Quick Heal Technologies Limited (QUICKHEAL.BO) Q1 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '26 Earnings Conference Call of Quick Heal Technologies Limited hosted by Valorem Advisors. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Nupur Jainkunia from Valorem Advisors. Thank you, and over to you, ma'am.

Thank you. Good evening, everyone, and a very warm welcome to you all. My name is Nupur Jainkunia from Valorem Advisors. We represent the Investor Relations of Quick Heal Technologies Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call of the first quarter of financial year 2026. Before we begin, a quick cautionary statement. Some of the statements made in today's earnings conference call may be forward-looking in nature. Such forward-looking statements are subject to risk and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's belief as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decision. The purpose of today's conference call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Now I would like to introduce you to the management. Participating with us in today's earnings call and hand it over to them for their opening remarks. We firstly have with us Dr. Kailash Katkar, Managing Director; Dr. Sanjay Katkar, Joint Managing Director; Mr. Vishal Salvi, Chief Executive Officer; and Mr. Ankit Maheshwari, Chief Financial Officer. Without any further delay, I request Mr. Vishal Salvi to give his opening remarks. Thank you, and over to you, sir.

Thank you so much, and good evening to all of you. I'm Vishal Salvi, CEO of Quick Heal, and thanks for joining me today. I want to walk you through the Quick Heal Technologies Limited Q1 FY '26. In FY '26, Q1 was softer than expected, and we faced some headwinds, especially in our consumer business and few key enterprise deals got deferred, which impacted our near-term revenue. But I want to emphasize that these challenges don't define us. Instead, they have strengthened our resolve. We have doubled down on building out our partner ecosystem and accelerating the adoption of next-gen cybersecurity solutions. These are foundational steps that will pay off over the coming quarters. Innovation is at the core of what we do. One of the highlights for this quarter is the launch of AntiFraud.AI Freemium. Introducing a freemium model lets us accelerate adoption among consumers by lowering the barriers. It's a way to build trust and expand our user base, which will fuel the future opportunities. We also received Analyst Recognition for our Seqrite product suite. It's always great to see validation from global analyst firms and confirm that we are on the right track with our enterprise security solutions. Beyond products, we are investing in deepening our relationships with partners and consumers. We hosted a successful event in Bangalore tied with a focused Data Privacy awareness campaign. These efforts help us to build trust and demonstrate our commitment to protecting customer data in a meaningful way. On the marketing front, we launched 360-degree brand advocacy campaign in Tamil Nadu. We engaged over 100 micro influencers and leverage user-generated content. This approach creates authentic connections with local communities, which is crucial in building a brand loyalty and awareness. Starting this year, we are focusing on strategic expansion in select international geographies. I'm excited to report that we have roughly doubled our revenue year-on-year in key overseas markets. This shows that our solutions resonate beyond India, and we are successfully growing our global footprint. To support our partner-led growth, we brought on board a new Vice President of Channel & Alliances. Expanding our partner ecosystem is critical for scaling and having a strong leadership in this area is a big step forward. Quick Heal Academy continues to capture key logos, and we did onboard a couple of marquee clients in this space. To wrap it up, yes, Q1 FY '26 presented some challenges, but we are optimistic because of the strategic progress that we have made from the product launches, to brand building, to expanding internationally and strengthening our partnerships. Quick Heal is well positioned to deliver sustainable value in the fast-evolving cybersecurity landscape. With this, I would like to invite our Chairman and Managing Director, Kailash Katkar, for our positioning in the cybersecurity landscape.

