nCino Inc

F:6NCA

Earnings Call Transcript 2021-Q3

[Operator]

Ladies and gentlemen, thank you for standing by and welcome to the nCino, Inc., Third Quarter Fiscal 2021, Earnings Conference Call. At this time all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference maybe recorded. [Operator Instructions]

I'd now like to hand the conference over to your speaker today, Greg Orenstein, Chief Corporate Development & Legal Officer. Please go ahead, sir.

[Greg Orenstein, Chief Corporate Development & Legal Officer]

Good afternoon, and welcome to nCino’s fiscal 2021 third quarter earnings call for the quarter ended October 31, 2020. With me on today’s call are Pierre Naude, nCino’s President and Chief Executive Officer; and David Rudow, our Chief Financial Officer.

During the course of this conference call, we may make forward-looking statements regarding trends, strategies and the anticipated performance of our business. These forward-looking statements are based on managements’ current views and expectations and are subject to various risks and uncertainties, including those related to the impacts of COVID-19 on our business, the financial services industry and global economic conditions. Our actual results may differ materially.

Please refer to the risk factors included in our filings with the Securities and Exchange Commission, which are available on the company’s website at ncino.com under the Investor Relations section and on the SEC’s website at sec.gov.

Forward-looking statements made during the call are being made as of today, December 9, 2020, based on the facts available to us today, and nCino disclaims any obligation to update or revise any forward-looking statements. The guidance we will provide today is in part based on our assumptions as to the macroeconomic environment in which we will be operating in the future, including the timing and pace of recovery from any negative effects caused by COVID-19. Such matters that are beyond our control and our assumptions may not be correct.

On today’s call, we will also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results. A reconciliations to comparable GAAP metrics can be found in today’s earnings release, which is available on our website and is an exhibit to the form 8-K furnished with the SEC just before this call.

With that, thank you for joining us, and I will turn it over to Pierre.

[Pierre Naude, CEO]

Thanks, Greg. Hello, and thank you for joining us today to review our third quarter fiscal 2021 results. First and foremost, I hope everyone is staying safe and healthy. Even as the pandemic persist the digital transformation of the global financial services industry is only accelerating. Our customer conversations this quarter, the increasing interest we have seen from potential customers across the globe, and the pace at which many projects are moving forward or reinforce our excitement about the digital future of banking.

The new normal of remote work has made a digital strategy more than just a luxury for a financial institution. It's an imperative to manage day to day operations. nCino's cloud banking platform help reduce costs, increase revenues, improve employee efficiency and productivity while enhancing transparency and compliance. All critically important in a digital world. Our third quarter results reflect that we are helping customers respond to this digital reality.

We are very pleased to have posted strong results for the quarter, again exceeding expectations and we are increasing our full year guidance. Subscription revenues increased 56% year-over-year, while total revenues grew 43%. Professional services revenues were also strong, mainly due to the accelerated deployment of a few large projects. The third quarter was also highlighted by the rollout of numerous product innovations across the nCino bank operating system as part of our full release.

We added new logos from financial institutions around the globe, ranging from an international challenger bank to an over $50 billion U.S. Bank, while taking customers lives in multiple countries.

Let's start by discussing our product updates in the fall release. As a reminder, nCino operates one code base across the platform, and we typically roll out major product improvements each spring and fall with incremental enhancements more frequently. So a $1 billion community bank is leveraging the same technology as the largest global banks in our installed base. This is part of our secret sauce. Customers can configure their solution to reflect the specific requirements of their institution while nCino leverages the cost benefit of maintaining a single codebase.

While I said we rolled out numerous product updates, the changes to nCino IQ, nIQ, our analytics platform are far more than an update. With the fall 2020 release nIQ's for the first time integrated into the bank operating system. Using artificial intelligence, data analytics and machine learning, nIQ allows financial institutions to leverage data and make more informed decisions in real time. We believe nIQ is a truly unique and unmatched offering. Our plan is to launch a series of solutions on the nIQ platform over time, integrated into the bank operating system.

One of our first nIQ solutions, Automated Spreading is targeted at our commercial banking customers. We have seen instances where automated spreading has reduced the manual requirements of loan underwriting by 50% to 75%, significantly increasing efficiency for financial institutions and accelerating the time to loan approval. We already have multiple institutions that have purchased automated spreading, all existing nCino customers that happened to be based outside the U.S., which is exciting as we continue our international growth.

