Quick Heal Technologies Limited (QUICKHEAL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Quick Heal Technologies Limited Q1 FY '23 Earnings Conference Call. [Operator Instructions] I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone, and a very warm welcome to you all. My name is Anuj Sonpal 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 conference call for the first quarter of financial year 2023. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs 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 decisions. The purpose of today's earnings call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Now let me introduce you to the management participating with us in today's earnings call and hand it over to them for opening remarks. We firstly have with us Mr. Kailash Katkar, Managing Director and CEO; Mr. Sanjay Katkar, Joint Managing Director and CTO; Mr. Navin Sharma, Chief Financial Officer. Now without any further delay, I request Mr. Kailash Katkar to start with his opening remarks. Thank you, and over to you, sir.

Thank you, Anuj. Good afternoon, ladies and gentlemen. Thank you for making the time to join us today for the company's earnings conference call for the first quarter of this financial year. We at Quick Heal are pioneer in India in cybersecurity space, providing simple but effective solution for our customers' complex cybersecurity problems. We are the undisputed market leader in the consumer segment in India, which constitutes around 2/3 of our overall revenue. This is a cash cow segment and has been flattish for us due to stagnant market for the past few years. The stagnant market can be attributed to a lot of factors, including but not limited to lack of customer awareness, lower growth rate of PC inventory and pricing pressure due to competition. Having said that, the global antivirus consumer market is likely to grow at around 4%, whereas India market is likely to grow at around 1%. We are already a market leader in this space, and we'll continue to maintain our strong hold. Coming on to the enterprise segment. We are excited about growth since last few years and have already become 1/3 of our overall business. We have made a strong [indiscernible] in the space, which is 20x larger than the consumer segment and growing at 11%. We have set up a strong customer base in the [ SMB ] segment in India through years of sales and marketing efforts, enabling us to grow at 4x in the industry. With the new and upcoming products release and our shift towards larger enterprise, the future looks are more promising. Our newly launched Zero Trust product has able to garner traction and acquire first customer in this quarter, which further solidifies our belief. In this quarter, Q1, our R&D expenses have increased by around 39% year-on-year. Our investment into this space are already bearing fruit and is visible from our Q1 results, wherein the enterprise business grew by around 50% over the same period in the previous financial year. In the last quarter, we have onboarded a couple of industrial experts in the R&D and marketing function, namely Ashish Pradhan as a Chief Technology Officer and Sudhanshu Tripathi as a VP and Head of Marketing, both of whom have -- both of whom comes with a significant experience in their domain. We also began our engagement with one of the top 3 global consultancy companies to fructify our long-term strategy growth plan. Now I request Sanjay to take over through the technology updates and current development product -- developed products. Over to you, Sanjay.

Thank you, Kailash. Good afternoon, everyone. Let me give you some more insight into the business segment performance of our company. As Kailash mentioned, in Q1 of FY '23, our enterprise business showed a strong year-on-year growth of around 50% to reach approximately INR 22 crores. We have a very strong presence in the SMB segment and are gradually moving towards larger enterprise and have added 36 customers with greater than 500 endpoints in this quarter. The growth has been primarily coming through our EPS product, and we are well set with our newly released products and future road map. I would like to take this opportunity to talk about our product road map and strategy for the enterprise segment. The product lines are broadly bucketed into 3 categories the endpoint security, zero trust and data privacy. So our endpoint equity product falls under the endpoint categories, which we are moving towards EDR and XDR for adding detections and response capabilities through automation, AI and ML from [indiscernible] protection. We had launched our first version of EDR last year and have got our early customers. We are seeing good enough demand for this product generating -- getting generated through this market. So the world, including developed markets like U.S. is currently adopting the Zero Trust framework in their architecture to prevent cyber attacks. So our next-gen zero trust user access and network access products are a solution for [indiscernible] on this trend. We had launched user access early this year and have onboarded our first customer in the zero trust user access segment this quarter [indiscernible] across countries are adopting data privacy regulations like GDPR in EU, and 71% of the countries worldwide have some form of data protection and privacy legislations prevailing. We have launched our products early this year to help companies protect the PII data within their database. So we are establishing product market fit for all these products which typically takes around 4 to 6 quarters, and you can expect revenues to flow in from H1 of FY '24. I would now request Navin to take you through the financial overview. Over to you, Navin.

