fact, I'm going over there to talk to some of the banks in September about this, understanding the industry better, where that's going to take us. But I'm still seeing significant interest in new technologies and how they can manage themselves better.
Jackson Ader
Okay. All right. Great. That is helpful context. One quick follow-up for Greg. The linearity that you spoke about in the quarter, the June and July impacting billings maybe moving into the next quarter. Was there -- was the quarter like more back-end loaded from a bookings perspective than you typically see in the second quarter or than you typically see in any given quarter?
Gregory D. Orenstein
No. I think, again, just coming on the other side of the liquidity crisis, we just saw the momentum build as the quarter progressed and things settled down, Jackson. I think that really more than anything would have been -- would be the thing to note for Q2.
Jackson Ader
I'm sorry, I just mean like was it more or less back-end loaded than usual or like than you expected?
Gregory D. Orenstein
No. I think it was in line with expectations. And again, speaking in the middle of the quarter and again talking to investors, we tried to highlight some of the momentum that we saw building and the quarter came together nicely. Our team did a great job, and it was nice to see.
Operator
And our next question comes from Adam Bergere from Bank of America.
Adam Charles Bergere
So how is the balance between the focus for new logos versus expansion deals changed this year so far? And how are you thinking about that balance on a go-forward basis with liquidity crisis that you're [doing there]?
Joshua L. Glover
The balance of our field focus hasn't changed. We make sure we have a team on the field out in the market to tell the story to new logos, and we also make sure we're able to take care of our existing accounts. The reality is when things get challenging. The first thing that slows down is the greenfield conversations because it's just hard for folks to continue on with due diligence with the new vendor, which is a good situation for us to be in because we have a great and happy referenceable customer base. So that will explain at some points when you see macroeconomic ups and downs, why we may see a little bit heavier weighting of expansion bookings. So part of that is just the reality of where the world is. But our market focus has not changed at all.
Adam Charles Bergere
Got it. And then between kind of your go-to-market motion for domestic versus international, is it fairly consistent between the 2 as well in terms of new logos versus expansion?
Joshua L. Glover
Consistent focus and consistent motions, just different maturity of markets and time and market, which leads to a different distribution of market penetration in the customer base.
Operator
And our next question comes from Saket Kalia from Barclays.
Saket Kalia
I'll keep it quick with kind of 2 housekeeping questions. Maybe the first one is for you, Josh. As you think about that 22% sales achievement, which certainly was great to see, and it sounded better. How do you sort of rank order the product areas that you felt like drove that growth? I mean, was it still very much driven by commercial lending? Or do you feel like the pipeline composition, things like retail, things like nIQ and others also drove a lot of that sales achievement as well. That's the first question.
Joshua L. Glover
Saket, it's nice to speak to you. No, we had a good mix of offerings here. We talked about 19 new logos on the SimpleNexus side. One of the stats that we referenced is 40% of our new logos have multiple solutions. So you will see commercial or small business involved in those, but you also see things like retail, SimpleNexus and nIQ offerings involved. So from our perspective, look, we're very proud of that commercial product, and we take good care of it. We take care of our customers, but we continue to see expansion and new logos with those other solutions as well.
Saket Kalia
That's great. It's great to see that breadth. Maybe the follow-up for you, Greg, is maybe a little bit of a longer-term question, but that 50% pipeline point on what I'll call commercial lending versus noncommercial lending. The question for you is, what does that mix look like in revenue terms today? And where do you think that mix can go over the next few years?
Gregory D. Orenstein
Yes. So from a market perspective, Saket, I think Pierre noted the market outside of commercial is twice as big. And so we attack commercial first, but again, we see a massive opportunity on the retail side with retail lending with our U.S. mortgage business with mortgage outside of the U.S. And so again, I think as we think about the opportunity we have, we think we're just getting started. And ultimately, just based on our SAM studies, that opportunity is twice as large as commercial.
Operator
And our next question comes from Ken Suchoski from Autonomous Research.
Kenneth Christopher Suchoski
Maybe I'll ask another one on the pipeline and that 50% that's coming from the noncommercial lending products. I mean when we talk to folks, I think what really stands out is your reputation on the commercial lending side. And Pierre, I think you've mentioned maintaining your market leadership in commercial lending. So can you talk about the competitive dynamic in your [moat], I guess, in the noncommercial lending products and your confidence in holding your own versus the competition just because it is a big part of the SAM?