One customer that purchased and has already gone live on automated spreading is $398 billion UK arm of a global bank, and another is an emerging challenger bank in Australia. For a current customer that utilizes nCino's spreading functionality, it can take as little as a few days to a couple of weeks to implement automated spreading. The time to revenue with orders spreading is significantly faster than our core products, where full deployment can range from six to nine months for a community or regional bank, and 12 to 24 months for a global enterprise bank.

Another nIQ product is portfolio analytics, which helps financial institutions better understand their portfolios, the payment history of their customers and what they can expect in the future. With portfolio analytics integrated into the bank operating system we expect to be able to more aggressively cross sell this functionality into our legacy customer base, as we did with a $1.6 billion community bank in the third quarter. While additional revenues from nIQ may not be material in the near-term, we see nIQ as further differentiating nCino, helping to increase our close rates and expand our competitive moat, as we lead the digitization of financial institutions of all sizes globally.

In addition to these nIQ solutions, in October, we also introduced enhancements to our collateral management functionality, specifically targeted to drive further adoption of our commercial lending solution in EMEA and APAC. Commercial lending customers will also benefit from the emphasis on increasing the ease of use, especially around loan modifications, and expanding portfolio management capabilities.

Our product updates for retail banking, focused on increasing the depth and breadth of our retail solution. These updates take us a step closer to realizing our unique vision for retail banking, a low touch, no touch solution that makes consumer banking easy and seamless for bank employees and their clients.

We are pleased with our continued traction in the retail segment. We signed new customers for our deposit account opening solution and we also expanded a successful retail customer, a top 100 bank in the Midwest to commercial lending, a good example of our land and expand model.

Our product roadmap highlights how the different teams within nCino are so closely aligned and all centered around our customers. To highlight others flywheel works, let's quickly look at our product development process. Our customer success teams lead the way, leveraging their close relationships with customers to understand the pain points and inefficiencies in their bay. This feedback helps directly inform our product roadmap.

In fact, the need for an automated spreading solution was established in response to customers sharing the frustration of manually inputting data, often multiple times for the same loan. Many of these customers become early adopters and provide valuable feedback as we tweak and perfect the product, making it ready for general availability. At that point, the smallest community or regional bank to a global enterprise bank can leverage our technology to increase the efficiency of their business, grow revenues and help ensure the regulatory compliance of their institution.

This customer centric approach and deep understanding of our customers business not only drives our land and expand model, but also let us configure seat deployments as their business evolves, thus helping to minimize churn. In fact, we are already seeing this play out with selected PPP customers, where we have helped them develop a strategy to redeploy PPP seeds when the forgiveness program is completed. And of course, product innovation drives new customer wins.

In the third quarter, a top 50 U.S. bank purchased our customer engagement solution and will leverage our industry expertise to achieve a very efficient deployment schedule. Earlier in the quarter, we announced that Texas Farm Credit was live on our platform. More recently, we added another customer in the agriculture lending space, expanding our market share in this niche segment.

The platform configurability, I noted earlier, is key to addressing the unique lending requirements of this market with $365 billion in assets. While we continue to grow our customer base in ag lending, we look for similar opportunities in other industries.

In Australia, Judo Bank, the country's first fully accredited challenger bank, is building its infrastructure on nCino, and will use our commercial lending system to service its small and medium sized enterprise clients. Finally, 15 customers purchased additional PPP seeds to service their forgiveness customers, including a top 10 and a top 25 U.S. bank.

As we discussed on our last earnings call, customer go lives are an important milestone for nCino and a key way we measure our success. Having a customer live in production and experiencing the benefits of our software is the first step in getting the next win with that customer. Again, everything at nCino goes back to our customers and our success is directly linked to this, which is why customer testimonials and feedback are so powerful.

For instance, Jeff Schweitzer, the President and CEO of Univest Financial Corporation, a long time nCino customer based in Pennsylvania, was recently quoted as saying, "we just got a report, that the loans that we are doing with nCino have lowered the amount of time that it would normally take us to complete the transaction by 60%. So that has created incredible efficiency for us. It allows the customer to get whatever funding they are looking for quicker, while allowing us to continue to leverage technology and grow without having to add more physical bodies to our team."

These types of data points and the results are a true differentiator for us, and a testament to the tangible impact nCino is having on our customers and on the global financial services market.