Thank you, Sanjay, and hello, everyone. Let me take you through the financial highlights for the first quarter of FY '23. The consolidated revenue stood at INR 61 crores, which represents a growth of around 11.5% on a Y-o-Y basis. I would like to reiterate the fact that our business has seasonality across quarters where our [indiscernible] revenues are generally lower. On a segment basis, the revenue from consumer segment remained flattish at [ INR 41 crores ], and the enterprise business grew by -- grew by roughly 50% to reach INR 22 crores on a Y-o-Y basis. This is similar to how we have been viewing the business to perform going forward. That is consumer segment to remain flattish or modest growth and enterprise business growing rapidly. The enterprise segment has already become 1/3 of the business, and we are looking forward to make the business -- make the mix 50-50. R&D investments for the quarter stood at 46% of revenues, while the sales and marketing stood at around 30%. EBITDA margin for the quarter stood at 1.72% and reason for decline in EBITDA margins were primarily due to the increased investment in R&D and sales and marketing. Also reiterating the fact that the revenues are seasonal, whereas the costs are not. We have increased our R&D efforts to cater to the bright opportunities of the market as Sanjay detailed out in his commentary. In Q1 FY '23, sales and marketing expenses were higher by 9% on a Y-o-Y basis at a consolidated level across the 2 verticals, which we believe will show results in the ensuing quarters in terms of revenue growth. The net profit stood at about INR 0.2 crores. We are committed to driving shareholder value by growing profitably across both of our segments and driving solid unlevered cash flow. We have constantly rewarded our shareholders through buyback and dividend distribution programs and have returned INR 436 crores to our shareholders since FY '20. And in addition to this, we have proposed a further buyback of INR 150 crores. With this, I would like to open the call for question-and-answer session.

[Operator Instructions] The first question is from the line of Vivek Ganguly from Nine Rivers Capital.

One quick question on the buyback. Would the promoters be also participating in the buyback?

Vivek. Yes, promoter would be participating, and they will be participating proportionately. Basis, the numbers the promoters have communicated, means broadly 36.4 lakh equity shares out of this 50 lakh shares would be promoters participation, which is a proportionate number.

Right. And sir, I had another question on the enterprise business. So in the presentation, you all have mentioned Seqrite HawkkEye, HawkkProtect. A couple of presentations earlier, we had 2 products that were highlighted there. And during this communication, you all mentioned that what you are launching now, it will start earning revenue -- it will gain traction about 3 to 5 quarters down the line. So what -- so -- and while we already have about a run rate of about, let's say [ INR 80 crores, INR 90 crores ] of enterprise revenue already flowing in. So what is the differential that we are alluding to that we as investors are not getting it? That these -- the Seqrite Hawkk product, Seqrite Hunt, these would be the new gen product that you are launching? But are these already garnering revenue, or these will garner revenue for you all going forward? And if so, then what is the differential between the current -- the contours of the current enterprise revenue that you'll have from the product -- from a product perspective and the one that will be your future revenue drivers?

Yes. So to answer that, see, you rightly mentioned, we have been mentioning about these products and investor presentation does have the list of the new products that we launched. The current enterprise revenues that we are seeing are coming from our existing business as usual products, which is like endpoint security and firewall and EMM, which is our enterprise mobility management. But this most particularly, the thing -- the revenues are coming from endpoint security as such because that's our stronghold and our market segment, which we target is the SMB. The EPS product is quite ready and competing with any of the MNCs in this category. With the launch of HawkkEye, which is an EDR and then further, we are extending it to XDR, and other products like ZTUA, all these products are for the newer markets that are getting generated -- is getting created because of the new way people are thinking about implementing security, and we want to be addressing those markets as well. So that's where are investment into these products and these products [indiscernible] have been already launched. And these are in the beta, I mean to say, pilot testing with a lot of organizations wherein we get the feedback, we'll customize it further, make it market fit ready. So that's where we say it's going to take 4 to 5 quarters further to start generating revenue out of that. So those are the new products which has a different and additional revenue potential, which will add up to our enterprise revenue.

