How's it going? Good to hang out with everybody a little bit last night on the rooftop for folks who made it early. We appreciate that. Appreciate the opportunity maybe to ask some questions before the session, and we expect to get questions after the session as well. I will start with just the obligatory cautionary note on forward-looking statements and disclaimers, and I'd be remiss if I didn't mention that at the onset here to take everything and interpret everything in context here. Today, notes aren't showing. The agenda will power—we'll talk about powering a new era in financial services, which we talked about in the general session. Then we'll talk about the financials, and we'll do a deep dive with Greg on the financials. After that, we'll go into Q&A. That is going to be the next hour or so.
Thank you all for being with us. I've had the opportunity to meet with many of you in my previous role, running customer success, and then after that, running product. More recently, obviously since taking over as CEO in February and specifically on my first earnings call and series of callbacks thereafter, some of you I'm also meeting for the first time this week. We understand it's difficult to make time to come here and make the trip, and we're flattered that you're here. Quite frankly, we're energized by the turnout and the interest in nCino. Many people have asked me since I stepped into the CEO role what has been the biggest adjustment for me and what's been the biggest surprise. In fact, some people asked that last night.
The net new activity for me actually has been the time and energy put in with this group and the investment community. Prior to the CEO role, I ran the two largest departments at the company in customer success and product and had roughly two-thirds of the company reporting to me and the global customer base. The interactions there feel quite natural. On the other hand, when I think about the three legs of the stool being employees, customers, and shareholders, this is the part that's been a little bit new, and it's also been rewarding, and it's also been challenging. I do think this is an incredibly bright group of people with varied backgrounds, and I appreciate your opinions and your feedback. I value transparency, and I value the challenges that we get from you all. Please keep them coming.
I would say the surprise for me with this group is that despite the critical mass and sometimes the volume of calls, by and large, you all have the same questions, which makes sense, right? That's quite natural that you would have the same questions, and rightfully so. We value the interest, and I'm passionate about our business. We hope you see that today, and we hope this forum goes a long way into answering lots of those questions. Without further ado, we'll ground you to some metrics here and the background that helped tell the nCino story. I'm not going to drain and read all the financial numbers because actually most of you can recite them based on your research that I'm impressed with, and Greg will dive deeper in his session.
What I want you to know is that nCino has delivered a suite of best-in-class solutions to over 2,700 customers ranging from community banks, credit unions, independent mortgage banks, all the way up to the largest financial institutions in the world with over trillions of dollars in assets under management. We are a financially stable company with over $540 million in revenue, primarily subscription revenues last year. We were at the right time at the right place in 2011, leading customers to the cloud. As you heard this morning, I firmly believe we are right back in that position, now leading customers first to the AI inflection point. We're doing this globally.
We're doing this with 1,800 employees across our seven offices with a unique combination of banking and technology experience and an obsession with business process re-engineering and industry transformation that quite honestly is in the DNA of our employees. These very employees, along with driving efficiency into the operating model of our customers, have helped us gain recognition you see here in some of the coveted best-of award categories in fintech, including nCino being a great place to work. A global customer base, financial institutions across the world are faced with similar challenges. Despite the varied nature of regulatory and cultural nuances, the old adage, "A loan is a loan is a loan," and other similarities hold true. Our value proposition resonates, and I haven't spoke to a customer anywhere in the world that does not want to drive efficiency into their operating model.
That's what we do, and it comes very naturally to us. We're proudly unique in our ability to serve customers globally, particularly in our vertical, with that single platform. To be clear, a common code base. Every customer we have runs on the same code base. Nobody else is doing what we're doing, and we're the only platform that has demonstrated ability to scale in this way. This is exactly why we lean into opportunities more broadly in EMEA, beyond the U.K. and Ireland, where we are well established, and as we have ambitions to go on to the continent, starting with Spain and the Nordics. This is also why we're so excited about the momentum in the Japanese pipeline, and we have several Japanese banks with us that I met with yesterday here at the conference.
We call attention to this market that has really come into focus for us in recent years, and we expect the same success in Japan as we've had in Australia and New Zealand. We've also been optimistic with our partner channel and the opportunities that present themselves in the Middle East and the potential in Latin America. We do not have entities and offices or direct models here in these countries, but we are opportunistic with the channel model. Honestly, this is not about admiring the globe for nCino and how many places we are. In fact, it's actually pretty hard to travel the world and be away from family, right? This is all about maximizing our SAM and more strategically capitalizing on the differentiation of owning the only true global data set in a space where we compete.
I will refer back to this data as a strategic asset further on in the presentation. Make no mistake, seeing the vertical AI opportunity clearly, our competitive advantage is afforded by our geographic reach and the scope of customers we work with. It is a clear differentiator. Where it gets intriguing for me, in one case, some things have not changed, right? I believe our story is compelling, recognizing that financial institutions the world over are facing the same problems. The issues have not changed drastically. As I mentioned this morning, by taking customers from purely manual legacy and sometimes paper-based systems to a digitally collaborative workflow, we have made advancements and helped and have very satisfied customers. These frustrating experiences, legacy tools and process and silent tech stacks lead to frustrating experiences that add up to missed revenue opportunities.
These inefficient processes, complying with nuanced regulations that are costly, are ripe for our platform value proposition. We've been chipping away at this for the past 14 years on the journey to north of $500 million in revenues. When I say chipping away and making incremental advancements, that's not to diminish the success we've had over the past 14 years. When we can take that digitally collaborative workflow with a cloud-native approach and then think about how we can inject that with AI, that's where the magic happens. We have the unified platform for onboarding any customer, opening any type of account, originating any type of loan, and monitoring portfolios. It provides for easy and efficient portfolio management with our Continuous Credit Monitoring Solution.
We have connected this with a consistent experience you have heard me refer to as the omnichannel, that the banker and their customer, whether digital or in branch, would have a seamless interaction with nCino. We have done that across commercial, including small business, consumer, and mortgage lines of business. The most exciting time in technology is here and AI is available to disrupt this entire experience that we have already had so much success with. Transformation and change management is in our DNA. I talked this morning about the inflection points of the past, mainframe to client server to cloud, etc. I just want to reinforce that this is more exciting than any of those times. Thirty years into software, I am more energized than I have ever been.
If you're in technology and you're an innovator and you don't recognize the opportunity and get excited about that, then there's clearly something wrong with you. We sit here at an important crossroads where we're aggressively pivoting the entire company to be AI-first, both inward, and that's been part of the fun, is changing the way we work at nCino, as well as outward, introducing efficiencies that our customers never thought possible. Happy customers with existing returns never imagined how far we can take them. With the platform that you're familiar with today, we've already reduced onboarding times, cut time out of account opening processes in half, and in doing so, reduced abandonment rates for customers. We've accelerated loan decision times substantially, and we've reduced mortgage application times.
Calling a spade a spade, we all know that the banking vertical can be a slower adopter of technology than nearly any other industry out there, save for maybe healthcare, throw government in there if you want. That's no disrespect to any of the banks in the audience today. They're already celebrating the wins, yet to shake the memories of legacy experiences and celebrating the progress made, and in some cases, not imagining that growth and that exponentially better experience we can deliver. Our job as an innovation partner at nCino and in this ecosystem is to keep pushing, to keep challenging, to keep reimagining, and lead them into the next era, the AI era. Those conversations I've had at this conference already five or six times over with individual enterprise top-tier banks. Let's share some more current customer value realization.
Let's talk about the customers themselves. Some of the largest financial institutions in the world have seen the value in adopting our solutions, just like Fifth Third Bank has, saving them time and money, both in development and ongoing maintenance. Let me level set. You see in the quote here that Jude from Fifth Third is ecstatic that we delivered value in one-fifth the time and for one-half of the cost. I will call out that that implementation of our solution took over a year, deemed a large success. That is recognized as good in enterprise bankland. I'm here to share two things with you in context around this quote. First, we have an internal initiative that is one of the most exciting projects I've ever participated in at nCino in my career. We call it Project SevZero.
We've quarantined off what we call a war room at the company, and we have 10 or 15 of our best and brightest in there every single day, sun up to sundown, sometimes after sundown. The goal is to deploy all of our solutions in our portfolio in under 200 hours. That's the objective. I just told you that Fifth Third celebrated tremendous success, and their project took over a year. Bold, yes. Ambitious, yes. Achievable, 100%. AI is the proxy. It is not just about delivering AI efficiencies to customers with the outcomes in our software platform. It is looking inward and changing how we actually deploy and implement these solutions as well, specifically by leveraging nCino's data platform and a finely tuned large language model. nCino is able to deliver prescriptive end-to-end solutions that work out of the box for customers of all asset sizes.