Back to the Go-Live. In the third quarter, two financial institutions in Canada went live on commercial lending, one, a top 10 credit union and the other a top six bank. We expanded on the Ag lending business, I discussed earlier by taking another leading Ag Lending back live, one of our largest global customers with nCino deployments in multiple countries went live with the commercial lending and its top 50 U.S. bank.

Finally, a top 25 U.S. bank expanded its commercial deployment, adding additional seeds. We also made further progress on building out our international footprint, despite some of the headwinds from COVID-19.

In the third quarter, we added our first in country salespeople in continental Europe and largely completed building out our European professional services team. We continue to grow our team in Australia as we see a significant opportunity in that market. We also made strides in localizing products for each of these non U.S. markets.

During the quarter, we are pleased to announce details about our relationships with a number of banks around the globe. Understandably, for competitive reasons, financial institutions often won't let us discuss our partnerships. So, we are particularly excited to announce in the third quarter that Barclays adopted the nCino bank operating system to streamline various onboarding processes. The comment from Paul Compton, the global head of banking at Barclays and Co-President of Barclays Bank PLC in October, was very exciting to hear, and I quote.

"The nCino platform has helped us simplify our workflows and increase our operational resilience, which ultimately helps us provide better service to our clients."

Another key partner announced this quarter was Fifth Third Bank, Jude Schramm the bank's Chief Information Officer discussed challenges in the industry, and how nCino was allowing them to successfully respond, noting that, as more and more interactions are shifting from physical to digital, we want to ensure we are accelerating our digital transformation to provide our employees and clients with cutting edge tools and technology. The nCino platform offers capabilities that allow us to innovate faster, and serve commercial clients in a more efficient way.

While unfortunately, the world hasn't been able to move past COVID-19 yet, we are seeing financial institutions who largely refocus on their core operations. In summary, our pipeline is growing, we see deals advancing, and we are looking forward to a strong close to the year, which would set us up well for next year.

Now, I will turn the call over to David, for him to share financial details about the quarter, our outlook for the fourth quarter, and our increased guidance for the full year.

[David Rudow, CFO]

Thank you, Pierre. And thank you all for joining us to review our fiscal third quarter 2021 earnings. Please note that all numbers referenced in my remarks are on a non-GAAP basis unless otherwise stated. Our non-GAAP financial information exclude the impact of stock based compensation and the amortization of intangible assets. A reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our website and as an exhibit to our 8-K furnished with the SEC.

Total revenues for the third quarter of fiscal 2021 were $54.2 million, compared with $37.9 million in the third quarter of fiscal 2020, an increase of 43% year-over-year. Subscription revenues for this quarter were $43.3 million, an increase of 56% year-over-year, representing 80% of total revenues in the third quarter. Subscription revenues benefited from approximately $1 million in catch up revenues related to a PPP consortium that utilize our software to process PPP loans. This was a onetime revenue benefit and in the future, we expect an immaterial quarterly revenue contribution related to this program.

In addition, 15 customers added additional seats to service the forgiveness portion of the PPP loan program.

As a reminder, revenues from PPP customers is recognized immediately. Unlike our core bank operating system customers, which generally activate over a defined period depending on the contract terms. At this point, we do not expect to add any new PPP related signings in Q4. And in turn, we anticipate activation schedules will return to the historical, more predictable schedules we have experienced over the years.

Professional services revenues were $11 million in the quarter a 7% increase over the $10.2 million in the third quarter of last year. Professional services experienced solid performance in the third quarter, particularly in Europe. We continue to aggressively invest in our international business, which helped drive our third quarter international revenue growth to 98% year-over-year. Revenues outside the U.S. are $6.6 million, or 12% of total revenues in the third quarter, up from $3.3 million, or 9% of total revenues in the third quarter of fiscal 2020.

Non-GAAP gross profit for the third quarter of fiscal 2021 was $33 million, compared with $21.6 million in the third quarter of fiscal 2020, an increase of 53% year-over-year. Gross margin was 61% compared to 57% in the third quarter of fiscal 2020. Our gross margins continue to improve largely from subscription product mix, as well as the onetime catch up of PPP revenues I mentioned earlier, where the costs have been absorbed rateably in the prior quarters.

Total non-GAAP operating costs for the third quarter of fiscal 2021 were $35.7 million or 66% of revenues, compared to $26.5 million or 70% of revenues in the third quarter of fiscal 2020. While we did see some cost savings due to COVID, especially around reduced travel and in person events, we continue to invest to grow our international footprint and expand the breadth and depth of our products as well as absorb additional costs related to being a public company.

