Cloud Banking Software Gem Defies Market Downturn: Why a Major Fund Is Reshuffling Its Portfolio

nCino (NASDAQ: NCNO) has emerged as a curious case study for value investors—a company delivering impressive operational momentum while watching its stock languish 37% below last year’s levels. This contradiction came into sharp focus when Tensile Capital Management, a California-based investment firm, trimmed its position by nearly 450,000 shares in the third quarter.

The Paradox: Execution Meets Market Skepticism

On the surface, nCino’s latest quarter worth $152.2 million in revenue tells a compelling story. The cloud-based banking software provider reported 10% revenue growth and an 11% expansion in subscription revenue—paired with a dramatic swing to $11.7 million in GAAP operating income (versus a loss in the prior year). Non-GAAP operating income surged 43% to $39.9 million, underscoring disciplined operational management and strengthening unit economics.

Yet the stock trades at $23.39 per share, having delivered neither the upside trajectory long-term holders might expect given these advancing metrics, nor the stability that defensive positioning would require. The S&P 500, by comparison, has climbed 13% over the same 12-month window.

How the Fund Restructured Its Exposure

Tensile Capital Management’s November 14 SEC filing revealed a deliberate rebalancing rather than an exit. The firm divested 449,165 shares during the third quarter, reducing its position value by $13.3 million. As of September 30, Tensile retained 901,539 nCino shares valued at $24.4 million—still a meaningful 3.1% of the firm’s 13F reportable assets under management, though it slipped outside the fund’s top five holdings.

Previously, this nCino holding had represented 4.6% of AUM in the prior quarter. The fund’s top five positions are now dominated by VERX ($94.3 million, 11.8% of AUM), DKS ($79.5 million, 9.9%), VVV ($74.7 million, 9.3%), LAD ($74.4 million, 9.3%), and USFD ($58.5 million, 7.3%).

What Separates nCino From the Herd

nCino operates a SaaS-based platform that powers digital transformation across financial institutions worldwide. Its flagship offerings—the nCino Bank Operating System and SimpleNexus—automate and digitize complex banking workflows while embedding advanced analytics and artificial intelligence for compliance and decision-making. The company serves a diverse ecosystem spanning global and regional banks, credit unions, mortgage banks, and broader financial services organizations.

The business model is decidedly subscription-driven, with revenue flowing through predictable recurring arrangements rather than one-off license transactions. This structural advantage typically commands premium valuations during favorable market environments. What makes the current setup intriguing is that nCino’s fundamentals—margin expansion, acceleration in subscription revenue, and advancing AI capabilities—appear to be strengthening precisely when the multiple is compressing.

Management also demonstrated conviction through action: nCino repurchased 1.4 million shares during the quarter, a relatively rare display of capital confidence for a software firm navigating uneven macroeconomic demand.

The Investment Calculus Going Forward

For holders and prospective investors, Tensile’s recalibrated positioning highlights an important distinction: the fund trimmed exposure without abandoning conviction. Funds that manage assets across quarters worth careful tracking often reassess high-growth fintech names when near-term multiples disconnect sharply from underlying business acceleration.

The central question remains whether nCino can leverage its improving profitability engine and deepening AI roadmap to eventually justify current valuations—or whether this represents a normalization of a once-elevated fintech cohort. The company’s cloud-based banking software franchise, serving institutions dependent on regulatory compliance and operational efficiency, suggests durable structural demand. But the valuation mismatch between operational delivery and stock performance will likely govern investor appetite over the medium term.

nCino’s market capitalization now stands at $2.7 billion against trailing twelve months revenue of $586.5 million—metrics that will ultimately determine whether this pullback by sophisticated allocators marks an exit opportunity or a prudent rebalancing ahead of a reset in market sentiment.