Friday, August 12, 2022

nCino inks $1.2B agreement to acquire digital mortgage platform SimpleNexus in early 2022

nCino signed a definitive deal to acquire SimpleNexus for $1.2 billion. It’s slated to go through at the end of nCino’s Q4, January 31, 2022. (Port City Daily/Shea Carver)

WILMINGTON — Last week, the worldwide leader in cloud banking, nCino, whose newly renovated headquarters are located in Mayfaire Town Center, announced it will acquire Utah-based SimpleNexus by the end of January 2022. The two companies entered a $1.2-billion definitive agreement — a legally binding deal, signed by both parties to outline the terms and conditions of the transaction — which includes a $200-million cash payment and 13.2 million shares of nCino common stock.

Founded in 2012, nCino works with over 1,200 financial institutions worldwide, including TD Bank, Truist Financial, Wells Fago, and Santander Bank. CEO Pierre Naudé said on a webcast last week, when nCino considers an acquisition of this nature, it asks five questions integral to its decision-making:

  • Does the company solve a problem in a way that extend nCino’s current capabilities?
  • Will the solution add value for customers and their clients?
  • Is a solution a good architectural fit for the single platform vision?
  • Do the company’s culture and values align with nCino’s?
  • Does the company have a strong, predictable, recurring revenue financial profile that will enable nCino to accelerate its growth?

“As we got to know the SimpleNexus team … it became clear that this was an opportunity that answered all of our key questions with a resounding yes,” Naudé said.

Founded in 2011, SimpleNexus is a leader in the digital home-buying market. It works with more than 300 independent mortgage banks (IMB), over 80 banks and credit unions, and over 41,000 loan originators nationwide. Naudé said the company served one in seven mortgage originations in the U.S. during the first three quarters of 2021.

Together, the two companies will continue working toward innovation in the IMB market, strengthen “consumer front-end technology and domain expertise” and launch mobile and point-of-sale offerings that address consumer needs. Naudé expressed how Covid-19 accelerated the public’s ease on digital dependency and even created higher expectations for digital platforms and businesses.

“Mobile capabilities are now a prerequisite for consumer-facing technology across business lines,” he said.

SimpleNexus’ software is designed to make home-buying a singular easy experience. It allows loan officers, borrowers, real estate and settlement agents to steer the homeownership process on their computers and mobile devices. From applying for a loan to signing documents to closing the loan, it’s all offered in one place.

“We deliver a tangible return on investment in the form of reduced turnaround times, increased margins and loan volumes, and more referral business,” SimpleNexus CEO Cathleen Schreiner Gates said.

Like nCino, SimpleNexus is subscription-based, meaning it doesn’t depend on mortgage transaction volume to generate revenue, making it a more predictive financial model, according to Naudé.

“We are passionate about customer success, which is evidenced by our trailing 12 months net retention rate of 163%,” Gates said.

“SimpleNexus provides a natural extension of incentives capabilities to the U.S. point-of-sale market space, a strategic adjacency with significant cross and upsell opportunities, which we estimate initially expand our Sam — or serviceable addressable market — by more than $4 billion,” Naudé added.

nCino has offices in London, Melbourne, Salt Lake City, Sydney, Tokyo, and Toronto, and in its second quarter of 2021, it experienced increased revenue by 36% compared to 2020. nCino’s client assets are anywhere from $30 million to over $2 trillion. It will announce its third-quarter earnings on Dec. 1.

“There is strong strategic alignment between nCino and SimpleNexus,” Naudé said. “We are both cloud native companies and were founded to help solve similar challenges, streamlining and simplifying cumbersome financial processes.”

“Together, our best-in-class, cloud-native platforms will significantly strengthen how we serve our customers,” Gates added.

Gates will continue to lead SimpleNexus’ team of 300 after the 2022 acquisition.

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Shea Carver
Shea Carver is the editor in chief at Port City Daily. A UNCW alumna, Shea worked in the print media business in Wilmington for 22 years before joining the PCD team in October 2020. She specializes in arts coverage — music, film, literature, theatre — the dining scene, and can often be tapped on where to go, what to do and who to see in Wilmington. When she isn’t hanging with her pup, Shadow Wolf, tending the garden or spinning vinyl, she’s attending concerts and live theater.

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