Sales and marketing for the third quarter of fiscal 2021 was $12.6 million or 23% of revenues, compared to $11.8 million or 31% in the third quarter of fiscal 2020. So we continue to invest in sales and marketing as we expand globally, sales and marketing expenses were slightly lower than originally expected during the quarter due to the ongoing reduction in travel expenses.

In addition, some of our new hires outside the U.S. took longer to on board. So those costs will be more impactful in Q4, along with increased spending on our digital marketing programs.

Research and development for the third quarter was $14 million or 26% of revenues, compared to $9.2 million or 24% for the third quarter of fiscal 2020. We continue to invest in building out the nCino bank operating system, including nIQ and our retail products, as well as localizing products to support our international expansion.

General and administrative expenses were $9.1 million or 17% of revenues, compared to $5.5 million or 14% in the third quarter of fiscal 2020. We continue to invest in our G&A function to help support our rapid growth, along with our increased public company related costs.

Non-GAAP operating loss for the third quarter fiscal 2021 was $2.7 million, compared with non-GAAP operating loss of $4.9 million in the third quarter of fiscal 2020. Our non-GAAP operating margin for the third quarter, improved to negative 5%, compared with negative 13% in the third quarter of fiscal 2020.

Non-GAAP net loss attributable to nCino for the third quarter of fiscal 2021 was $3 million or $0.03 per share, compared to non-GAAP net loss attributable to nCino of $4.2 million or $0.05 per share in the third quarter of fiscal 2020.

Turning to cash, we ended the quarter with cash and cash equivalents of $378.6 million. Net cash used in operating activities was $10.8 million, compared to $8.5 million in the third quarter of fiscal 2020. In addition, capital expenditures were $0.8 million in the quarter, resulting in negative free cash flow of $11.6 million for the third quarter of fiscal 2021.

As a reminder, Q3 is normally our weakest cash quarter, because it is the slowest billing quarter of the year. Conversely, Q4 is usually our strongest billing quarter, which usually results in improving cash collections in the first and second quarters.

Now turning to guidance. For the fourth quarter, we expect total revenues of $53 million to $53.5 million. As a reminder, the third quarter benefited from a one-time catch up of $1 million in subscription revenues.

Note also, this guidance assumes no additional immediate activations from PPP signings in the fourth quarter and our normal seasonal mix of professional service revenues. We anticipate subscription revenues will remain at approximately 80% of total revenues.

Non-GAAP operating loss is expected to be approximately $8 million to $8.5 million, and non-GAAP net loss attributed to nCino per share to be $0.08 to $0.09. This is based on a weighted average of approximately 92.5 million basic shares outstanding.

We are increasing our guidance for the full fiscal year 2021 as follows. We now expect total revenues of $200.7 million to $201.2 million. We also expect non-GAAP operating loss for fiscal 2021 to be $14.7 million to $15.2 million and non-GAAP net loss attributable to nCino per share to be $0.16 to $0.17, based upon our weighted average of approximately 87 million basic shares outstanding.

In summary, we are very pleased with the continued momentum in the third quarter as we continue to benefit from PPP related revenues along with increased professional services activity, as customers are anxious to get their programs live. We are encouraged that customers are refocusing on their core business, especially the larger enterprise banks. I don't think anyone would say we're back to normal, but we believe the trend is definitely improving, which is reflected in our increased full year guidance, which at the midpoint represents 45% annual total revenue growth and 56% annual subscription revenue growth.

As always, we appreciate the hard work and dedication of the nCino employees around the globe, along with the confidence of our customers and loyalty of our stockholders.

Now we will open the call to questions.

[Operator]

[Operator Instructions] Our first question comes from Saket Kalia with Barclays. You may proceed with your question.

[Saket Kalia, Barclays Capital]

Okay, great. Hey, guys, thanks for taking my questions here and some great customer examples there in the prepared commentary.

[Pierre Naude, CEO]

Saket, how are you? Good to hear from you.

[Saket Kalia, Barclays Capital]

Hey, good, Pierre. Good to hear from you as well. Maybe first for Pierre. Can you just talk about what you're hearing from customers that use your tools for the Paycheck Protection Program? And maybe just as importantly, how they're thinking about those tools going into next year, when knock on wood, those seats won't be used for PPP or forgiveness?

[Pierre Naude, CEO]

Yes, very good question. So that, most of these customers, this was really, I think, accelerates the understanding for the need for the digital tools. And so what we are doing is working with many of them to expand the offering for digital lending across to other portfolio elements.