For configuration that is truly unique to a customer, and banks will still tell you that they're unique, they are all special, trust me. We leverage AI tooling and agentic workflows to deliver flexible configuration of nCino where needed. Said another way, we're taking every configuration of our commercial solution and training LLMs to produce a single, repeatable, rapidly deployable version of our commercial product. Secondly, we're going to do this with every single solution on the platform. You can imagine with me that the future experiences, Fifth Third upgrades to our AI-infused releases, would read 10 times longer and one-fifth the cost, and so on and so on. There is First Horizon. The stats you see are relative prior to Banking Advisor readiness or agentic AI upfit.
These numbers Bryan Jordan provided in a First Horizon earnings call last year can actually be far more aggressive, and they will be. We owe it to my peers and all our customers to keep pushing. We are proving it, and the point is we continue to raise the bar. Reputation, innovation, and speed, all part of our mission statement from day one. That is already evident to our existing customers and a driving force behind our success. Do not just take it from me and Fifth Third or First Horizon alone. There are a few customers with us today to share their experience. Really excited and proud to have Scott Simpson, who was at our headquarters in Wilmington a few weeks ago, joining us from First Citizens Bank.
This is not just a kind of North Carolina nepotism story here because, in fact, we signed 17 of the top 30 largest banks in the country before we signed First Citizens. We are so excited that they are nCino customers, starting with us on the consumer lending journey. I would love to have Scott come up and talk to you all about their experience. We are going to get you comfortable, Scott. Thanks so much. Appreciate it. I will finally switch about it. All right. Podium aside. Thanks for coming in.
Thanks for having me. Seriously. Great to be here.
Of course. Your role has expanded at the bank, and you have had a great career across several, but specifically here at First Citizens, focusing primarily on commercial services, but now to include consumer banking. If you could just give us some insight because there's an audience here, and I get the question often from the audience, "Aren't you a commercial-only company, Sean? Isn't that your flagship? Why are you dabbling in these other areas?" These are questions that have come to me. Here you are, a $200 billion bank that has actually started your nCino journey with consumer lending.
We started on the consumer.
I think it's more I don't think people believe me when I say that, so maybe they'll believe you. If you could tell us a little bit about what compels you to start with consumer.
Yeah, fair. As you said, we're in a really unique opportunity right now to kind of step back and look a little more functionally. I'm on the technology side of things, and from a tech perspective, I've been able to step back and look at the lending portfolio across. If you step back with our last couple of acquisitions, specifically CIT and then Silicon Valley Bank, really heavy on the commercial side. As you can imagine, that just introduced a lot of dynamics, a little bit of complexity, and a lot of strategy we've got to work through on the commercial side. From a consumer standpoint, similar challenges on how do we standardize, how do we modernize, something we've been talking about for a while.
As we're still working through the bits of the acquisition and planning, this is just a prime opportunity for us to jump in, basically both feet on the consumer side of things and really get into implementation, execution, try to up our game, bring some of that standardization, and kind of the mantra we're working through on the technology side, a little bit of rationalization, simplification, standardization, a lot of stuff the nCino Consumer Lending platform should be bringing for us.
Yeah, and you're on the front end of that, preparing the people, right? Because there's technology and there's always this massive change component that I've talked about earlier, and I know we're here to partner on that. Can you share some specific consumer capabilities about our platform that maybe you weren't able to find elsewhere in the market, knowing that it's a competitive landscape?
Fair. I think right now the teams, they're really excited on the digital. They'll call it the digital-first kind of abilities and capabilities that'll bring. I think more importantly from that, it's the ability for us to meet our customers really where they are. We've got a digital presence. We've got a lot of folks on that digital online experience. We still have the in-person. We still have the branch-based network there. The ability to start online, move into a branch and complete it, or start in a branch, go back and update online, bounce back and forth.
Obviously, the transparency the system will let us bring in, both from our external clients and our internal bankers, to really just know at any given time, this is where your loan application is in the process, this is how we're processing it, this is what you should expect in the next hour, next day, next week going through it, that we have a hard time putting out there just really clearly and transparently right now.
We expect you to hold us accountable for all of that.
Absolutely will.
I'll jump in the car and drive right up the minute you need me. How about just the partnership in terms of talking about how we do rely on one another? Your visit to Wilmington a few weeks back and how we're thinking about, hey, before we even start configuration and integrations, that there's that whole change management component. How do you think about that on the journey with nCino?
The change management component's big with it. The partnership has been phenomenal. Kind of what you were saying earlier, just an amazing time to be part of technology right now and watching just the pace of change accelerate at a breakneck speed. Being in the banking industry, having a partner that's out there truly working with, in the borrower Chris's terms, you're working with tomorrow's technology today and getting ahead of it. More than just staying in tune with the news, keeping up with the buzzwords and being able to repeat it, but hands-on, really practical working with that technology.
More importantly, from the banking perspective, or from our perspective at least, your ability and the team's ability to bring that back into very practical, pragmatic ways that we can then go consume and implement and do it at the right pace for the bank to bring our teammates comfortable with it, but to be able to handle the change management and everything that comes along with it.
Great. We're excited about the partnership. We're excited about getting you to the end line as fast as we possibly can.
We're looking forward to it as fast as we can.
Thank you very much. We appreciate you coming today. Thanks, Scott. I'll help you out. Thanks again, Scott. First Citizens Bank, top 20 financial institution with 16,000 employees, $200 billion in assets starting the journey with nCino on consumer lending. Let me make one additional point here. Most of you know that we entered the enterprise space in commercial banking way back in 2015 with SunTrust Bank, now part of Truist. Since I've been in this conference, I've met with SunTrust, I've met with Truist, M&T, Wells Fargo, Bank of America, and others. Guess what? Each of those banks has somebody who at one time worked at SunTrust and references that. You can make damn sure that we're going to make First Citizens wildly successful on this consumer lending journey. I have no doubt that there will be employees at First Citizens, because it's a small network out there in big banks, who are going to speak to the market and move around. Our consumer lending solution will be deployed at other banks of this size and scale.
We also had a video to play, but I think we're going to roll with that. We're going to roll with that in a little bit. The video's coming. Fulfilling the platform vision, it all started for First Citizens with consumer lending and the fact that they're headquartered here in North Carolina is icing on the cake. We are the worldwide leader in commercial lending, undeniably, with over 400 customers on our solution. In consumer, which is now best of breed, we have over 100 customers on our platform. We have over 400 customers on our Mortgage Solution, being the clear IMB leader in the space with an opportunity to take mortgage to all of our FI clients, as we're already north of $50 billion in assets under management for our largest mortgage customer in the U.S. We plan to have active discussions.
In fact, Paul and Daniel, who's our founder and active in the market, is heading up to a top four bank this week to present our Mortgage Solution. This slide brings home what I've been telling you. Our platform facilitates the key processes within a financial institution: onboarding customers, opening accounts, lending, and portfolio management. We do this across commercial, including small business, consumer, and mortgage lines of business, again, served up with a common digital front-end experience for the banker or their customer, whether digitally or in branch, to experience a seamless user journey, powered by that data set we talked about earlier. We're the only vendor in financial services that brings all stakeholders across the front, middle, and back offices of a financial institution onto a platform that can scale and be deployed on a global basis.
Before nCino, this had not been done with modern, scalable, cloud-based software across any single one line of business. We have grown both organically and through strategic acquisitions that have rounded out these offerings over the years. This week, as we showcase that consistent omnichannel experience all over the community lounge and across these solutions, including our formal entry into the Onboarding space. Now we are pivoting the entire company toward the vertical AI opportunity in financial services, which we will again be a pioneer. To emphasize the unique cross-sell opportunity we have, here is an example where we are only 30% penetrated with our commercial solutions in the existing customer base and less than 15% penetrated with our consumer solutions in that very same customer base.
The remaining opportunity, shown in blue, is just as available, and that's exactly why we continue to go deeper and broader with our offerings. It's why you see the maturity and the hardening of our Onboarding, Continuous Credit Monitoring, Small Business Lending, Business Account Opening, Auto Spreading, Commercial Pricing and Profitability, and many other experiences, the cross-sell and upsell opportunity. Our expanding SAM. Some of you who are with us at IPO know that we were a $10 billion SAM at that time. So we nearly doubled that as a public company, putting capital to work. The $19.5 billion SAM has been updated to include $500 million of Onboarding opportunity in the U.S. market and $300 million of Onboarding opportunity in the EMEA market. This SAM is derived by extrapolating ACV in our existing customer base relevant to FI assets.
This is different than prior seat-based approaches and better reflects how we think about the opportunity going forward, given our new pricing model. The opportunity for commercial lending in continental Europe is largely greenfield and larger, comparably, than the U.S. market. Japan is over a $1 billion SAM, and that's comparable to the U.K. and to Canada. $2.2 billion of SAM is represented in Consumer Lending, Deposit Account Opening, and Small Business Lending in the U.S., still largely unpenetrated. None of this SAM contemplates the generative AI opportunity that you've heard me talk about already so much today. That's all potential. That's all upside. We're being conservative in the nature of not forecasting there. M&A has been an accelerator for nCino. Build by partner. Every software company out there contemplates these. They're always part of the discussion at our executive table.