Pierre Naude
Yes. Thank you. That's a great question. Look, our platform centricity as well as the customer focus, I think is a big differentiator for us. Consumer is a much more simplistic product set because your end user experience must be a lot more simplistic and ease of use and instantaneous. However, because of all the regulations, it's a fairly difficult product to develop with all the integrations to actually make it that simplistic to use. So it's a complex problem you're solving, but you have to make it simple to the end consumer.
If you then look back at other people selling into that consumer or small business base. What you're basically seeing is a bunch of companies who developed software in the '80s and '90s. And so we're coming out of the box here with a modern cloud-based solution that is part of a broader IT infrastructure and I don't see other people coming up trying to do the same thing here.
So I do think this is back to that reputation thing. If we maintain the reputation in the biggest profit center of the bank, we get the influence to go in there and get at least the opportunity. And then if you execute well and maintain the reputation, I think you're going to see exactly this playbook about the same momentum and the same market leadership in the other aspects of the platform. And that's what we're focused on here. And then the meetings I have outside of commercial around the country, I'm hearing similar stories. So I'm highly optimistic this strategy will play out.
Kenneth Christopher Suchoski
Okay. Great. And maybe just as my follow-up, maybe I'll ask about M&A. There was some commentary out there a couple of months ago stating the company might be exploring strategic options, including a potential sale. So I was wondering how, I guess, you guys are thinking about the potential options for the company here because we are getting a lot of questions on it. And I guess, is this is a company that should be in the public markets? I know you've talked about not disclosing certain metrics due to competitive reasons. So I would love to just get your latest thinking there.
Gregory D. Orenstein
Ken, I appreciate the question, but I'm sure you can appreciate, we don't comment on rumor and speculation. So can't really address that any further.
Pierre Naude
We love what we do.
Gregory D. Orenstein
We do love what we do.
Operator
And our last question comes from Alex Markgraff from KBCM.
Alexander Wexler Markgraff
Maybe just first on the Middle East win. When you think about some of these opportunities in less penetrated international markets, just curious maybe, Josh, for you, do you feel like all the pieces are in place here to kind of go full steam ahead with these types of opportunities?
Joshua L. Glover
First of all, it's a reputation-based company. We're not going to make a commitment to a bank that we're not ready to follow through on. So when we go into a new market, we're excited to announce one of the largest banks in the UAE. We're going to show them a great path to success. So the pieces are absolutely there. I have a high level of confidence in the distribution machine and the teams on the ground in those markets that show those customers a path to success. And as we validated in Europe, in APAC, in Japan, in Canada, the global system and a greater ecosystem gives us unprecedented scalability to where if you remember several years ago, we signed 3 Toronto banks in 1 year, and we showed them a path to success by leveraging the same ecosystem. So we're excited and we're proud and we'll be just getting started in those markets.
Alexander Wexler Markgraff
And maybe just one quick follow-up on the second half. Just curious if there's any way for you all to kind of describe the renewal opportunity in the second half for us?
Gregory D. Orenstein
From a customer -- current customer basis in terms of what the renewal forecast looks like Alex?
Alexander Wexler Markgraff
Yes, yes.
Joshua L. Glover
So we see a normal year there in seasonality. We don't really guide to that. And from our perspective, we're going to keep taking care of those customers renewing as we have an opportunity and hopefully formalize those partnerships for a long time.
Gregory D. Orenstein
Yes. I think contracts have terms, but again, as additional products become of interest to customers that can accelerate a renewal as well. And so we always see a new sales opportunity as an opportunity to expand. So hard to predict that outside of kind of our normal cadence, Alex.
Operator
And thank you. I would now like to turn the call back over to Pierre Naude for closing remarks.
Pierre Naude
Thank you all for joining us today. I want to thank the nCino employees around the world for their passion, focus and execution, particularly over the past 6 months, and senior teammates have helped customers through a very difficult period, proving yet again that our culture and business values are true differentiators in the market. We are excited to welcome any of you to our first Investor Day on September 28 in Wilmington, North Carolina. We'll share updates on our product strategy and additional insight into our financial outlook among other topics. We look forward to seeing you then. Thank you so much for attending tonight.
Operator
This concludes today's conference call. Thank you for participating. You may all disconnect.