But firstly, we are leaving those solutions in place, because there is an anticipation of a follow on around the PPP, and we'll have to see what happens there. But as soon as we know that we'll either use the seats for the next round of PPP that comes to fruition, and if not, we have plans with our clients to redeploy that to expand it to other products inside the bank.

[Saket Kalia, Barclays Capital]

Got it, that's really helpful. My follow-up for you, David. Maybe related to services revenue. It was good to see the acceleration here. I guess, I'm curious, do you have any anecdotes or data points on whether services revenue tends to lead or lag subscription revenue or just generally anything we can glean on the subscription part of the business from this quarter services result?

[David Rudow, CFO]

Yes, I don't think there's any, I don't think you can glean anything to subscription. Because remember, the majority of our projects are deployed by our partners. And you don't have visibility into that. We had a very strong results performance in Europe, with the services team, and then also the Americas. So we expect that will continue, as we show the prior guidance for the fourth quarter as well.

We do have seasonality to remember for the fourth quarter, just normal seasonality, we have people going on PTO, we have the holidays to deal with. And so we do expect that we'll be sequentially down as we look at the fourth quarter.

[Saket Kalia, Barclays Capital]

Got it. Very helpful. I'll hop back in queue. Thanks, guys.

[Pierre Naude, CEO]

Thank you. Good to hear from you.

[Operator]

Thank you. Our next question comes from Brad Sills with Bank of America Securities. You may proceed with your question.

[Brad Sills, Bank of America Merrill Lynch]

Great. Hey, thanks, guys. I wanted to ask a question on international, it sounds like you're seeing some real traction there in the services business. Would that translate into subscription as well? And just any commentary on some of the investments you've been making there, and how those are playing out?

[Pierre Naude, CEO]

Yes, Brad. Good to hear from you. Let me make an overall comment and then David you can take the more detailed ones. As I mentioned, throughout this we got to know all of you that the frustration this year is, we cannot travel to Europe because of COVID then actually go and hire people and drive momentum into the market. However, even under these circumstances, we are seeing great traction, we've hired people locally into countries now in Europe. As you know, our main office is in London. We are also seeing very good interest in our pipelines across the European continent.

So I am actually very optimistic that the investments we are making are beginning to pay off. And the same problems that was here five years ago, and how we penetrate the market, we're seeing exactly the same problems over there. And we see the beginning of that momentum coming. As you know, we've got good traction in the UK and Ireland, and I'm beginning to see that same signals across the bond in Europe.

[David Rudow, CFO]

Yes. Brad, how you doing? We had a really good quarter internationally 98% growth 12% of total revenues. The services team performed very well in EMEA. Asia Pacific was a good quarter. And we are continuing to invest in our PSO teams in EMEA, and APAC and then also on the support side and international and EMEA as well. So it so far it looks good. COVID has -- I think it's that all the lockdowns that we're seeing it really hasn't had a major impact on the deployments on the services side. So we're very pleased with what we saw from the team in the third quarter.

[Brad Sills, Bank of America Merrill Lynch]

That's great. Thanks, David. Thanks, Pierre. And then one more if I may just on nIQ some good traction here. It sounds like automated spreading solution in one of the big banks, should we expect more deals like that where nIQ is being deployed for a specific use case? I know it's being implemented across or embedded if you will, across all the different modules within nCino.

But is it more use case driven? Are you seeing customers in the pipeline for nIQ looking at nIQ more pervasively throughout the organization? How should we think about that? Thanks, guys.

[Pierre Naude, CEO]

Yes. So I see two main benefits with nIQ. The first one is it's going to differentiate us further from the competition. And also sometimes we are competing with home build or people who want to build any house, which is becoming less and less. But the more intelligent in automation we drive into these systems, the more difficult it will be for the bank to compete with the IT departments, as well as it will diminish the competition on the point solutions. Because how do you string all these things together to give your employees and your customers a cohesive experience?

As you look at those nIQ examples, I'm very excited about for instance, when we bought Visible Equity, they were focused mostly on the small credit unions. And now we have signed up a nice community bank that is much bigger than the typical credit union service on the portfolio analytics. Then you look at what we said in the press release around two large banks, taking the automated spreading solution. In one case, it was an existing customer often suite when we acquired them. In other case it's an nCino customer using our spreads.