Thank you, Vishal, and good evening to all of you. Quick Heal has been my lifeline, what started in a small shop with a simple mission to protect people from viruses, malware has grown over the last 30 years into one of the India's most trusted cybersecurity brand. Today, we protect not just individuals, but small businesses, large enterprise, government institutes and many more. And we do this through solutions built right here in our own R&D center and lab, Securite Lab, one of the largest in the country. One of the things I'm most proud of is our positioning as a trusted native cybersecurity provider. In today's world, digital threats are rising fast, especially with global tensions and complex cyber risk. Our role has never been more important. Our products don't just protect, they help India stay digitally secure. We are aligned with the government's Atmanirbhar Bharat vision. Now I know quarterly numbers can sometimes feel like a snapshot that doesn't tell the full story. But cybersecurity isn't a short-term game. It's a long-term mission, and we are in it. We have a strong foundation, a deep talent pool of experts, a respected brand in the market, world-class infrastructure, including our malware lab and the most important, the trust of millions of customers. The demand for cybersecurity is only going to grow and we are ready with the right people, right technology, and the right vision. Thank you for your continuing with us. Your support means everything. I would like to invite Sanjay to speak about the innovation that we are driving at the company.

Thank you, Kailash. Thank you. So at Quick Heal, our purpose innovate, simplify and secure drives very aspect of our work. So we innovate to stay ahead of emerging cyber threats, simply complex security challenges for our users as well as businesses and enterprises and secure digital environment across all sectors. This vision comes to life through cutting-edge platforms like GoDeep.AI, a AI-driven threat detection that continuously learns and adapts to identify sophisticated attacks in real time. Most recently, we have introduced SIA, Seqrite Intelligent Assistant as a part of our XDR, which is extended detection and response platform. SIA acts as a contextual and intelligent assistant, helping cybersecurity teams interpret threat data, correlate incidents and respond faster with actionable insights. By combining automation, threat intelligence and intentive design, we are making enterprise-grade security smarter and more accessible. These innovations reflect our ongoing commitment to protecting the digital world through technologies that are intelligent, scalable and built for the future. Further, our to make cybersecurity more inclusive and accessible, we have also partnered with Bhashini, the National Language Translation Mission. Through this collaboration, we aim to deliver cybersecurity awareness and assistance in multiple Indian languages, ensuring that language is no longer a barrier to staying secure in the digital world. As we look ahead, we remain committed to building a safer digital future, one where security is intelligent, intuitive and within reach of everybody. With this, I would like to hand it over to Ankit to talk specifically on the financial performance of the quarter.

Thank you, Sanjay. Hello, everyone. I would like to update you through Quick Heal's financial performance for quarter 1 FY '26. The numbers reflect some challenges this quarter. I will also elaborate on some important operational insights that can help us understand the company's strategic position. Starting with top line, we see revenue declining to INR 57 crores in Q1 FY '26 compared to INR 70 crores and INR 65 crores in Q1 and Q4 of previous year, respectively. This largely is a result of softer market conditions in the consumer segment. Owing to overdue receivables and challenges we faced in collections in earlier quarters, we have taken proactive measures to curtail invoicing this quarter for a few specific partners. Having said that, we have seen a positive trend in collections in the month of July. In the Enterprise segment, we have seen deferral in few deal closures, resulting in a flattish year-on-year result. The latest order of cyber literacy program that we have disclosed in May, which is already reflected in our order book has initiated in Q2 as the academic institutions have just opened up. Moving to operating costs. Overall expenditure has been consistent at INR 66 crores this quarter, the same level as Q1 of last year. While the R&D spends are optimized, our commitment to innovation remains strong, delivering cybersecurity products to protect our customers against cyber attacks. EBITDA for the quarter is negative INR 9.7 crores. Profit after tax for the quarter stands at negative INR 5.5 crores. To summarize, the financials reveal that we are currently navigating a challenging quarter marked by revenue softness and continued investment in growth and innovation. Going forward, the key focus will be on driving revenue recovery while managing expenses to improve margins. I am confident this balanced approach will deliver better operating leverage and create shareholders' value. Thank you for listening. I would like to open the floor for the question and answer session.

[Operator Instructions]The first question is from the line of [Jatinder Agawal] from Relax Capital.

So just one thing, right? So this is on the B2B segment of the enterprise business, right? So we've consciously increased the addressable market that we have over the last 15, 18 months. And to what I understand, the last -- this thing was that last year, March, the full stack was ready, right? If you look at the total addressable market that you have and you actually look at the revenue growth that you're actually posting in that segment, it is like single digits at best, I guess, on an annualized basis. So can you just explain where is the gap? Is -- are you missing out in terms of people in sales who are able to push that product into the market? Is it pricing that you get priced out because of competition? Or is it something like execution that you're not able to actually execute or implement whatever you would have done in terms of your strategy? So I want to have a more detailed understanding of what is going wrong in the enterprise business. I'm not so concerned about what is happening on the B2C business. That will help us.

