Company: NCNO
Filing Date: 2025-08-26
Form Type: 10-Q
Source: 0001902733-25-000106
Chunk: 18

Company: nCino, Inc.
Filing Date: 2025-08-26
Form: 10-Q
Item: Part I, Item 2
Chunk 18
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229)(0.5)%$5,743 2.0 %

Income tax provision was $1.8 million for the three months ended July 31, 2024, compared to a provision of $1.2 million for the three months ended July 31, 2025, and resulted in an effective tax rate of (18.9)% and (9.7)%, respectively. Income tax benefit was $1.2 million for the six months ended July 31, 2024 compared to an income tax provision of $5.7 million for the six months ended July 31, 2025, and resulted in an effective tax rate of 8.4% and (293.1)%, respectively. The change in the effective tax rate for the six months ended July 31, 2024 compared to the effective tax rate for the six months ended July 31, 2025 was primarily attributable to changes in our valuation allowance and profitable foreign jurisdictions.

We continue to maintain a valuation allowance against our deferred tax assets in several jurisdictions, including the U.S. It is determined by management when a valuation allowance should be recorded, utilizing significant judgment and the use of estimates. Through acquisitions, the Company recorded a net U.S. deferred tax liability mostly related to identifiable intangible assets. The deferred tax liability recognized provides additional positive evidence that a portion of the Company's U.S. deferred tax are realizable. As a result, the Company reduced the historical valuation allowance in the U.S. by $2.0 million during the first quarter of the Company's fiscal 2026. The Company increased the valuation allowance in the United Kingdom by $2.5 million due to limitations on the ability to utilize acquired deferred tax attributes as part of corporate reorganizations related to foreign acquisitions during the second quarter of the Company's fiscal 2026.

On July 4, 2025, H.R. 1, the One Big Beautiful Bill Act was signed into law. This legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in the Company’s fiscal 2026, including the restoration of immediate expensing of domestic research and development expenditures, more favorable rules for determining limitations on deductions for interest expense, and reinstatement of accelerated fixed asset depreciation. These changes were reflected in the income tax provision for the period ending July 31, 2025 and did not result in material changes to the Company’s tax position. In addition, this could increase