Over time, that solution is going to help us to penetrate the spreading department or underwriting department of a bank much deeper, because it really drive that level of efficiency, number one. And number two, it will differentiate us further in the market as the market either on the commercial loan origination.

So I'm just exciting overall on the trends I'm seeing there. And as we mentioned earlier, those products from implementation tend to revenue is much faster than traditional seed deployment of the big transformation projects.

[Brad Sills, Bank of America Merrill Lynch]

That's great. Thanks so much, Pierre.

[Operator]

Thank you. Our next question comes from Terry Tillman with Truist. You may proceed with your question.

[Terry Tillman, Truist Securities]

Yes, thanks for taking my questions. And congratulations on the strong results. Hi, Pierre, David and Greg. I guess my first question just relates maybe, Peter, for you, or Pierre for you on the retail banking side. Just maybe an update on where you are in terms of the size and scale of that business? And with the pandemic, does that potentially accelerate the roadmap and adoption by bigger enterprise or global banks? And then I had a follow up. Thank you.

[Pierre Naude, CEO]

Yes, as we look at retail in general, let me just describe what retail is again. So it’s a reminder. Firstly, there is a retail lending solution. There's also a deposit account opening solution that includes checking savings, money markets, HELOCs et cetera and then there's the onboarding solution. So that three combined makes up that and then you've got international mortgage that comes in there.

And on all those fronts, we are seeing great momentum. But as you know, the retail product suite is much more regulated than what the commercial side is. And as such, we just had a great release coming out in October, where we further refined our HMDA and TRID [ph] solutions, as well as our doc prep solutions, which these are very complex things. The regulations and requirements may vary by county and by zip code, okay. And as we mature that to actually work across the U.S., I'm beginning to see great interest.

See, there's a notion today in banking, that the retail solutions are working good enough. And what we're beginning to prove through configuration, automation, and a low touch to no touch experience is that we can move the needle here for banks to make it a lot more productive, and improve the customer experience. And through that we are beginning to see the early signs of momentum.

I frankly speak quite a lot with our Head of Sales in those markets and asked him about it. And every time I ask him, he says Pierre, there's a good pipeline, and there's great interest. And we think that thing is coming along. Then in April we have another release. And every time we do that, we mature that thing and we automate all the processes more. So I've got very optimistic view of the retail solutions.

[Terry Tillman, Truist Securities]

And I guess David, maybe just a question and it's more just to kind of for memory sake, because I may have forgotten. But did you all talk about kind of the updated full year FY '21 contribution from PPP programs, whether it was program or forgiveness and any change to that? And can you remind us again what the redeployment rate you see going into next year? And again, congrats.

[David Rudow, CFO]

Yes, thank you. Thank you, Terry. So for the third quarter, PPP contributed about $5 million to the number and that includes the $1 million catch up from the consortium. And for the year now, we expect $13 million and that's up from $10 million that we talked about on the second quarter. And in terms of seeds being redeployed, I think it's too early. There was a handful of customers that we redeployed elsewhere into their orgs, but it's just too early right now. The sales teams out there talking to customers, making sure that when they are up and need to be redeployed, that they'll be a home for them. So, so far, so good.

[Operator]

Thank you. Our next question comes from Josh Beck with KeyBanc. You may proceed with your question.

[Josh Beck, Keybanc]

Thanks for taking the question, team. Good to hear from you. Pierre, I maybe just wanted to start with you. Certainly the tenor I think of the bank executives seems to have really improved in the last 90 days. I think the loss rates that the banks had forecast, things are actually coming in a little bit better. So you'd mentioned this notion that they're starting to refocus on their core operations. So I'm just kind of curious, are they pretty aggressively pivoting back to digital transformation? Is it something that they're teeing up for 2021 once they get through this year? Just would like to hear a little bit more about just the tenor of conversations you're having.

[Pierre Naude, CEO]

Yes. No, absolutely. I think what we are seeing is at the upper end of the market is that they realize this work from home phenomena. The productivity they got from the people has really shifted their outlook on real estate, on how are you going to treat your people population, because all of us are competing for talent.

And then you have to look at the experience of the relationship managers out in the field and the tools you give them. So this has driven a heightened awareness and urgency towards that. So I see traction at the top end of the market as well as the middle. When it comes to the community banks, they had a bigger impact because of PPP, the workload that was done, the disruption through COVID, et cetera.

