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The analysts said in a note that the company’s FY2025 estimates are at risk as they look too high when accounting for the recent bookings performance.
NCNO shares are currently down 1.7%, trading around the $32.50 mark. They opened the session as low as $30.69 per share.
The analysts also noted the company is facing bookings performance and potential revenue headwinds from recent bank closures.
“Despite recent bookings challenges, NCNO continues to trade at a premium to peers on a growth-adjusted basis, even on numbers that we believe aren’t appropriately accounting for the RPO to revenue delta that we unpack in this note,” they wrote.
The analysts explained that while their firm would understand and underwrite a premium valuation in a more normalized bookings environment, they believe the next one to two years will be challenging for NCNO from a growth perspective.
“Our analysis suggests that FY25 revenue growth is capped at +14.5% y/y, even when making the aggressive assumption that sequential RPO growth throughout the balance of FY24 and FY25 is in line with banner FY22 levels, and NCNO is able to convert all or a portion of the potential ~3% headwind from recent bank closures,” they added.
“While we are optimistic that the worst of the bookings challenges are behind NCNO, we cannot confidently say the same for revenue and thereby anticipate the current delta between RPO growth and FY25 revenue growth will compress as top-line estimates are reduced.”