So just to add to that, this is not something which is going to replace the existing enterprise products. Even those products are equally needed by the same customer and this Zero Trust will be additional product solutions for the customer actually.

Right. So these products that you have mentioned, the Seqrite products will be over and above the endpoint product revenue line that you all have. Now, would you all -- right? Would you all be able to take us through -- we are pretty layman investors. We don't understand the technicalities of this space too much. But if you can take us and help us understand what each of these HawkkEye, HawkkHunt, what is the role that they perform in the cybersecurity ecosystem, each of them? That will be very helpful because that is what we have been like struggling to understand while your -- this is -- the enterprise is, as you all say, is the future bread and butter with retail being flattish or on a -- flattish at best. So if you all could help us understand that, then it would make us take a much more informed investment decision.

Right. So see, the EPS, which we already had, which is [ for business ] as usual for us is about endpoint security. But now the endpoint security is not only enough security, which is coming up because of the new trade landscape. So we have started working on these new products. So HawkkHunt is about endpoint detection and response, so EDR is the short form. And EDR is about protecting the network from most much advanced threats, giving control to the user to check the threat telemetry, go through the [indiscernible] telemetry and take the decision. So it's more towards protecting from advanced threats like APTs, advanced persistent threat attacks that are happening nowadays actually. And the ZTUA product is all about Zero Trust user access, which gives an additional layer of protection for making sure that when any of the organizations, any of the users whoever is connected to the network and not only users, it's going to be devices. All these are like going to change to a new platform, which is Zero Trust, wherein no devices or no user will be trusted every time the user will be authenticated and allowed into the network. So that kind of security is a much advanced security needed for larger enterprises to handle the advanced threats that we're seeing nowadays actually. So ZTUA is an additional layer, which is recommended by most of the companies like Gartner and all recommended to all the large enterprises to get protected from the advanced threats. And the third product that we have coming up is in the data privacy segment where newer data privacy laws, which are going to come and in certain -- in certain countries, which is already implemented, there are a lot of compliances that enterprises need to follow. And these compliances need a large -- lot of tools, which we bring in like for the product that we launched, which is HawkkProtect -- sorry, HawkkScan. It stands for all the data at the user end and classifies them into different buckets. And gives easy control for a user to take the further decisions. So all this is like the market that are getting ready for these kind of products, and we are making sure that we have products in all these -- of the segments so that we will be able to grab certain share of the market. So if you see focused market potential in these categories is around 700 million globally, I'm talking about. And I'm talking about 700 million roughly by FY '27. So in next 5 years. And that's where we want to grab some market share out of these products as we launch and stabilize this product [indiscernible].

So you mentioned about HawkkEye and HawkkProtect. What about HawkkHunt and HawkkScan?

No, I mentioned about HawkkHunt and HawkkScan. So EDR is a HawkkHunt. Data privacy is HawkkScan. And HawkkEye is a centralized dashboard for us actually, which is the demand coming from all enterprises, wherein all these products when the customers implement, they want everything to be on a single dashboard, single pane of glass where they can control all the applications on one single dashboard. So that -- HawkkEye is a platform where all these products get logged in and the user gets a centralized control over that. So that's, again, a good demand that is coming, and we have launched HawkkEye, which has now integrated EPS, EDR and HawkkScan as well and very soon HawkkProtect. So all these products will be a part of HawkkEye and HawkkEye is going to be a centralized dashboard for the control for any CSOs that they will -- managing their infrastructure, right?

And what does HawkkProtect do?

HawkkProtect is zero trust user access actually. So that's what I said, yes, ZTUA.

[Operator Instructions] The next question is from the line of [indiscernible] Singh from CCIPL.

I just have a small question regarding the share buyback. So could you just share some more details about the buyback, like the buyback size and when it is expected?