You have heard me talk about some exciting growth initiatives in motion that we believe will be accretive this year. nCino's approach to market expansion includes organically building product, strategically acquiring technology and/or companies, and partnering with adjacent vendors to continue to fulfill the platform mission. Over the years, we built and enhanced products internally to ensure innovation and seamless integration across key solution lines of commercial, small business, and consumer lending. As you can see with the strategic acquisitions of SimpleNexus, DocFox, FullCircl, Allegro, Visible Equity, and FinSuite, we significantly augmented nCino's platform's capabilities on mortgage lending, onboarding, account opening, indirect auto lending, and advanced analytics and AI and machine learning.
This strategic approach has allowed us to create a unified platform of best-in-class solutions, enabling financial institutions to replace multiple legacy systems, connect their operations, and streamline workflows and processes across various business lines to achieve desired business impact and business improvement. There we go. We have talked about the strategy. We have talked about our growth. We have talked about our SAM. On some of our callbacks after the last quarter's earnings call, we also talked about some of the growth initiatives for nCino: expanding our EMEA focus, realizing the onboarding opportunity, activating the credit union market, cross-selling mortgage, and then embedding data in AI and analytics. I am going to spend the final section here talking about each of these growth initiatives that I believe augment and supplement our strategic vision. The data foundation we stand on is robust and rock solid.
Aggregating data from across market segments, lines of business, and geographies across 2,800 customers puts nCino in the enviable position of actually having process-centric data, which means we have a point of view on how our customers should run their business, which is much different than every company out there with access to the same LLMs and no point of view. From the day we founded this company, we felt convicted that if we could capture and expose the data in a meaningful way, and that includes integrations to core transactional systems and then exposing that through nCino, that the company would have a massive opportunity, and opportunities would present themselves. That data shows up in how our customers interact with nCino, how they interact, how they enter data, how they integrate data to a myriad of systems.
We serve up that data to our customers in the flow of their business process and capture the trending of that data over time. This sets us apart from the pure transactional systems as well as point solutions in the market and serves as the foundation for our AI strategy. Banking Advisor, agents, and APIs are the three pillars of our strategy. I know not everybody was here this morning. I do not want to completely retell the story. On Banking Advisor, we will continuously expand our skill sets with a groundbreaking generative AI tool built specifically for financial institutions. Until there is no distinction between core nCino functionality and Banking Advisor capabilities, imagine an insight of the future where we are not talking about Banking Advisor at all. It is simply embedded in the platform.
We will integrate intelligent, autonomous AI agents throughout the platform, and these are specialized AI assistants, digital bankers that can independently perform tasks, make decisions, and solve problems without constant human guidance. We will capitalize on our acquisition of Sandbox Banking to enhance your ability to connect data and integrate systems and streamline operations. On the nCino platform, AI will not feel like a separate feature. It will feel like nCino working smarter, faster, and intuitively, all the while drawing down on intelligence units and monetizing data. We have increased from 2 - 18 Banking Advisor skills and capabilities from this very day last year, and we continue to create hundreds of use cases that serve as our pipeline for Banking Advisor. Some examples: autofilling an appraisal review checklist, which eliminates the need for a banker to hunt through an appraisal review for key data points.
Folks, these documents in some cases are 70-150 pages long. Automating calculation of underwriting metrics like debt service coverage ratio, which can decision loan viability in seconds. Quickly summarizing an individual's net worth so we can understand how to recommend next best action. Our aim is to continue delivering capabilities that will drive even more use cases. Banking Advisor value can be realized quickly with capabilities turned on overnight. It's early, particularly with the release of many of these capabilities this week, but we're excited by the reception we're seeing, and I think you're already hearing it from customers like Wells Fargo, who's with me on the main stage this morning. Having a top four bank already adopting and on the front end of Banking Advisor is exciting for nCino.
When you combine it with our new Operations Analytics capability, you are empowering institutions to track feature adoption, user engagement, and system performance, all in real time, giving teams a 360-degree view of how nCino is actually being used across the organization. Adoption, I think Scott alluded to it, is something banks obsess about, and we are getting very serious about making sure they can read out where they are on the adoption curve. For example, FIs can ask natural language questions like which regions or market segments have the slowest SMB loan approval times and receive visualized insights. Now let's talk about agents. An agent is simply that digital banker. It is assigned a task. That task is tracked, and that task is measured all the way to completion with a human in the loop. Here at nCino, we already know what these tasks are.
In many cases, they show up in the current workflows that we have already processed or engineered for our customers like Fifth Third, like First Horizon. Now we're going to supercharge those workflows by automating those very tasks. Where we've already replaced manual and legacy tasks with digital experiences, we will replace clicks, drags, and drops with agents to anticipate and react to intelligent rules and instructions. We will string together multiple tasks to automate end-to-end journeys on the path to one, which is, if you can imagine, one human in an end-to-end approval loop of a complex commercial loan. Today, you have many humans in the loop across workflows, and we will have agents tap into the biggest opportunity, which lies in unstructured data. Lengthy documents like commercial real estate appraisal docs and tax documents will be easily summarized and routed for automated decisioning.
All of the data we have at our fingertips will inform a rules engine that will be trained and finely tuned to serve up decision criteria to banks quickly to make decisions on behalf of their customers with a relationship-centric approach and a human touch on how they interact with their customer on next steps. Again, think about that typical loan process. If your AI assistant can initiate the loan request, retrieve and aggregate all the documents associated, trigger the risk review, fill out compliance forms, and draft the credit memo, all before the inbound file even lands on a banker's desk. That documentation is massive in scope and scale. This resonates with our customers.
I think folks are getting an increased appreciation for the strategic asset that is Sandbox Banking and why we acquired that company who's been a trusted partner for us for the past several years earlier this year. We believe that Sandbox Banking is the foundation for an iPaaS integration platform as a service solution that will embed in our platform that provides a comprehensive solution for managing integrations across multiple systems, applications, and data sources. Unlike tactical middleware, Sandbox Banking is built for flexibility, scalability, ease of use, and making it ideal for rapidly evolving environments. Beyond that, they have come to us with pre-built connectors for common systems, reducing integration times, common financial systems that all of our customers use.
They're designed for scalability, enabling seamless addition of new technologies, and they provide centralized management of integrations with monitoring and automation capabilities tailored to support cloud-based and hybrid architectures. Sandbox Banking has a purpose-built for financial institutions platform addressing unique regulatory, operational, and legacy system challenges, all common to our customers. This is a long-term strategy for nCino and by enabling ongoing adaptability and innovation without the significant development and overhead that we would have to initiate with a build process inside the company. This will serve as a hub for all integrations, creating a unified layer between core systems and modern technologies. It will also serve as a unifying layer for all the solutions on the nCino platform to be interconnected with one another. I think you can tell I'm excited about Sandbox Banking. All right. EMEA, I told you all the story.
That same founder I referred to, Paul and Daniel, who's heading up to tell the mortgage story, actually went over to London and started our operation in EMEA in the early days where we had quick success and penetrated some of the largest banks at scale in the U.K. and Ireland with our Commercial Lending solution. As Paul and came back to the U.S., I would tell you that we didn't handle the transition to the next leaders very well. Either we didn't pick the right leaders or we didn't handle the transition or whatever it was, but we slowed down for a couple of years in EMEA. Now we've acknowledged that, and we've been very selective about bringing Joaquin de Valenzuela on board. He's here at the conference.
He has built out his leadership team, his second-line sales, as well as channels and partners, and is putting his marketing engine in place. We're seeing pipeline growth and sales momentum building. We have good penetration on an account basis in the U.K. and Ireland market, which paves a great path for cross-selling and upselling. For Greenfield logos, we see a great opportunity on continental Europe, where we are far less penetrated. We're adding additional functionality for the EMEA market with this focus on our Onboarding solution acquired with the FullCircl technology. The acquisition exercise here, which we'll talk more about, has critical Onboarding KYC and KYB technology underpinned by data orchestration into the overall platform that we would be able to deliver end-to-end client lifecycle management and tell that story across the continent in Europe.
That packages up the ability to onboard, validate, monitor, and review an institution's customer married with nCino's core functionality on product origination. It's a powerful story, and it's one that resonates locally, as evidenced by the momentum that FullCircl has had. We believe that owning this capability will enable us to provide a true end-to-end story and the cross-sell into the existing customer base and the expansion within prospective but defined and familiar target markets in the region. From there, we'll look toward expansion from the U.K. and Ireland onto the continent with FullCircl's technology and expand our integration capabilities, and we have the option in the future to take that overseas to the U.S. Segueing from EMEA to the broader Onboarding opportunity, which was teed up by FullCircl.
