nCino to acquire mortgage platform SimpleNexus

Cloud banking solutions provider nCino on Tuesday announced plans to acquire SimpleNexus, the developer of a mortgage lending platform used in one in seven mortgage originations in the U.S., in a stock and cash transaction valued at about $1.2 billion. Under the proposal, nCino would acquire SimpleNexus for approximately $240 million in cash and $960 million in nCino common stock, which is currently about 13.2 million shares, in a deal expected to close by Jan. 31, 2022. The acquisition would expand nCino's capabilities, Chief Executive Officer Pierre Naude said in a conference call Tuesday, also noting the large portion of stock in the transaction reflects "the strategic alignment and conviction that both nCino and SimpleNexus management have in the long-term trajectory and success of our combined businesses." The two companies will develop mobile and point-of-sale offerings across additional business lines, Naude added. Both nCino and SimpleNexus offer cloud-native platforms that address traditionally cumbersome financial processes using subscription-based models, making SimpleNexus' revenue more predictable and independent of mortgage volumes, he noted. nCino 's banking solutions manage customer onboarding, loans, account opening, regulatory compliance and more, with clients including $1.9 trillion Wells Fargo , $1.4 trillion TD Bank Group and $20.0 billion Coast Capital , one of Canada's largest credit unions. The Wilmington, N.C.-based company, which was founded in 2012, in September reported revenue of $66.5 million for its second quarter of fiscal 2022, up 36% from $48.8 million year-over-year. SimpleNexus , founded in 2011, offers an "end-to-end" mortgage solution spanning customer engagement, origination, closing and business intelligence. It serves more than 41,000 loan originators, 300 independent mortgage banks, and 80 banks and credit unions, including $12.5 billion First Financial Bank and $315.7 million Texas Tech Federal Credit Union . The Lehi, Utah-based company has raised a total of $128 million in two funding rounds, according to Crunchbase. CEO Cathleen Schreiner Gates, who will continue to lead SimpleNexus, noted that its platform has seen a net retention rate of 163% over the last year. "By helping lenders manage their teams and stay connected with borrowers and real estate partners, we deliver a tangible return on investment in the form of reduced turnaround times, increased margins and loan volumes, and more referral business," Schreiner Gates said. While banks typically have digital solutions that allow borrowers to apply for a mortgage, SimpleNexus has also embedded a loan officer experience into its app, connecting the borrower to other referral partnerships — insurance companies, for example — to create additional revenue opportunities. nCino Chief Financial Officer David Rudow called the acquisition of SimpleNexus accretive to his company’s growth profile. SimpleNexus' annualized total revenue as of Sept. 30 was $41.6 million, and nCino plans to make "additional investments in the business to accelerate the product roadmap and expand growth opportunities for the combined companies," Rudow noted. Timing and future products nCino initially sought a partnership with SimpleNexus but saw an opportunity to expand nCino's retail offerings with a point-of-sale mortgage lending solution, Naude said on the Tuesday call, adding that the acquisition will be "further cementing our focus and growth into the retail market." nCino plans to expand its retail loan offering to include international mortgages, which the CEO called an "unwavering" commitment with "great opportunities." The SimpleNexus acquisition, he said, would also be "very, very helpful" as nCino works to develop an API-based middle- and back-office loan origination system that will connect to a point-of-sale solution. There are also cross-selling opportunities as SimpleNexus' platform applies to some 1,100 nCino customers, and the two companies have only 140 overlapping customers, Naude said.

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nCino to acquire mortgage platform SimpleNexus

$1.2B acquisition would expand companies' mobile, point-of-sale offerings

Buffett-backed StoneCo sheds $22B in value since peaking

Temenos launches improved automations and developer support

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