Thank you so much for that question, Jatinder. And see, I think one is you need to -- first of all, I wanted to tell you that from the way we are running this business, we don't see any major things which are going wrong in our enterprise strategy, okay? And I'll tell you why. One is that, as you rightly said, the full stack of all these new products was launched and introduced somewhere last year. And a lot of this actually requires reach out and GTM for it to start having inroads into the customer segment that we have targeted, okay? Now if you remember, one of that was related to our data privacy stack, and we were talking about how we were launching and building it and how we were obviously very aspirational in terms of its growth. But unfortunately, because the guidelines have not yet been issued by the government of India, we have been -- we are still waiting. But having said that, the good news is that we have created a very strong pipeline of data privacy deals. And I'm also happy to share that we have won one large BFSI deal in this quarter, okay? So we have started to also now get into a winning position in the market. And that's a good news, right? So while we were talking about it, but now we have started to see that it is getting fructified. Now overall, if you look at it from 0 in terms of contribution for the enterprise revenue, right now, our new product segment stands at somewhere between 13% to 15%, okay? And that's a steady growth which has happened. And -- but if you look at our pipeline, we are extremely bullish. So all the foundation that we have put in place is now coming to bear, and we have started to have good conversation, okay? So the last thing I wanted to say in this, Jatinder, is that if you look at any enterprise cybersecurity business, right? It has got a gestation period, right? And we need to be committed to it for it to start reaping benefit. All the hard work that we have done is setting up the foundation and we remain bullish in terms of how we are going to grow in this market. And also a very important aspect that you should know is that we have constantly grown. I mean, of course, if you look at quarter-on-quarter, it is appearing to be flattish because some deals got deferred. Otherwise, it would have been a very different story. But like I said, right, we have now won a very large deal in the data privacy segment and the good pipeline is there. So we can start seeing some growth coming up in the coming quarters. I hope that answers your question?

Okay. My next question is for Mr. Katkar. If you could explain now that Vishal is on his way out, what is your thought process in terms of looking out for someone? Is the -- are the promoters going to come back into the business? Or do we again look back for a professional CEO?

So as a part of our succession planning, the company is currently engaging an active search for a new CEO to lead us into the future.

So the promoter family does not intend to come back, is it?

Not as a CEO because I am a Chairperson as well as Managing Director.

Correct.

So Managing Director can definitely manage in entering period actually.

Okay. And is there any time line? Are you talking to some people? Or is there any sense as to by when you think you should be able to close the new professional...

I think whoever we might select, again, it might take 2 to 3 months' time as a notice period part of it. We will try to close it as early as possible.

Perfect. And one thing I want to ask, it is more on the business side, right? A large part of your investments over the last couple of years have gone into creating this enterprise platform products, whatever you may call, right? And generally, in the product business, once revenues start coming, we see a J curve in terms of margin expansion, right? And if you go back, I had asked this question, say, about 2, 3 years ago also. And I think the management this thing was that, we will have 50% revenues coming from B2C and 50% from B2B. And I still remember asking the same question, what is B2C declines, then we are effectively at the same run rate, which is what the fear I had, and I think it seems to be translating into something like if not exactly the same number, but it seems to be exactly translating into something of a similar thought process. Can you give a 3-year, 5-year thought process? This is what I think my revenues will be. This is what my cost structure would be. Because otherwise, it is all talks in terms of products, in terms of strategy, how you're trying to get into that business. But on the other side, where you have to monetize all that knowledge, I think we are lacking. At least that is what I can make out as an outsider because we are investors and not really running the business. So if you can just help us understand, I don't want any quarterly revenues this quarter, next quarter, I don't care. If you can show some thought process, what it will be like in 3 years, 5 years? And let's this time not discuss percentage. I want you to tell us this should be my ideal revenue run rate on the enterprise business. This will be B2C, but B2C, I really don't care.