You all know that we acquired both DocFox for the U.S. market and FullCircl to solidify our entry into the onboarding space because onboarding commercial customers is hard. All of our commercial customers can benefit from this solution. Every single customer I talk to, there's not a single one that says, "Onboarding is easy for us, Sean. We've got it solved." They're either looking for a solution or waiting for the right time. The conservative estimate of the SAM at $800 million that I shared earlier just considers GOs where acquired products are immediately applicable.
With the DocFox IP fully integrated into the nCino platform, we will enable financial institutions to unify and intelligently manage the entire client lifecycle across information intake, document collection, and customer due diligence on a single platform, regardless of the entity's complexity, and allows us to deliver this functionality more quickly than if we were to build it ourselves. We acquired that IP, and we integrated that fully to the platform, spent the majority of the past year on that exercise, and are showcasing it right now in the community lounge. That fully integrated solution helps simplify one of the most time-consuming processes for commercial bankers, which is complex commercial account opening, because every customer wants to not only onboard their customer, but then seamlessly go into either account opening or loan origination. This pre-built application that streamlines client information and document collection has robust integrations.
When we talk more broadly and globally over to EMEA, robust integrations for ID and verification and business data to decision accounts, all with a human in the loop with AI processes to analyze and validate information. This opportunity is huge. We're activating the entire sales force, our pipeline momentum. We expect to spike at this event and coming out of this event because the market knows that it's taken us a moment to realize the integration of our IP to the platform, and now we're ready. Our sales force is energized and excited to go out and sell this solution. Like I said, every customer struggles with this problem. The mix of regulatory, operational, and customer experience complexities with the integration work we've completed since last year's acquisitions put us in the prime position. Remember, connecting these acquired technologies to the platform is the key.
It's why we didn't sell Onboarding last year, and we plan to sell Onboarding this year. We've talked about AI. We've talked about EMEA and Onboarding. Let's talk about credit unions, and then we'll wrap up with mortgage. We have over 1,000 credit union customers today of the 4,500 plus in the U.S. market with a $1 billion TAM. Through the maturity of our Consumer Lending solution, our Small Business Lending solution, and the proven Commercial Lending solution that is already deployed in the world's largest credit union, complemented with acquired technology to facilitate indirect auto lending, we have unlocked $1 billion of SAM with product readiness. We have relationships with over 1,000 customers in this space through our Portfolio Analytics business. The Portfolio Analytics is a great entry point.
It's relatively low deal size, but we view it as a ripe opportunity to cross-sell our platform into a market segment that experiences many of the same challenges that our customers have been solving for in the banking landscape. Largely, those problems are the same problems, but the culture is much different. When you talk to the credit union, it's a different vernacular. It's a different relationship. It's about the community. It's about the members. In the past, we had the same sales RVPs selling to banks and credit unions. What we've done now is we've quarantined off a specific credit union go-to-market team. They do nothing but face off, speak with, and sell to credit unions every day.
They have one of the most energized leaders that we have at the company, a proven leader at nCino, who's run support engineering for me in the past and actually worked at a credit union with our Portfolio Analytics solution before coming to nCino. That go-to-market is in motion with dedicated reps and sales support, energized and running toward the opportunity, just as we are Onboarding. Targeted business development campaigns early this year have generated a large portion of the opportunities in our growing pipeline. Do not just take it from me. I'll let you hear from a few credit unions from Credit Union One, a forward-looking institution with nationwide membership that has selected nCino for Commercial and Consumer Lending, including our indirect solution with Allegro. If we can play the video.
Why we chose nCino was because they can assist and facilitate the automation piece and across all of our lending platforms, make it easy for our members to use one seamless, wonderful system. The fact that we're able to tie in the commercial, the business, the indirect, and the small business piece of it, that was really the driver for us. As you get bigger and bigger as a credit union and our portfolio, we really need a partner to help us sustain that growth. That is where nCino is going to come in huge for Credit Union 1. We're going to have a centralized point where all the systems talk to each other. We can track everything. It is just going to allow us so much more opportunity to be efficient and to grow.
We talked about the consumer lending solution with Scott on stage. I think there's an assumption there that this is what the credit unions are most interested in. They are interested in consumer lending. I would also tell you in that growing pipeline I referenced, there's equal interest in Small Business Lending from the credit unions in the market that are at this conference today. I would encourage you, if you go to the community lounge, to look at that Small Business Lending and understand for yourself how well you think that applies and fits directly for the credit unions that we plan on taking down. The fifth growth initiative that we think is compelling specifically at this point in time, in addition to our overall long-term strategy, is the cross-sell opportunity with mortgage in the U.S.
Since acquiring SimpleNexus, despite a tough industry backdrop, interest rates, and all the things, we've continued expanding our market leadership with independent mortgage bankers. We continue to gain market share, and our reputation there is pristine. The mortgage backdrop has impacted speed to market in larger financial institutions where we see a massive opportunity in our existing banking and credit union landscape to cross-sell the solution. Presently, we have 45 out of 400 of our US bank customers on our existing Mortgage Solution. We're seeing healthy attach rates in the accounts where we have cross-sold mortgage, which reinforces our conviction in the opportunity. Focused on cross-selling mortgage to bigger banks and credit unions where the need exists to provide consistent, enjoyable experience for borrowers is exactly what we plan on doing.
We've worked hard to make the technology scalable, delivering on the needs of a secure multi-tenant architecture, expanded integration set, and automated underwriting system capabilities. We're ready to go as we charge up to a top four bank to present our solution this week. I'm going to wrap with a reminder on how differentiated the nCino platform is. Nowhere else in the global fintech market can customers experience the breadth and scale of our offerings. The things that we do: Onboarding, account opening, loan origination, and portfolio monitoring across the lines of business where we do them in commercial, consumer, small business, and mortgage, delivered consistently with the omnichannel front-end experience and underpinned by that data set. The energy at the company, to me, feels at an all-time high. Perhaps that coincides with one of the biggest opportunities we've ever seen in technology.
At the same time, we're making hard decisions at nCino to sharpen our focus and to align our energy where we see the growth opportunities, where we plan to execute, and we plan to reaccelerate. We've shared our commitment to ACV, Rule of 40, and free cash flow. As we segue to our financial update, I'd like to recognize my appreciation for a great partner in our CFO, a gentleman who's passionate and cares deeply about our business and operates with discipline, focus, empathy, and integrity all at the same time. He's a great leader and a steady hand for nCino. Please welcome Greg Orenstein back to the stage.
Thanks, Sean. Thank you all for joining us today. Whoops. There we go. I hope you enjoyed this morning's session. With Sean's presentation just now, you have a better understanding of why we are so excited about our growth prospects, our product strategy, our product portfolio, the competitive positioning we have, and the sizable and unique opportunity in front of us to continue to transform the global financial services industry. You may have seen the press release we issued this morning. In case you did not, we announced our first quarter preliminary financial results exceeded the top end of our guidance ranges for total revenues, subscription revenues, and non-GAAP operating income. We look forward to sharing additional details on our Q1 performance and on our outlook for fiscal 2026 next Wednesday, May 28th, on our Q1 earnings call. Just to be clear, any references to annual guidance today do not take into account any reconsideration based on our first quarter results.
Turning to a review of the new ACV KPIs we first disclosed on our Q4 earnings call, I wanted to highlight a few points to keep in mind when you think about ACV in this disclosure. First, ACV is how we measure sales achievement internally and is the best leading indicator of future subscription revenue growth. Our incentive compensation plans for the go-to-market organization are structured to optimize the exit rate of subscription fees under customer agreements, as we have historically experienced and we expect to continue to experience high customer retention rates. For perspective on these targets to achieve the midpoint of our ACV guidance this year, on an organic and constant currency basis, we need to add about $3 million in ACV on top of what we achieved last year.
Now, with an integrated Onboarding solution ready for the market, along with all of the other additional products and innovation we showcased this morning and what you just heard from Sean, with improving ACV retention and about 14% more sales capacity, we feel good about our ability to achieve our fiscal 2026 ACV targets and are heads down and laser-focused on execution. Achieving our ACV guidance should yield accelerating subscription revenue growth in fiscal 2027, as the subscription revenues from these sales will follow the ACV. Next, I wanted to focus for a few minutes on our ACV retention, which is improving with an improving macro. Yes, for our business, we believe the macro has improved quite a bit from the extraordinary events we navigated the past couple of years.
As a reminder, in fiscal 2024, the unprecedented rise in interest rates and the liquidity crisis impacted new sales of our solutions, given that our customers and prospects were focused on surviving the day versus investing in new technologies and projects. This was particularly the case up market for banks in the United States, where we uniquely have exposure versus most of the other companies in this space that only focus down market on community banks and credit unions. If you look at the chart on the right of this slide, you will see that much like the lag in subscription revenues from ACV, when we quantify churn, it's the quantum of lost ACV. The lost subscription revenues are felt in the compares for another year.