Community banks was ahead of the curve like a ConnectOne, which is a great friend of ours and has deployed this early and is really adopting it widely that ahead of the curve, and there and New Jersey and to do business in New York City all the time was with a lot of lockdowns and restrictions. So if you ask Frank, he's ready.

The one that's behind, I think it'll take a while to solve because we have to see what happens to this next several PPP, and how it impacts their productivity and what they have to do. But I feel very good that if you look at the pipelines and we mentioned we've got very strong pipelines, the highest ever is that, the banks are engaged and they realize they have to do that. And our job now is to close it, move the project forward.

[Josh Beck, Keybanc]

Great. And maybe just following up on the pipeline commentary, that's certainly encouraging. Maybe just help us think about converting that into bookings and maybe what that cycle looks like versus a pre-COVID, I imagine that we're still in a transition period here, but just would be curious your commentary there?

[Pierre Naude, CEO]

Yes, we are seeing that the activation schedule is returning back to normal. So if I look at the contract structures we're seeing now, remember PPP accelerated the activation schedule tremendously, so the contract and the revenue right away. And that's why you're going to have a tough compare either quarter-over-quarter or maybe next year just because of that holistic phenomena.

But as you look at what's happening out there now and the contracts I'm seeing, we're getting back to the more normal transformational projects with the rollout schedule and activation schedules that mimics the historical trends of what we saw on the company, which tells me two things. The first one, this is not a patchwork of solutions, this is to slam it on to say, I've got some of these will front end. It actually is people seriously looking at their middle back offices and how they are going to operate in the future, which is a good sign for us. And I think it's 100% the right sign for the banks to address it that way.

[Josh Beck, Keybanc]

Okay, really helpful. Thanks, Pierre.

[Pierre Naude, CEO]

Thank you. Good to talking to you.

[Operator]

Thank you. Our next question comes from Brent Bracelin with Piper Sandler. You may proceed in your question.

[Brent Bracelin, Piper Sandler]

Good afternoon. And thanks for taking my questions here. I have a couple one for Pierre and then a couple follow ups for David, if I could. Pierre, I wanted to ask about the partner strategy. Obviously, you've had some great partners and some niche partner like Monroe, but we're starting to see a pretty nice uptick in hiring at some of the larger SI partners, particularly the Deloitte kind of stands out here. And just wondering how should we interpret some of these bigger SIs and increased hiring activity? Do you see that as a precursor to maybe a larger bank automation investment cycle coming? Is there big incentives for these larger SIs to build practices around nCino? Just trying to understand and tie why we're seeing the uptick in some of those SI partners around nCino specifically?

[Pierre Naude, CEO]

Yes, we are in constant communication with our partners. It's such a large go to market engine and dependency for us. As you know, and you can actually see it in our own PS revenue trends that we want to have our own competent teams to help and assist we know the product base. However, as we look across and that's reflecting in our pipelines, is that these companies all know that once we get out of COVID, who knows how long that will take, but we all read the news. It's going to be a different world, the customer and consumers are expecting a different level of interaction. And there's many banks wondering will people ever come back to the branches at the same volumes that they used to come before, because they've learned new habits.

So we are seeing that reflection and you see in the hiring is actually reflected in our pipelines and the activities and conversations we're having with the largest banks in the world around what is your operating model, what is the real estate model, what is the brand strategy and how do you automate the workflows of these people and what tools you provide.

So I think you're onto something there that that is a leading indicator, we see it in our pipes for where the business is going.

[Brent Bracelin, Piper Sandler]

Great. Super encouraging there. And then I guess for you, David. I apologize, I popped on here. Did you give us an RPO metric yet? Or is that something we'll have to wait for the Q to look at?

[David Rudow, CFO]

Yep. No, we can talk that will be filed in the Q tomorrow. But I'll give you details here. So total RPO came in at 453 in total, less than 24 months was 299 and then greater than 24 months was 154. So it's down sequentially about $3 million, but not surprising this is normal and seasonal for this time of the year. Q3 is our lowest billing period and our lowest renewal period of the year. So this is normal, don't look into it. And this is what we expected as we entered into the third quarter.

[Brent Bracelin, Piper Sandler]

Super helpful comment. It sounds like some of that bleed off too is tied to just the PPP revenue. And you said what was that $3 million, $4 million in the quarter, I assume so that that would be the bleed down a little bit sequentially?

[David Rudow, CFO]

Yes, PPP was $5 million in the quarter.