No, [Jatinder], this is Vishal here. See, I think the first important message is that this pivot -- enterprise pivot was very critical for the future growth plans of the organization, right? If we had continued with only consumer, you would have been a very declining situation as far as the business is concerned. So the fact that we have pivoted helps us to maintain, if not decline, at least maintain our run rate, which has been there for last few years, okay? That's number one. Number two is we have continued to be in the investment space on the products and solutions, which are very critical for enterprises today, okay? And yes, we haven't yet been able to demonstrate the growth that we are looking for. But as you have seen for the last 1 year, we have been growing our team. We have been doing multiple things to set the foundation for the future, right? Our sales -- new sales organization is fairly young, right? Our Head of Sales has just finished 1 year in the organization. And these things have taken -- takes time for us to navigate the change and get everybody onboarded. That is what we have been constantly focusing on. So we feel very confident about the foundation that we have created, and we have not deterred from investing, okay? And it has to be a patient game in terms of looking at how we can now use this foundation for the growth that we have anticipated, right? We have never given a guidance as far as the future is concerned. What we have said is about how we are investing for the future. So -- but having said that, the leadership team, the promoters, the Board feels confident about the business model and where we are in, and we will continue to do that. And we feel confident that in future, we will start showing the curve and the improvement that you are actually talking about

[Operator Instructions] The next question is from the line of, [Devang] an individual investor.

Am I audible?

Yes. Yes, Devang. Go ahead.

Okay. So I just have a few suggestions and a bit technical question is I've just recently started investing as an individual investor in this company. And prior to doing that, I was going through the products to understand the quality and how good are the products. And the missing part, which I felt is I could not come across any videos on YouTube related to unboxing the product or configuring it or how to install it. So something -- I believe something like a Quick Heal AntiFraud is a product similar to Truecaller. And while configuring Truecaller, it just took me about 15, 20 minutes, and I was up and running. And with something like Quick Heal, it's been almost 6 or 7 days, I'm still struggling in configuring the app and understand what are the features of these app. So if the management could post more videos with -- through the technical team on YouTube, I think since we predominantly are into the B2C market, it would be a lot more helpful to promote these products and sell them well in the market.

So Devang, I think thank you very much for your feedback. And this is something which we have also noted because especially a product like AntiFraud is basically helping consumers to understand all the risks which are there on their phone, existing on the phone as well as those which are coming from outside. And therefore, there are certain privileges which are required at the time of setting the application. And that can be a little difficult for a normal user. And that is something which we have noted. And while we have also trying to improve that whole user journey so that the experience of onboarding is simpler. I think your feedback is well taken. I don't think we have right now created any videos related to unboxing. Apart from that, there are many other videos that we have created, but we will -- we definitely take your feedback and we'll work on expediting such videos as well.

None of the videos were useful to me as the end user. And I have reasonable experience in the cybersecurity field to basically understand the product inside out.

So I think your feedback is noted, Devang. We'll work on it.

[Operator Instructions] The next question is from the line of [Jatinder Agarwal] from Relax Capital.

So like obviously, the B2B business or the enterprise business has been disappointing and you, yourself in your comments said that the pipeline looks interesting. I'm not sure if I read through the presentation. Is there any place that you've disclosed what the pipeline looks like? Because if I'm an outsider or an investor, I'm actually just lost. I just don't have any idea how the new revenue line or order book looks like. Can you share some qualitative aspects?

Yes. So Jatinder, Vishal here. So we have been disclosing order book for last 2 quarters, okay? And so the order book that we have shared is INR 24 crores, okay? In fact, I should have told earlier itself that it's a very healthy order book. And also, there is a deferred revenue of around INR 2 crores. So we have a very good -- and this is already something which is in the hand. okay? We don't -- right now, we do not disclose our pipeline, specifically in terms of numbers. Maybe in future, we could give some guidance. But right now, we don't. And -- but I can tell you that the things that I talked about earlier, and I'm sharing it again now, is that it is improving and it is looking healthy for us, and it gives us the confidence about our future.