So broadly, the offer size is INR 150 crores. And the buyback is proposed at INR 300 per share, which translates into 50 lakh shares which is broadly 8.6% of total paid up capital. We are going through tender route and time lines, et cetera, while there are -- I mean, SEBI, et cetera, comes into play. But broadly, we expect the buyback to get concluded in 3.5 to 4 months.

[Operator Instructions] The next question is from the line of Keshav Garg from CCIPL.

Sir, thank you very much for the [indiscernible]. Sir, but the only thing is that we are giving an unrealistic price of INR 300, so the whole idea is that our -- since our PAT is flat since FY '18 at around INR 83 crores, but still due to your buyback, our EPS has increased from 11.8 to 14.3. So since our CMP was around INR 200, we could have done a buyback at INR 250 . And instead of 50 lakh shares, we could have bought and extinguished 60 lakh shares. So basically, our EPS would have increased further, whereas the shareholders would have got the same INR 150 -- I mean INR 150 crores. Sir, so in future kindly keep that in mind. And sir, if it is possible to revise the buyback price, then please do so. And sir, also, sir -- and we are unnecessarily paying 30% dividend. And if we can just pay a token dividend, then we can do more buyback. Sir, so you can kindly consider that suggestion. And sir, also wanted to understand, sir, going forward for this financial year FY '23, sir, what is the expectation, sir? Will we be able to surpass the INR 140 crores EBITDA that we did in FY '21 because I understand that there was some spillover that year from the previous year?

Thanks, Keshav. So as I understood, you have 2 things. One was a larger suggestion with respect to buyback and dividend. So probably, Board has taken a lot of considerations, a lot of factors, et cetera, were considered by Board and they come to that number. But nevertheless, we will keep it in mind during the next transaction if the Board approves any buyback in future. Second, with respect to EBITDA, see, larger part is revenue growth, what we are factoring, and we have been communicating even in past and similar, we are communicating again this time that retail business, which is broadly 2/3 of our business. Globally, this business, the retail segment is growing at 4%. And in India, the growth in retail segment is barely 1%. So broadly, with this, our expectation for full year to remain in similar range, what India or global numbers are. Enterprise business is a business which is growing at a faster rate. Globally, it is growing at 11%, and we expect to grow better than global numbers. And this is how we performed in last year. And similarly, we believe that -- and even the same performance was there in quarter 1 as well. With respect to EBITDA, it would be difficult to comment on EBITDA numbers largely because we are investing heavily on R&D and sales and marketing for our retail business and R&D primarily for our enterprise business. And you know that entire IT industry is facing cost escalation, and we are no different from that. So what we are targeting is reasonable growth in revenue. And to the extent possible, we will keep optimizing our cost to have a better bottom line.

Sir, and also, sir, whatever -- basically, whatever R&D we are doing, we are debiting it from the P&L. Sir, so do we have any CapEx plans or whatever R&D we are doing, that is our -- basically our CapEx?

So Capex is limited, is very limited numbers, means in our larger scheme of things, CapEx is insignificant. R&D is our major investment, which [ happens ].

Okay, sir. And sir, also wanted to understand, sir, that sir, we are paying normal tax rates. Sir, so I think that for R&D, we get some income tax deduction. So our tax rate should be lower than normal since we are spending so much on R&D?

No, the tax benefit, R&D was available 3, 4 years ago. In the last 3, 4 years, that deduction in the 35(2AB) was abolished. And as such, there is no tax benefit for R&D.

Okay, sir. And sir, lastly, I wanted to understand, sir, that post-COVID, there was a huge increase in sale of IT -- like IT products like PC and laptops, et cetera. Sir, around 50% increase in sales. Sir, so how is it not reflecting in our revenue? I mean, on the retail side because I mean if more people are buying IT equipment. And sir, in 1 call, you did mention that for the first 6 months, the equipment comes with free antivirus. So now that -- those 6 months are over, so now people should be purchasing antivirus software.

See, lack of consumer awareness is the biggest issue in India, broadly 20% to 25% laptops are only covered under -- covered through antivirus. While this is a big opportunity for us, at the moment, this 20%, 25% improves to 45%, 50% or even it's a higher the way it is in developed countries. It provides a larger window opportunity. But as of now, this awareness, consumer awareness is very low, more particularly in India. So while we are working to improve it, the way it improves, this will help us increasing our revenue as well.

