nCino’s Exit and the Market’s Dragon’s Lair

On a day when the markets were busy arguing with themselves, the Guild of Digital Alchemists (NCNO +2.64%) found itself in a curious situation. A contingent of wizards from the Unseen University of Capital Allocation had decided to liquidate their entire hoard of 4.5 million shares, fetching a tidy sum of $124.7 million.¹

What Happened

According to the quarterly scroll of the SEC, the wizards sold every last scrip of their investment in the third moon-cycle of the year. Their assets, which had once gleamed with 5.2% of their portfolio’s AUM, were now reduced to ash.² The remaining treasure chest held 32% less gold than before, a clear sign that the wizards had been trimming their sails in preparation for stormier seas.³

What Else to Know

The wizards’ remaining holdings now resemble a medieval feast: 33.4% of their AUM is tied up in Hinge Health (HNGE), followed by UDMY, S, MSFT, and NVDA.⁴ One might say they’ve shifted from alchemy to metallurgy-preferring the tried-and-true metals of Microsoft and Nvidia over the more volatile alloys of the digital age.

As of Wednesday, the Guild’s shares were priced at $24.97, a 29% tumble over the past year. Meanwhile, the S&P 500, ever the cheerful optimist, had risen 12%.⁵ The market, it seems, is playing a game of “pick on the underdog,” and nCino has been chosen for its distinctive lack of sparkle.

Company Overview

Metric	Value
Revenue (TTM)	$586.5 million
Net Income (TTM)	($21.8 million)
Price (as of Wednesday)	$24.97
One-Year Price Change	(29%)

Company Snapshot

The Guild of Digital Alchemists crafts cloud-based elixirs (software) to automate the mundane tasks of bankers, such as client onboarding and loan management.⁶
They cater to a broad spectrum of institutions, from grand banking cathedrals to humble credit union huts.
Advanced analytics and AI are their secret ingredients, brewing automation and actionable insights from the dregs of the loan lifecycle.

For those who prefer their metaphors in the form of SaaS, nCino offers a subscription-based elixir, promising recurring revenue and a loyal clientele. Yet the market remains skeptical, as if the Guild’s latest improvements-10% revenue growth and a 26% non-GAAP margin-are written in a language it refuses to read.

Foolish Take

When a holding grows too large, even the most patient wizard must consider the risk of overexposure. nCino’s recent quarter showed signs of life: revenue climbed 10%, margins turned positive, and $100 million was spent on share repurchases.⁷ Yet the stock remains a dragon’s hoard that no one wants to touch.⁸ This disconnect is not lost on the Unseen University, which has shifted its focus to larger, more liquid enterprises-Microsoft and Nvidia, for instance, or Hinge Health, which seems to specialize in ergonomic chairs for wizards.

For the value investor, nCino’s story is a riddle wrapped in a paradox. The fundamentals are improving, yet the market’s disdain persists. Perhaps the dragon of investor sentiment is simply in a bad mood, or maybe it’s waiting for the next chapter in the saga. Either way, patience is required, as execution and share price often dance to different tunes.

Glossary

13F: A quarterly scroll sent to the SEC, detailing the holdings of the wizardly elite.

AUM: The total value of treasure managed by a guild or firm.

Liquidated: To turn an investment into coin, much like melting down a sword for scrap.

Quarter over quarter: A comparison of a wizard’s spells between two consecutive moons.

Portfolio downsizing: The act of reducing one’s magical arsenal, often due to a shortage of gold.

Cloud-based software: Elixirs stored in the ether, accessible via subscription rather than alchemical ritual.

Regulatory compliance: Adhering to the arcane laws of the financial realm.

SaaS: The modern elixir, sold in monthly doses.

TTM: The 12-month period ending with the most recent moon-cycle report.

Loan lifecycle: The journey of a loan from birth to repayment, often involving paperwork and sighs.

Actionable insights: Clues that can be used to solve the riddle of profitability.

Digital transformation: The process of turning analog processes into digital ones, much like turning lead into gold-if you squint.

¹ The wizards may have sold their shares to fund a new tower for the Unseen University.
² Or perhaps they were simply tired of the Guild’s constant complaints about regulatory compliance.
³ A 32% reduction in assets is roughly equivalent to losing a library of scrolls.
⁴ Hinge Health, it seems, is the wizard world’s answer to ergonomic chairs.
⁵ The S&P 500’s 12% gain could be attributed to a recent influx of dragon gold.
⁶ Automating loan management is like teaching a dragon to count its hoard.
⁷ Share repurchases are a sign of confidence-or desperation, depending on the wizard’s mood.
⁸ The market’s disdain for nCino is as puzzling as a wizard refusing to cast a spell.🐉

2025-12-17 22:29