As a reminder, churn was heaviest in Q3 and Q4 of fiscal 2024, which pushed the revenue impact of those events into fiscal 2025. While ACV retention normalized some in fiscal 2025, and we expect it to continue trending in the right direction, we modeled a 3% headwind to fiscal 2026 subscription revenues from the still elevated churn that occurred last year. Before we leave this slide, I will note that mortgage-specific churn has continued to trend in the right direction, with Q4 being the lowest churn quarter for mortgage in fiscal 2025. Turning to our cumulative ACV trends, I just referenced the disruptive impact the macro and fiscal 2024 had to our sales efforts, particularly in our large bank, commercial lending, and mortgage businesses. We were encouraged by the sales momentum and activity that built during fiscal 2025.
As noted in the footnotes, consumer on this slide includes our consumer lending, consumer deposit account opening, international mortgage, and portfolio analytics solutions. If you exclude portfolio analytics and international mortgage ACV from the consumer organic growth rate of 11%, our consumer lending and consumer deposit account opening solutions grew approximately 50% in fiscal 2024 and 33% in fiscal 2025. We are pleased with this. When you couple it with the feedback we have received from customers, like what you heard from Scott for Citizens just a short time ago, it makes us optimistic about what lies ahead for this opportunity. I will dive into consumer lending in a little more detail on the next slide. If you have followed the company, you know our product rollouts have historically started down market.
As the product matures, we start going up market, which, of course, generally drives larger deal sizes. As you may recall, we signed our first enterprise bank for consumer lending in fiscal 2024, which contributed to the 50% year-over-year increase in ACV. Last year, we signed two regional banks with over $50 billion in assets for consumer lending, which contributed to the 33% year-over-year growth rate. Turning to mortgage, while the macro continued to be a drag on our U.S. mortgage sales and ACV retention in fiscal 2025, I will point out that our U.S. mortgage ACV grew each of the past three years in one of the most difficult mortgage markets in history. When you think of mortgage and ACV, also keep in mind that overages in mortgage volumes are not included in our ACV number.
Looking more closely at consumer, we were especially pleased to see the investments we've made in consumer lending bearing fruit in fiscal 2025. We had a great year signing up consumer lending logos, 43 to be exact, which we believe is a validation of the market-leading nature of this solution. We also believe we can increase average consumer lending customer ACV by now selling more regional and enterprise banks, as highlighted on the prior slide and as Sean touched upon. Specifically, as you can see by the examples on the right side of the slide, there are opportunities to add seven-figure deals with consumer, which would more meaningfully propel ACV growth for this product. The omnichannel capabilities we've delivered this week further differentiate this offering.
We believe we have the only modern, truly native multi-tenant SaaS consumer loan origination system in the market, and that is now paired with a unique omnichannel experience across business lines for our customers' customers. We believe this not only enhances the stickiness of our platform, but should provide for meaningful subscription revenue growth in the future, including more from our aggressive push into the credit union market, as you heard from Sean. Finally, on the expense side of consumer lending, in light of the maturing nature of this product, the peak in development spend is behind us. We believe less investment will be required going forward to realize the sizable opportunity we see in the market, particularly when combined with our single platform strategy and our other platform offerings.
Turning now to our international business, as we discussed on our Q4 call, we see an opportunity to improve our focus and execution to reaccelerate subscription revenue growth in EMEA, including by expanding our presence on the continent outside of our traditional strongholds of UKI. To that end, as we discussed on last quarter's call, we recently made personnel changes in our EMEA business, particularly in the sales organization, to ensure we prioritize the right opportunities. As you can tell, international has been accretive to our subscription revenue growth rate historically, with a majority of those revenues coming from EMEA. Last year, we acquired FullCircl to expand our solution set for the European market with a product that addresses the most topical theme for our customers there, which is regulatory compliance.
You have also heard us consistently discuss our optimism around the opportunity in Japan, and we look forward to updating you more on our continued progress in that geography in the coming quarters. Now, I would like to spend a few minutes on the transition of our pricing model. As a reminder, under our new model, our solutions have a minimum platform fee based on either assets under management for each line of business the customer has on the nCino platform or on transaction or processing volumes. As assets, transaction, or processing volumes grow above contracted limits, we have the opportunity to increase annual subscription fees. So far, the rollout and acceptance of the new pricing model has gone well, with no surprises or notable issues.
We believe this new monetization model optimizes retention dynamics over the long term, mitigating the risk of users exiting the industry from advancements in technology and from efficiency gains realized from the use of nCino's software. Additionally, Banking Advisor is included as part of the new pricing model, and that solution comes with a consumption limit for intelligence units. When this limit is exceeded, we bill and recognize subscription revenues on the extra usage. We are incenting our sales and customer support teams to monitor intelligence units' usage. As customers exceed their contracted limits, we work with them to increase the limit for an additional committed fee. Regarding intelligence units, as you heard from Sean earlier, prior to this week, we had just a couple of use cases in the market, which generated only a small contribution to subscription revenues.
This week, we added 16 new Banking Advisor capabilities, which we expect will help increase the usage of intelligence units and ultimately subscription revenues from this solution. Turning to the next slide, recall that our legacy seat-based pricing model had fixed pricing during the contract term, which historically averaged about four years. While that model had many positives, particularly while we were a younger company, over time, we saw that it was more difficult to get a price increase upon renewal that appropriately reflected the additional functionality and innovation we developed during the contract term. As reflexively, the customer's starting point of the new price negotiation was a four-year-old price.
Now, instead of negotiating a renewal price every four or so years, we will have the opportunity to get annual intra-contract price increases, as under the new pricing model, we will calculate the assets on our platform every year, and based on the growth in those assets from one tier to another, have the ability to increase the customer's fees. Our expectation is that this growth opportunity can be consistent with the historical FI asset growth rate of around 2-3% per year on a per-customer basis. Another positive of this new model is that since monetization is not tied to seats, FIs are incented to bring more and more users on the platform versus having to do a cost-benefit analysis of provisioning each additional seat.
We believe this will encourage financial institutions to further leverage nCino and use the unique platform we have built across commercial, small business, consumer, and mortgage to consolidate vendors and to provide their customers a more seamless and enjoyable user experience across all of their interactions with their financial institution. Additionally, to make the buying process even easier, we are bundling certain products formerly sold as add-ons, which should help drive subscription margins higher over time. A final point on this slide to highlight is shown in the chart on the right. It is common, particularly on deals with net new customers, for pricing in the early years of a contract to be lower than at the end of a contract. As I noted earlier, our incentive structure for the go-to-market organization is meant to optimize the exit rate of subscription fees under customer agreements.
Under platform pricing, we charge customers an annual fee rather than a seat price multiplied by a quantity. The accounting rules have us average these annual fees for the purpose of subscription revenue recognition. Accordingly, cash conversion in these ramped deals is lower than subscription revenues initially, but more than subscription revenues in later years of a contract. This is different from under our legacy seat model, where subscription revenues generally aligned with billings. On this slide, you can see some of the long-term target model metrics we provided at our first investor day in September of 2023 as compared to our fiscal 2025 results. We made some progress in fiscal 2025 towards these objectives, increasing subscription gross margins by about 100 basis points, reducing sales and marketing by about 250 basis points, and reducing G&A by about 150 basis points.
We very much recognize gross margins, particularly the impact of professional services on total gross margins, as well as research and development, are where we have the most work to do in achieving the 35% target. This is where we'll be focusing efficiency initiatives in fiscal 2026 and beyond. I will say, with the various initiatives we already have in motion or planned, including the significant opportunities we see leveraging AI, I have even more confidence in achieving the 35% non-GAAP operating margin target today than I did at our first investor day. As noted, we see two primary levers for improving operating margins in support of achieving the Rule of 40 milestone somewhere around the fourth quarter of next fiscal year. The first lever is by improving gross margins.
On subscription gross margins, our omnichannel, US mortgage, our new onboarding, Banking Advisor, AI, and analytics offerings are hosted on AWS, which offers accretive gross margins. We expect product mix will naturally continue shifting our subscription revenue, our subscription gross margin higher to achieve the 78%-80% prescribed in the long-term model. With professional services, we see the opportunity to realize quicker deployment timelines through investments in productizing integrations, including by leveraging our Sandbox Banking acquisition, by taking a more prescriptive approach to our projects, and by leveraging AI. On the AI point, you heard Sean discuss just one initiative, Project SevZero, where we have already seen that project hours can be cut in half with AI doing much of the work. Over time, this should either improve profitability and/or actually reduce the mix of professional services revenue impacting our total gross margin.
For those of you that have followed the company, you know that we have a vibrant system integrator ecosystem, and you have heard me say that we will continue to look for, we will continue to look to push professional services to our system integrator partners. In furtherance of that strategy, and while it will take a little while to see the results, with what we are already seeing is possible with AI, we want to note that professional services gross profit growth will be the focal point of our internal operating plans versus driving additional professional services revenues growth. The second lever is by reducing research and development spend as a percentage of revenue. With R&D, we are focused on continuing to optimize our organization, including by making sure our development spend is tightly aligned to the product verticals with the highest growth prospects.
