nCino, Inc.

Gentlemen, please stand by. Your Encino, Inc. Third Quarter Fiscal 2021 Earnings Conference Call will begin momentarily. Thank you for your patience and please stand by. Thank you. Ladies and gentlemen, thank you for standing by and welcome to the Encino Inc. Third Quarter Fiscal 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star one on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Greg Orenstein, Chief Corporate Development and Legal Officer, Please go ahead, sir.

And welcome to Encino's fiscal 2021 third quarter earnings call for the quarter ended October 31, 2020. With me on today's call are Pierre Naudet, Encino's president and chief executive officer, and David Rudeau, 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 management's 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 encino.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 Encino 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 reconciliation to comparable GAAP metrics can be found in today's earning release, which is available on our website and as an exhibit to the Form 8K furnished with the SEC just before this call. With that, thank you for joining us, and I'll turn it over to Pierre.

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 persists, the digital transformation of the global financial services industry is only accelerating. Our customer conversations this quarter, the increasing interest we are seeing from potential customers across the globe, and the pace at which many projects are moving forward all 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. Encino's cloud banking platform helped 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 Encino bank operating system as part of our fall release. We added new logos from financial institutions around the globe, ranging from an international challenger bank to an over $50 billion US bank, while taking customers' lives in multiple countries. Let's start by discussing our product updates in the fall release. As a reminder, Encino operates one codebase 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 Encino leverages the cost benefit of maintaining a single code base. While I said we rolled out numerous product updates, the changes to Encino IQ or NIC our analytics platform, are far more than an update. With the fall 2020 release, Nick is, for the first time, integrated into the bank operating system. Using artificial intelligence, data analytics, and machine learning, Nick allows financial institutions to leverage data and make more informed decisions in real time. We believe Nick is a truly unique and unmatched offering. Our plan is to launch a series of solutions on the NIC platform over time, integrated into the bank operating system. One of our first NIC 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 Encino customers that happen to be based outside the US, which is exciting as we continue our international growth. One customer that purchased and has already gone live on automated spreading is the $398 billion UK arm of a global bank, and another is an emerging challenger bank in Australia. For a current customer that utilizes Encino'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 auto-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 new 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 NIC may not be material in the near term, we see NIC as further differentiating Encino, 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 NIC 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 solutions. 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 Encino are so closely aligned and all centered around our customers. To highlight how this 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 day. 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 lets us configure seed 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 seats when the forgiveness program is completed. And of course, product innovation drives new customer wins. In the third quarter, a top 50 US 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 agricultural 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 Encino and will use our commercial lending system to service its small and medium-sized enterprise clients. Finally, 15 customers purchased additional triple-piece seats 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 Encino and a key way we measure our success. Having a customer life in production and experiencing the benefits of our software is the first step in getting the next win with that customer. Again, everything at Encino goes back to our customers and our success is directly linked to theirs, 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 Encino customer based in Pennsylvania, was recently quoted as saying, We just got a report that the loans that we are doing with Encino are have lowered the amount of time that it would normally take us to complete a 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 results are a true differentiator for us and a testament to the tangible impact Encino is having on our customers and on the global financial services market. Back to the go-lives. 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 Encino deployments in multiple countries went live with a commercial lending in its top 50 U.S. bank. Finally, a top 25 U.S. bank expanded its commercial deployment, adding additional seats. 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-US markets. During the quarter, We were 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're particularly excited to announce in the third quarter that Barclays adopted the Encino 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 Encino platform has helped us simplify our workflows and increase our operational resilience, which ultimately helps us provide better service to our clients, end quote. Another key partner announced this quarter was Fifth Third Bank. Jude Schramm, the bank's chief information officer, said, discussed challenges in the industry and how Encino is 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 Encino 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 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 should 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.