[Brent Bracelin, Piper Sandler]

$5 million. Okay, that's helpful color. And then I guess, last question for you, David here. I know it's early looking out into 2021 and we're still well into this pandemic, but just as you think about the pipeline, as you think about the visibility of the business, how you prioritize the investments? Thinking about sales and R&D without guiding next year, do have an appetite to lean in here on the opportunity? Or are you going to be a little more cautious just trying to get an early read on the investment appetite and getting more aggressive on the sales and R&D front for next year? Thanks.

[David Rudow, CFO]

Yes, good question. Yes, we see the opportunity. So we are absolutely investing. We accelerated hiring into the fourth quarter for next year. We are adding salespeople on the continent Europe, because we see the demand and the interest internationally. We're adding services people there to help them in deployments of the sales. We're also making a major investment on the R&D side as well to mature the retail product to advance commercial and to work on and advance the nIQ product as well.

So we see the opportunity, the pipeline is there. The interest is there. The market is there and we're pushing ahead and investing as quickly and responsibly as we can.

[Brent Bracelin, Piper Sandler]

Good stuff, great to hear. Thanks again.

[David Rudow, CFO]

Thank you.

[Pierre Naude, CEO]

Thank you.

[Operator]

Thank you. And our last question comes from Brian Peterson with Raymond James. You may proceed with your question.

[Alex Sklar, Raymond James]

Great, thanks. This is Alex Sklar for Brian. Pierre, I want to start with mix, and just curious about the product release cadence for some of the AI and analytics tools around that, if that's kind of a similar spring fall cadence. I know you've been working on a commercial and retail pricing as well as the automated spreading you talked about today.

[Pierre Naude, CEO]

Yes. So obviously, as you can imagine, we do some of that development work here in Wellington. We've got visible equity in Utah, working on all our data lakes, our analytics, et cetera. And then we've got the data recognition team in Melbourne, Australia. And I will tell you, this is a test always for the company culture to see if you can work over three territories like this an integrated product. Because all these products are integrated into the bank operating system and provides the bank officer as well as the consumer a singular experience, it doesn't feel discombobulated.

We do follow those release schedules, but we are pushing automation of releases to the point where we can actually release interim releases and do push upgrades to customers as is required. We stick to the twice a year cadence now. But we actually do every now and then of course upgrade in between. Specifically as somebody on a project and we want to accelerate the adoption of that, which is actually being very well received.

But also remember, if we upgrade the bank, they have to absorb the upgrade and the new features. And many times for these banks to take these continuous upgrades and a lot of the features is very difficult to absorb. And that's why we stick to this more disciplined approach. And then we'll make exceptions on a project basis. Does that make sense?

[Alex Sklar, Raymond James]

Yes, that's great. And then just one follow-up. I'm curious, as we've kind of progressed through the pandemic here, has that caused any changes in what you're replacing? I know you had the kind of four big buckets on the competitive landscape and what you were placing historically. I'm wondering if that's changed at all, as a result of the pandemic.

[Pierre Naude, CEO]

Yes. There's one thing we did see. In the old days, traditionally, we would go in and tackle the middle back office, automate debt, and then roll out portals to the front ends once and I always call it 150 in the kitchen. Now we're beginning to see some of these bigger banks. Look at the nCino platform. They like what they see. But they may do deposit account open as a front end solution first, and just do that and once they've got that in play, because that's an urgent priority for them, we will roll from there maybe to commercial lending or small business lending or retail.

So we've now got this thing down where we actually go part of live and do a quick hit with a quick solution be in production in two months or three months, and then expand further depending on that priority. And I clearly see that is because of change behavior, because of COVID and the lockdowns and we can go to the brand system and so on to help their people to be productive in this environment.

[Alex Sklar, Raymond James]

Okay, great. Really helpful. Thanks, guys.

[Pierre Naude, CEO]

Thank you.

[Operator]

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Pierre Naude for any further remarks.

[Pierre Naude, CEO]

Well, thank you. And thank you all for attending our earnings call today. As I hope you picked up in my comments, I'm really excited about the road ahead for nCino. Our pipeline has never been stronger and the conversations we are having, along with signed contracts in hand reflect the increasing global demand for the digital transformation of financial services.

While we all wait impatiently for the vaccine to be widely distributed and the resumption of a normal world, there is no going back for banks. The digital transformation is underway and only accelerating, and we believe nCino was uniquely positioned to capitalize on this tremendous opportunity. Thank you for your time today.

[Operator]

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.