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

I have 2 questions. And the first is the data point. But the next question is related to it. So if you look at your last year's revenue, how much of your revenues came from outside India? And within that, what has happened globally in terms of the recent geopolitical events, specifically with Russia and Ukraine? Is there anything you would like to share your thoughts in terms of how the macro environment for your business changes for the products that you sell overseas? And my second question is related to the government of India, recent changes in cybersecurity, which are upcoming. I'm actually a novice and my understanding of technology is very weak. So if you could just explain [indiscernible] what are these regulations, which are upcoming, and how does that impact our business for the enterprise business within India. So these are 2 questions.

Sure. [ Jitender ], we could not hear your question number two. So if you would like to repeat it. But with respect to our revenue, we are -- currently, we are India-focused India-centric company. More than 95% of our revenue comes from India. Per se, with this Russia-Ukraine war, as of now, it has not impacted us. Probably, when we decide to go global, then we will see that what could be a consequence of or repercussion of these things. This is your answer for question #1. If you can repeat your question number two?

Yes. My second question is related to some news verticals which I have read, where the government of India is coming out with some new cybersecurity regulations that were to be implemented by end of September is what I understand. So what are those regulations basically? Because it says that it impacts large corporates and mid corporates together in terms of data privacy [indiscernible]. Is there something that you would like to share for a layman as to better understand what are those regulations and how does it impact our business?

Yes. So I mean, it's -- data privacy regulation is in discussions in Indian government since at least more than a year now. We are hoping that it should come by next September, but it's like it has been delayed a lot. But if those -- the data protection regulation is just like if you see in -- it's just like GDPR in EU actually, European Union. So once these data privacy laws are into effect, enterprises will have to work towards protecting the data that they are collecting, especially the PII data that they collect from their customers or vendors. And that's where -- I mean it will become more stringent. We'll have to protect the data. At the same time, they will be held responsible, liable for any kind of data breach that happens and aftereffects on the repercussions of those breach actually. So that will at least bring in further awareness among the enterprises, and we will have to spend on the data protection related products. So our data privacy -- a product that will be helpful in this will be about the HawkkScan, which is all about data scanning, classification and applying policies and rules around that actually.

The next question is from the line of [indiscernible], an Individual Investor.

Congratulations on our good growth and revenue, sir. So I'm new to the company. So please excuse me if I ask some basic questions. So the first question, which I have is the retail business growth has been flat year-on-year and almost half quarter-on-quarter. So from your commentary, I understand the focus is now on this vertical. But can you explain what was the industry growth during the same period? And are we losing market share to our peers. And if so, can you name some of these peers? And lastly, the sales and the marketing expense has increased significantly, then why is the growth still slow?

So [ Daria ], with respect to your question on retail. So see that globally, the consumer industry is growing at 4%. In India, the growth is literally flat at -- barely at 1%. If you compare it with our last 2, 3 years performance, we have grown at lower single digit as compared to a 1% growth in India. This is part number one. With respect to our growth in sales and -- see, larger expense on these sales and marketing. So we are looking to focus [indiscernible] for increasing demand and broadening the pipeline and lease through digital channels. We are also looking forward to optimize our digital presence through [indiscernible] optimization and marketing. But these are long-term investments, and it would be not right to expect results on an immediate basis. And probably because our investment in sales and marketing was the only sector which has helped us in growing our retail business in the last 2, 3 years as compared to flat market.

And to add to that, I'll say we are not like only focused on enterprise. The focus is on both. Only thing is consumer is on a different trajectory. And so the retail products are facing what's the trend in the market. But at the same time, we are maintaining our market share and trying to see where and how we can further grow into that. But we're definitely holding our market share...

And just to add, our market share currently in India is the highest. I mean, we have 30-plus percent market share, and we are leader in retail segment in India.

Okay. And my second question would be like on the enterprise side. So can you elaborate what kind of clients are we catering to? If you could give a mix of industries or client profile, that would be helpful. Also, what are the average deal sizes? And how many clients are we catering to currently? And what is our average gross margins or EBITDA margins on these projects? And lastly, what is our average time line of these projects?