With the opportunity to increase development velocity with AI, we expect we can reduce absolute dollars of R&D spend without sacrificing innovation. As an example of that velocity, we are already seeing some of our top developers become about 10 times more productive with the aid of AI. We also see an opportunity to further leverage the lower labor costs of our South Africa operations that we acquired with the DocFox transaction. We do plan to provide you with an update on the second margin lever on our earnings call next week, so stay tuned for additional details and commentary. Finally, you can see the meaningful progress we have made over the past two years improving our operating margins. Hopefully, this track record provides you with some confidence in our ability to continue to improve this metric on our path to Rule of 40 and beyond.
With that, Sean and Harrison are going to come up here to join me, and we will open up for questions. If you have a question, please raise your hand. A mic will be brought to you. If you could just wait to ask your question until you get the mic so that the folks listening online can hear it, that would be great.
Michael, I'll see your hand first. Yeah, wait for the mic, please.
Michael In fante, Morgan Stanley. Thanks for doing this today, guys. I just wanted to ask on, given Banking Advisor and all of the focus at the session today, how should we think about where you are from a Banking Advisor cross-sell perspective versus where you are in the pricing transition? I know you mentioned 15% of revenue today on the new pricing model. You expect to drive that number over time as renewals come up over the next, call it, three to four years. With the new capabilities rolled out on Banking Advisor today, it sounds like it really should not be a headwind to attach, just given it is really a consumption model and you expect to meet and exceed those thresholds. Am I thinking about that correctly? Any nuance you would add to that?
No, I think you're thinking about that right. Banking Advisor, I mean, you've heard from Wells Fargo this morning. We've got customers interested in deploying the technology, and it's deployable quickly. That comes into the model. I guess the lag is between deployment and then us realizing the consumption of those intelligence units. We believe there's kind of a pent-up demand that's building. We should have more visibility to that, maybe toward the back half of Q3 and Q4. As we head into next year, it's exactly why we're a little conservative and not putting that directly in the models on the SAM and on the upside. We do believe, and I think you kind of appreciate the story on how Banking Advisor just embedded across the platform starts to become part of the experience itself.
People are already coming up to speed and really receiving the asset-based pricing model well. There is not a whole lot of friction in those conversations other than just change, like just getting their head around it. As that consumption of intelligence units starts to show up, we will be able to more confidently forecast that. I think it will be a bigger part of how we lean in on the model.
Yeah, and just to expand on that, Michael, going from 2 - 18 capabilities is a big step, right? Ultimately now our customers are going to have a lot more opportunities to use and experience Banking Advisor. We expect that will drive momentum. Again, as we see that and we see the data, it'll provide opportunities to update you guys as well as our own models and expectations around that. The other thing that we've been doing over the past period of time is seeding our customers' environments with Banking Advisor, right? Even if they haven't been using it yet or just are playing around with it a little bit, we've got the technology in there, and ultimately we can help expand that with new capabilities fairly quickly.
I think that positions us quite well for that to truly start impacting us as that usage goes up, which will ultimately drive higher subscription revenue growth.
Second.
Thanks, Saket Kalia, Barclays. Thanks very much for hosting this. Maybe Sean and Greg, for you folks. I think we understand the mechanics between ACV and the lagging nature of subscription revenue, which I think is really important. I'd love to dig into that 8%-9% ACV growth that we're talking about here for fiscal 2026. Maybe you could just help us think about how much of that maybe comes from new logos. You've got a lot of new things that you're looking at in Europe, for example, right? That seems like a primary for new logos. Also a better ACV NRR. How do you think about the interplay of those two? Talk to us about any comments you want to make on sort of the sustainability of that as you think further beyond 2026.
Yeah. For sure, new logos in the international, EMEA continental opportunity. We talked about Japan. I think new logos, it's an interesting exercise to look at the credit union market because on the one hand, we have 1,000 customers in the credit union market. On the other hand, most of them pay us a relative fraction of what you're used to seeing on nCino ACV, right? I would argue if we could go back and sell commercial, consumer, small business to credit unions, to me, that's a new logo, right, for a customer that only has Portfolio Analytics today. The mortgage opportunity in credit unions as well. I would factor that in when you think about new logos. That's how I think about it. The cross-sell upsell opportunity, the mix between those two. Revenue is revenue.
We're going to go after it everywhere we can find. You've heard about our growth levers. We don't differentiate between new logos and existing logos. You do see consolidation in the space, right? The trend around logos, if we paid attention to that alone versus the overall opportunity to mine revenue tied to delivering outcomes and efficiency, is exactly where we're headed. When we think about the shift that's already happened from the per user per seat to the consumption model and now what we're seeing with the buildup of Banking Advisor, you just look at, for instance, mortgage document validation as an example.
I don't think we even know yet the potential of that because if you can actually reduce from days to minutes for folks, then you're probably going to figure out how to monetize that more aggressively after you have the proof points, right? I think in that existing customer base, that Banking Advisor margin over time is going to see bigger opportunity. I might have missed something there.
No, no. I think, look, we do focus on getting new logos, and expansion is obviously important to us. Again, we talk about just got moved maybe from one bank to another. That is a lot of our leads come from relationships that we have had, great experiences. They go to a new bank and say, "You need nCino." Love new logos. Internally, we really do not differentiate between a new logo and a cross-sell. We have so much product to sell. You saw some of the white space statistics in Sean's presentation. That is our platform story, right? If we do not have new logos in a particular quarter or two, but our ACV is going, that is fine, right? Again, obviously over time you do want to add them. Again, for us, it is more just driving ACV wherever we can find the opportunity. Thank you.
I think we missed Ryan.
Thanks, guys. Ryan Tomasello with KBW. Appreciate the reaffirmation of some of the long-term targets. I guess we think about that 35% margin target that you're reaffirming and the line of sight that you think you have to a Rule of 40 by the end of next year. One of the key variables I think missing from the commentary was the revenue growth mix of that. Last investor day, you talked about 15% being a number you felt confident in as a structural growth profile. As we kind of fast forward to today, how are we thinking about this structural growth profile relative to the 15% you talked about two years ago?
Yeah. So look, I think the framework we put in place, that Rule of 50 framework, I would say, is from our perspective intact. Again, with the last time we spoke in early April, talking about a Rule of 50 as we gave new guidance just did not seem like it made sense. Let's focus on getting to Rule of 40. Once we get to Rule of 40, which we gave you a target on, we can focus on where we go from there. From a growth perspective, look, I think what we want to do, and obviously we talked to you guys about changing our guidance philosophy, right, as we came in with Sean on board and we started the new year.
I think what we wanted you guys to see here is why we are so optimistic about the growth opportunity, all of the products that we've invested in, how this platform has come together. Over time, I think we will update that metric. Right now, I think our focus is on making sure, again, you see the optimism and opportunity that we have and ultimately make sure you have confidence that certainly from the expense perspective, we are very focused on continuing to become more efficient and continuing to get that operating margin up.
Let's go to Chuck next.
Thank you. And I appreciate you guys doing this today. Chuck Nabhan from Stephens. My question is on account opening. I think we're all aware of the opportunity in the space. You've talked a lot about how intricate the process is and how much room there is for optimization. My question is, what differentiates a strong solution versus a less strong solution in the market? I'm also interested in what you've done since the acquisitions of FullCircl and DocFox to improve the competitive positioning of those solutions.
Yeah. If you reference Chris Gufford's presentation this morning in the main stage and the emphasis on time, that is probably the biggest differentiator in the account opening experience. You're going to assume it's going to have to be compliant and have all the requisite information and ID and verification and all the things. Speed, how fast can I open the account matters. That's exactly why we've added the onboarding capabilities. That's what was missing for us, right? We kind of went headlong into the actual exercise of opening the account without having the front-end verification and all the onboarding complexity fully contemplated. That's why we acquired those technologies.
When you seamlessly integrate those two, right, and then you have that customer onboarded not only for account opening, but to the platform, to do anything on the platform that we do, right, which differentiates us from the other competitive solutions out there that are point solutions that only do one thing. I think that's really kind of the entire justification for the onboarding solution. We saw that as a gap when we were out there in the account opening space. We got a lot of feedback from customers there, and we acted on it.
Alex Markgraff.
Thanks. Alex Markgraff, KeyBank Capital Markets. Sean, could you maybe expand on the deployment initiatives and just the sort of timeline around that, when you'd expect to get to that ambitious goal? Greg, if you could just sort of pile on that. With respect to some of the longer-term gross margin targets, what's reflected by those deployment ambitions within that range?
