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nCino CEO on the acceleration of digital transformation in banking

Pierre Naudé, nCino CEO, joins Yahoo Finance to discuss the company’s Q2 earnings, Wells Fargo joining their client base, cybersecurity, and how artificial intelligence will continue to drive growth.

Video Transcript

- Speaking of moving up, we've got shares of Ncino on the move today as after the cloud banking services provider posted a blowout earnings. Total revenues for the second quarter, up 36% to a record high helping the company cut its losses. And as you can see there, the, stock is up pretty nicely, double digits as a result. Joining us now is Ncino's CEO, Pierre Naudé. Piere, good to have you here. Talk to us about what drove these results last quarter, and how you're guiding investors into 2022.

PIERRE NAUDE: Thanks for having me, Alexis. It obviously was a remarkable quarter. This was a record second quarter for us in the company. You know, we announced a Wells Fargo deal, we've done the US Bank deal. What we're seeing is that acceleration of digital transformation in banking. We transformed that heavy middle back office processes to actually make these banks look more like fin-techs. And I think the momentum was on our side. You see international growth out 129% year-over-year. So we are moving from a US based commercial lending company to a global-based multi-product company, and that movement is showing results here.

- You mentioned Wells Fargo, which was burying the lead there, Pierre, because this is a big client for you that you're bringing on board. Talk to us about your relationship with Wells Fargo. And I guess this now means that two of the top four banks in the US are clients of Ncino. The other would be Bank of America, right?

PIERRE NAUDE: That's correct, since 2017. You know, we're proving to these big banks that package software in the cloud is truly providing agility. You can transform your business processes because in the end, the only thing the customer is concerned about is, am I approved? And when can I get the money? So they have to be nimble. They have to move faster, make better decisions, and simplify their IT infrastructure. And that's what we are doing with our cloud-based platform. You know, on top of those two big names, we've got Barclays in the UK, we've got TD Bank. So you've got a number of these larger banks now. And a brand like Wells Fargo will drive momentum into Europe because it's a recognizable brand.

- How do you think technology and specifically AI is going to continue to drive growth, especially in your industry in the coming quarters?

PIERRE NAUDE: Yes, it's great. You know, AI, machine learning, and analytics, if you combine those three, we are actually launching a number of products under our brand called NIQ, that stands for an Ncono IQ, where we do things, for instance like portfolio analytics to show the bank where is their exposure, what is their lending practices to follow regulations more closely. Another one is automated spreading. That's when you take the financial statements of a customer like an entity, a company, a small business, et cetera, and analyze that to understand that credit worthiness.

Well, we all automate that now by scanning it in pre-populated spreadsheet-like tools, and actually provide insights on top of that. A third one that is coming up that I see a lot of promise for and see great interest is commercial pricing and profitability. We're literally through math and data and insights, we can tell the bank how to charge for a loan. And we see great interest in those kind of products to remove the bias of individuals, and actually drive a much more accurate prediction of what you should price it.

- How does privacy and also cyber security play into what you are doing? Because I know you're automating a bunch of things for these banks, you're onboarding customers, loan origination, and other things that the bank needs to run smoothly. But how are you doing that and still being sensitive to customer privacy and protecting their data?

PIERRE NAUDE: You know, we're very fortunate. On day one, we made a decision to build on the Fourth.com platform by Salesforce. And as you listen to Marc Benioff, his passion for trust and privacy and data security is second to none. And we're actually a layer on top of that, which gives us access to the best in the world CRM solution, plus a global infrastructure of data centers and a platform that is secure. On top of that, we have processes because we're selling to banks. So we understand exactly what the regulations are, and how we have to adhere to them.

- Pierre, I know when I was looking through the financials for last quarter, you have cash and cash equivalents totaling about $400 million. That's an enviable position for a company to be in right now. What are you planning to do with that cash?

PIERRE NAUDE: Alexis, we're trying to expand into Europe. We're building product faster. We're one of the highest spend as a percentage of revenue on R&D. We like to build stuff, that's why we've got a platform. But on top of that, as you see some of the executive personnel moves we did, we are taking some of our most experienced people to look more on strategy. And we always look at build, buy, and partner.

And so as such, we look at some M&A activities. Will not comment on specific ones, but I think there's opportunities in the market. We also look at partnering more deeply by region and country. So I think we've got a fantastic opportunity with a $12 billion TAM ahead of us.

- All right, we're going to leave it there. Pierre Naudé, CEO of Ncino. And again, that stock up 17 and 1/2% after that strong earnings report.

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