So exactly because it's a very classic B2B business, and we as outsiders are actually lost. So there has been a lot of data improvement over the last couple of years. This is something that you should ideally discuss internally and disclose on a very regular basis, right? This is my order book. This is the pipeline I'm talking. At least we, as outsiders will know that, okay, it takes 12 to 18 months for this to get either into your book or to go to a competitor. But at least we have something to -- basically, what I'm trying to ask is I need to understand what this number will look like in the next 2, 3 years. But the way the presentation goes or the way the numbers go, actually, I'm at a loss except for words or in terms of talks, there is frankly nothing that I can rely in terms of numbers. So we have -- I can give you a couple of companies that are there who are into product business, but they genuinely disclose this is the pipeline which we are bidding in. Now whether I'll get the bid or I'll not get the bid or someone else will get it, which is fine. But at least as an outsider or as an investor, I can do some probability that my last win rate was X percent. My incremental win rate will be 5%. And then I can at least have some judgment as to how that number looks like. Can you please discuss this internally so that we as outsiders have some comfort as to what that number on the B2B business will look like?

Yes, yes, sure. I think your feedback is taken on both, Jatinder. But like I said, if you remember in previous investor meetings, I had mentioned that as we fine-tune our metrics, we will start sharing and that's when we started sharing our order book. So even in this investor deck, we have shared our order book as well as the press release. And I think the next thing after that to mature is to give you more color in terms of how the order book will get converted and what is the time frame. So we will definitely work on that and improve and give more granularity in coming quarters.

[Operator Instructions] The next question is from the line of Mihir Manohar from Carnelian Asset Management.

Am I audible?

Yes, Mihir.

Sir, I wanted to understand, on the DPDP side. So what is the current status in parliament or on the I mean judiciary side or the legislative side, when should one expect the implementation to happen? Why is it taking so much time? And second thing was on the product side. I mean, when we see the product over here, I mean, how do we see this particular product? Is there competition? I mean who are all others are providing products? And what is the strength of the product when we see the strength versus the existing products or the competition to competition...

Thank you, Mihir, for that question. So the current status that I can share with you what we understand is that we are waiting for the final go ahead from the government. As you know that government had issued a draft implementation framework for feedback from public, which has been provided. And now the final draft is with the government for them to issue it. I think the good news is that some of organizations forward-looking and organizations have already started their journey. They are not waiting for the act to actually come into enforcement. And as a result, as I just mentioned to you, the good news is that we have won our large -- one large deal with Indian BFSI client. And that gives us a lot of confidence. And the client has got all aspects of the data privacy life cycle from data classification, identification to consent management. Now as far as our product is concerned, we have used this time to invest and build more features, functionalities into the product. So the content management aspect, which came into play only after the act was introduced is something which we have integrated in our product in this period of time. And it's already now released and available for our customers, and we already have our first customer. So this is what we have been doing in terms of using this time to continue to add more features and functionalities. We obviously are betting big on this and continue to betting big on this so that because of the pipeline that we have created, we'll continue to have a good go-to-market for that. Now as far as the competition is concerned, there are players, there are Indian players and there are global players. I think we feel very confident the way we have beaten other players, global as well as Indian in this deal that we have won. We feel confident that we'll be able to compete in this market. And because it is going to be a very large TAM, we will have a fair play as far as DPDP solution is concerned. So I think all of these 3 things are very critical. And like I said, some of the organizations who are forward-looking are not waiting for the act to come in. And we are already doing multiple POCs and proposals are there, which hopefully, we'll be able to close more deals this quarter as well.

Okay. And this deal is Tier 1 BFSI or would it be Tier 2 BFSI?

It's a Tier 1 insurance company.

[Operator Instructions] As there are no further questions, I now hand the conference over to the management for the closing comments. Over to you, sir.

Thank you so much, everyone, for joining us and asking us great questions from us, and have a good evening. Thank you.

Thank you.

Thank you. On behalf of Quick Heal Technologies Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.