Yeah. Near and dear to my heart, having grown up in professional services realm early in my career and then running customer success for quite a while here at nCino, the teams that are busy right now literally re-engineering the way we deploy our software are actively using technology that's available through AI that simply was not available to us even months ago, no less years ago. What we have done is we have taken some of our best and brightest solution architects, a combination of long-tenured nCino folks who know deeply our data model and our process workflows and where all the bones are buried on the platform, so to speak. We have injected them with some of our new AI-first technologists coming in, and we have matched them up together.
We said, "Let's reimagine this whole thing by feeding the configuration into LLMs and coming out with this prescriptive approach." We are starting with commercial. That makes the most sense. That is where we have the majority of our ACV. That is where we can make the biggest impact on our bottom line and also the biggest impact to the customer base. The lessons we learned from commercial, I believe, we will be able to apply quickly across consumer, mortgage, and small business. We are actually going into kind of what most people would refer to as POC mode with this in Q3. We will be testing out, standing up customers in 200 hours as early as the third quarter with our commercial solution for a community bank.
Now, what that means is we'll challenge them and say, "We're configured and ready to go." They might say, "Well, we just kind of thought we're going to add this other integration," right? Okay, let's apply Sandbox Banking. That's why we have them. We're going to accelerate there as well. I think by and large in the community and regional space, we'll get there pretty fast. I will caveat that in what I call enterprise bank land, all bets are off unless the customer truly can reimagine much of their culture and the governance, right, around these processes.
Scott might be able to actually comment on this a little better than I because he would tell you, "Sean, if you could give me a pre-configured solution, that sounds amazing." It would probably take me at least a couple of months just to get it through my steering committees, even though it works from day one, right? In enterprise bank land, we have to caveat that. I want to set expectations appropriately. I think we'll be seeing commercial momentum the back half of this year and then momentum across the other solutions the front half of next year. That is all going to be tightly monitored in terms of how we think of the Rule of and our mix of revenue.
Yeah. As it relates to the long-term targets that we put out in September of 2023, none of this was contemplated, right? My comment about being even more optimistic than I was then, and we were obviously optimistic then to put it up, is in part driven by what we're seeing with this initiative and what that can mean for the company and ultimately us meeting and exceeding those metrics.
This is why I say the energy at the company is at an all-time high. This literally bubbled up on an earlier conversation where I pulled one of our solution architects aside, Jay Leiner, and I said, "Jay, why aren't we doing this?" He kind of looked back and said, "Just because we're busy," right? "We're busy deploying things the way we've been deploying them." I said, "Forget it." Took five folks, worked with my head of PSO, said, "Take them out of the field. We're going to figure out how to deliver those projects with the same staff. These five folks are going to live in this room, and we're going to feed them, and we're going to send water in there, and they're going to come out when we're done.
In a lot of Celsius.
There is more energy coming out of that room than anywhere at the company right now. People actually go out of their way to stop by and see what's going on. That becomes viral, right? That works its way into how we build software and how we do other things. That is why I say just the opportunity to be in tech right now is one that we think is just fantastic. We are going to have people running toward these opportunities everywhere at the company.
Robert.
Robert Dee from Truist. Thanks for the time today. Sean, on the third intelligence pillar with Sandbox Banking and APIs powering the AI capabilities, I'm curious how much of the iPaaS market with FIs is white space versus competing with or replacing other vendors, particularly upmarket, and how critical is owning the iPaaS layer in winning with AI products?
Yeah. That's a really interesting exercise to go through. I would tell you candidly that we haven't gone through the exercise of sizing the iPaaS TAM associated with nCino. However, we do believe we're going to derive incremental revenue from selling Sandbox Banking adjacent to the platform this year, and it's going to come pretty quickly. Again, traditionally, as our customers have had the option to partner with a third party to do what most people traditionally would call ETL, as Suji and I were talking about earlier, there are proven players in that market that do that very well. On the other hand, that's still friction in the sales process. Now I have to negotiate with nCino, and I have to negotiate with MuleSoft or Salesforce or whoever it is. I have to get those two folks talking, and then they, right?
What I would submit to you is that not only do we have a revenue opportunity that we have not sized yet, but we think like if I were to roughly say, "Let's just take a very conservative estimate that 30% of the customers moving forward will actually take Sandbox out of the gate that did not before." That could be possible. I do not have any science or data behind it, but it is a very logical and reasonable assumption. I think we are going to speed up sales cycles. I do not have to have RVPs jockeying on integration conversations, brokering in third parties. You remove that friction, and you improve velocity in deals. You also recognize that you have an integration partner now that has a point of view on these systems that we are connecting to.
Every other ETL third party that we're talking about is a horizontal, right? Sandbox, vertical integration, right? They understand the complexity, the framework, the architecture behind these core transactional systems, the credit bureaus, all the financial data that we're connecting to. That is why not only nCino, but even before we acquired nCino, there were some big horizontal medium players out there that were interested in talking Sandbox to serve up financial data through other platforms. Those could be compelling as well, but we're staying focused on the platform for the moment. Did that answer your question? Good.
Let's go to Aaron in the back.
Thanks, guys. Aaron Kimson from Citizens. Appreciating the comment that you're past peak consumer lending product development costs. How should we think about the proportion of R&D that's allocated toward the consumer side of the business, which is the biggest slice of the SAM versus the commercial side, which is the biggest piece of revenue today versus the AI use cases that kind of span both of those? How do you think that'll evolve going forward?
Yeah. Look, I think as we talked about, we are very focused on even more tightly aligning our spend where we see growth, okay? I think as you talk about consumer, it is a growth opportunity for us. Again, we went through a lengthy development cycle, and I think we feel good about the product that we have, right, out in the market. I think that allows us, again, particularly now when we talk about doing some unique things with AI, it allows us to reduce that but still be innovative, right, and still drive that.
We have not broken down in terms of % of our overall R&D spend, what goes to consumer, what goes to Banking Advisor, for example, or commercial, but know that we do consistently, constantly look and figure out where we should be allocating those dollars to the point where, again, we do adjust teams and move folks around. I think as we see more and more people embracing AI and driving future development through AI, I think that provides an opportunity from an efficiency and a cost standpoint that, to Sean's point, was not around a year or two ago, right? Not a great answer to your question because, again, we do not break down that detail. Like I said, you should know that is something that we pay very close attention to.
Right-sizing our investments with the return is a big part of our Rule of strategy, correct. I think it helps to get over certain goals, certain milestones. Clearly, for us, Insight was a big milestone. We promised to our customers that we were going to deliver what we delivered and what you can see down in the community lounge and what was shown on stage this morning. That was very important to us, right? Getting over that milestone does allow you to catch your breath and look at, again, okay, now as we focus on the next milestone, where should our dollars go and where should we be spending them?
Alex Sklar.
Thank you. I had a few questions on platform pricing. First for you, Greg, just on the commercial customers who have adopted today, can you just comment on what you've seen from uplift, from including unlimited seats and then the Banking Advisor in the tier? Any expectations on what that 15% could look like at year-end in terms of as we think through the renewal base? Then Sean, one for you. What have you seen in terms of the ability for the new platform model to just reduce friction for broader commercial adoption of other lines of business? A customer using you for one loan type, but now adopting the platform pricing now takes you wall to wall on the commercial side. Thanks.
Yeah. From a timeline perspective, again, when you think about, I guess, the seasonality or so of our bookings, I think you all know it is very Q4 weighted, right? That is when, again, as we get through the year, we will be able to look back after we get through Q4 and truly assess how things have gone. I am not going to predict that as we sit here today. You can assume that our average contract length is four years, and the ACV should be relatively spread. We do have situations that come up where, again, someone may not be up for renewal, but they are going to buy a new solution, and we will use that as an opportunity, right, to pivot them to new pricing, right?
As those opportunities come up, we do hope that will help accelerate that four-year timeline that in theory it would take to work through that. Again, in terms of the interactions that we've had with our customers, they're very familiar with this model, right? Certainly, some of the cores use this model and otherwise. For us and for them, I think the old seat base with the late activation model was what was somewhat unique. That required us to spend time with them explaining it to them. It also required them to sit back on a four-year contract and say, "Okay, what do I want to commit to now?" Right? What happens if I don't need as many seats year three? Do I get to reduce that?
There's a whole bunch of back and forth around that that ultimately we saw impacting the sales timelines and process. When things were kind of booming several years ago before COVID and obviously the liquidity crisis, people were not as concerned about that, right? Obviously, we live in a world now where people are very focused on expenses. That takes that tension out of the selling cycle, which we found to be a positive. Again, so far, it's going well. We always have conversations around price and renewal with our customers. The fact that it's a new model, I'd say, is less of an issue versus just what's the new price. Again, I think what's important for us, as we said, we've been targeting upwards of 10%, right? Just to give you a number, does not mean we always get it.
Maybe we get more sometimes. Sometimes it also depends on how long ago a customer's pricing was, right? We have some old pricing that maybe it's truly time to give them a step up. As we're thinking about that jump, I think that's a good target for us, a good goal for us. We'll get more information about how well we do as the year progresses.
With respect to your question around expanding across products within commercial, that is your question, right? Yeah. Listen, the best indicator is how successful you are with that first product. Our strategy is to go in and partner with our customer and identify where that low-hanging fruit is, where we can get the quick win, where we can get measurable gains in efficiency. When we get that, we almost always expand all the way across, right? Where we might hit a bump in the road and we are a little slower for adoption on that first product or a few, then it is harder because then you are kind of selling again, right? By and large, we get it right the first time most of the time. I would also tell you that market segmentation matters here.
The smaller the bank, the smaller the size of institution, credit, and union, then the more the ownership of those products is under a single or small number of individuals. The larger the bank, as you get up into the enterprise at scale in the top four banks, you have products that are completely siloed even within the commercial bank. You are actually, again, selling twice or three times, right? Now, you can look at that one of two ways, right? Because if you look at just the commercial opportunity in banks and you would count that by logos, I had this conversation last night with somebody at the rooftop. Like when you just say logos, you say, "Oh my gosh, you guys have over 50% of the market," right?
If you say, "No, like how much of your solution is actually deployed and specifically down to the product level within commercial," then you kind of get to a place where you're like, "There's an awful lot of room to grow." Answer your question?
Yep. All right.
Adam.
Great. Thanks so much for doing this. Adam Hotchkiss with Goldman Sachs. You mentioned 16 new Banking Advisor functions. Could you just remind us what the process is by which you internally think about the highest priority areas to innovate from an AI perspective? Then Sean, you talked about us not needing to talk about Banking Advisor in the future because that is just going to be the nCino core platform. What do you need to do from an innovation and execution perspective to get there?
Yeah. On the first question, so if I interpret that question, it's like how do you prioritize pipeline for Banking Advisor, right? And we quite simply look at where's the most friction in the existing process. We look to the data to inform that. Again, looking at that foundation of data that we have on aggregate across 2,800 customers using our products, we can say, "Where are the biggest bottlenecks?" That's exactly where we should find opportunities for Banking Advisor. That's matured in our point of view since this time last year. I think that's matured with the tools, technology, and where the market is, right? This time last year, lots of folks were talking about chat experiences, and it was like, "Hey, the low-hanging fruit seems like if I can interact with knowledge." Great, that's kind of easy, right?
That was actually easy to stand up. Removing friction from the actual end-to-end loan cycle times is where customers are willing to pay measurably, right? We look at that and we say, "Where's the biggest bottleneck?" We say, "Go find a solution there." Almost always, it's associated with the volume of documentation, right? That's where we look. The unstructured data opportunity in AI is, if you look beyond financial services, the biggest opportunity I think people are seeing broadly, and we see it just the same in banking. What was the second question?
Just around the unification between you said we wouldn't be talking about Banking Advisor.
Oh, right, right. Yeah. So listen, I think what matters most to me in the long run as a shareholder is the drawdown on Intelligence Units for Banking Advisor. That's where we all want to get to. We're going to be up here talking about the monetization of these skills all over the platform, right?
I think we get to a point where as we sell the platform and we talk about solutions just come with Banking Advisor, but we need to build up that data and the trending of that data and the understanding there in terms of how to back that into a pricing model that we can then get creative with our customers and say, "Rather than wait and see how much you use it and pay as you go, we might be able to package it up creatively in anticipation of that because we can forecast it," right? I think easily, maybe not next year's insight, but the insight after, we'll be sitting here saying, "The platform is the platform. Intelligence is everywhere. The experience is nCino.
Awesome. Thank you. It's Nick Altmann from Scotiabank. There's historically been this cohort of customers that you guys have talked about that they would kind of go down the process of evaluating nCino. They'd go try to build it on their own, and then they'd come back. With generative AI, there's kind of this notion of like, is a lot of it going to be kind of prepackaged apps or is there going to be a lot of DIY? You can argue that, or you can say the platform's a little bit more cohesive now, 16 solutions, but then Banking Advisor. You just talked about the data set that you guys have that kind of backs that across all of your customers. For those customers who have tried to go build this on their own, what are those conversations like now? Are they changing?
Is there an argument to be made that it's maybe less attractive for those customers to go try to replicate this with kind of where the platform is today and where it's going? Thanks.
Yeah. I was up at a top-tier bank a couple of weeks back participating in one of their innovation forums, and we spoke to their senior technology and business leaders. The conversation was very much around mutually how we see Agentic build, right, in the space. They shared some of the initiatives they had internally around Agentic build, but validated that they would look to nCino because they're limited by only the data that they have and then the access to the same LLMs everybody else has. While we have that same data, right, because they're a customer of ours already, right, and we have consent for their data, and we have access to the same LLMs, and then we have access to the aggregate data set across 2,800 customers.
When you talk about the skeptics out there on AI and the difference between 99.6% and 99.9% accuracy and how much that matters, the more data and the more purview you have to that is a big deal, right? I also think that they appreciate the fact that nCino has a point of view on process-centric data. They might be building agents relative to their own process while they want a partner who's going to build agents that has a point of view broadly on what's working. The question we get all the time from our customers is, "What are my peers doing? And how am I doing relative to my peers?" That moment right now is a massive moment for nCino with the injection of AI into the usage data journey. What I'm hearing in these conversations is everybody's building agents.
Banks are doing it themselves as well. When it comes to building agents around the processes that we re-engineer, they'd rather have nCino do it and serve that up.
Cris.
Thanks for taking the questions, for all the information. Cris Kennedy from William Blair. Can you just talk about the cross-selling initiatives that you have? I mean, it's always been a huge opportunity for you. What are you focused on to really drive that?
Yeah. Power of the platform, we already talked about all the solutions that we do cross-sell. I think the ability for any business to focus in order to achieve success matters, right? The same goes for a sales rep, right? If we go out to our sales organization and we sell and we say, "Sell down market and up market everything we have," right? That's not really a great strategy, right? It's hard for that rep to focus. I think as we've grown and scaled, one of the benefits of having that critical mass and having the data to inform where we spend our time is to get the sales organization more focused on opportunities. An example would be how we now have activated a very specific credit union go-to-market team and focus nothing but energy there, right? They're not distracted by banks.
They're not distracted by IMBs. They're not distracted by anything else. We talked about EMEA, right? Hey, what do we want you to sell in EMEA? We want you to sell commercial. We want you to sell onboarding. And international mortgage is compelling. Right now, do not worry about the rest, right? When we talk about mortgage, right? Traditionally, we have been very successful in the IMB space. Our sales reps were hanging back with respect to cross-selling that to banks because we did not quite have the scale around the architecture for multi-secure, multi-tenant framework, etc. Now that we are there, we put that same mortgage playbook in the hands of the reps that are selling to banks, and they go aggressively there. We have a very intense focus on enablement, on sales enablement at the company.
We have one of our most proven former field sales engineers that runs that enablement organization. They have the plays on the cross-sell, up-sell, whether you start with consumer and expand to commercial. That is a much different go-to-market motion than the inverse, right? All these are part of the sales training activities that we develop each year at kickoff. By and large, I think you guys have interacted with some of our sales folks. They are mostly from industry. Most of our sales reps have worked in banks before, so they understand these business problems. I guess the very simplistic part of the zoom-out answer is we go where the most ACV is, right?
We try to understand the landscape, and we hold our reps accountable for having relationships with the bank where they would understand what business problem are you trying to solve today, and of those business problems, which ones actually have funding and an openness and a culture to actually drive out an initiative.
I think, again, our platform story, I think, resonates quite a bit, right, in the consolidation with one vendor as I referenced in my remarks. I think the other thing is even on a points basis, even though we do not necessarily go by point solutions because we are a platform, it was very important for us. Again, I think with the products that you see downstairs to make sure that each one of our solutions individually is best of breed, right? Wherever, to Sean's point, there is an opportunity to land, we can go and be competitive with that solution by itself. Again, we have this broader story around the platform, around the data that I think no one else can match.
You have to be the best.
You have to be the best.
Any more questions? All right. Some closing words?
Thank you for your time. Like I said in the beginning, we really appreciate your input. We appreciate your feedback. We respect your opinions. Please keep the bidirectional communication coming. Thanks for your time. I'm sure we'll probably have some more sidebars after this. We welcome that as well. Hope you enjoy the rest of the conference. Run over to the community lounge. I would like to give a special shout-out to Harrison. Harrison is a phenomenal asset to us at the company. He's a great partner. I think he maintains active dialogues and relationships with you all. If anything I'm saying is wrong, tell me in private, and then we'll go ahead and make sure that it's wrong. But we really appreciate him.
The setup of this event, the behind-the-scenes work he does to make sure that we show up and speak to you in a way that's meaningful is appreciated. Thank you, Harrison. Thank you all for your time. Enjoy the rest of the conference.