So we currently have around strong presence in SMB segment, and we believe it comes around 15% to 20% in Indian SMB. So we have 15% to 20% market share in SMB segment or the endpoint security market. We have also been shifting towards the larger consumers and to protect a good number of quality logos. So some of them might be included like -- if I have to name a few customers, it's like BITS Pilani or like Fino Payments Bank, Emami Cement. So any organization having IT infrastructure is our potential customer, and that's why we target them to sell our endpoint security products.

Okay, sir. Yes. That's it from my side.

I need to say, there's no particular vertical that we are focusing. It's like throughout -- across the vertical, we are -- across different verticals, we target our customers for endpoint security. And currently, like adding new products that we are launching in current [indiscernible].

[Operator Instructions] The next question is from the line of Kaustav Bubna from BMSPL Capital.

I basically just had one question. Out of this INR 20 crores of enterprise revenue for the quarter, which is basically 33% of INR 61 crores total revenue. How much is the sale to private corporates? And how much is it to government? So out of your [ INR 80 crores ] of revenue coming from [ Seqrite ], how much is it -- how much percentages -- how much percent of this [ INR 80 crores ] is to private corporates? And how much of this is to government?

Thanks, Kaustav. Broadly, these type of information, normally, we don't disclose in -- to outside, I mean to anyone. So this is a bit confidential and proprietary information for us.

But then how do we as investors or potential investors gauge your enterprise growth, your private corporate growth?

But see...

Okay, tell us how much -- over the last 5 years, how much has the sale to private corporates grown on a CAGR basis?

The growth is similar, both in government. So limited information, what I can share with you broadly, the CAGR growth for government and private customers are similar. Predominant sales comes from private sector sales only.

Okay. Doesn't make sense to me but thank you.

The next question is from the line of [ Madhusudan Bohra ], an Individual Investor.

Mr. Kailash, I want to ask you about the growth in revenue and net profit over a period of time. I see over a period of 3 to 5 years, our revenue has grown just by at least 3%, which is not even beating the inflation, which I have in India. Even my revenue, if I see between 3 years, the net profit growth is around 8%. In 5 years, it's just minus 3%. And what I'm seeing is, there's growth as an investor, if I want to go and look at the company, I don't see anything changing in the company. Because if I see it from last year, 2015 or '14, revenue is just hovering around INR 300 crores mark. I don't know what is the reason like technical, neither I understand nor I want to understand. I just want to ask management. First, are they satisfied with their own performance that [indiscernible] so many years, there's no growth in revenue, nothing happening in profit terms. So only as an investor, I can see is buybacks coming because you have a cash reserve, which is allowing you to make the buyback. That's a good price, which is -- something which is [indiscernible] the investors. But apart from that, can you just tell me first, as Mr. Kailash, are you satisfied with the performance of the company yourself? Second, what is the growth plan as you must have had some vision for 3 to 5 years for yourself and for your company. So what kind of revenue you are targeting for next 3 to 5 years, your plan? What Kind of net profit you are targeting, whether some spillover goes from 1 quarter to another quarter? Some quarter, there is some expenses [indiscernible] comes. So whatever happens. But as a total 3 to 5 years, where is your vision for revenue? And what is your vision for net profit? Second, sir, I see our working capital cycle is around 100 days last 2, 3, 4 years. Is there any chance that we can [indiscernible] 100 days working capital cycle? And the third, sir, is in the presentation, it was given that over a period of time, you rewarded INR 75 per share to the shareholders. So just wanted to know how this figure has come, sir?

So there are around 2 to 3 questions which you have raised. So you mentioned about the revenue growth and the bottom line growth part of it. So definitely, I understand the revenue growth percentage is less compared to -- compared to the expenses' growth, which has happened in the organization. But whatever the expenses are happening is like sort of investment into the futuristic products, which we are working on like a zero trust and data privacy part of it. And these investments were there for last 2.5, 3 years almost. And apart from that, even the current business as usual product, in that also, we need to do a lot of upgradation part of it and new next-generation development is required. So it is not into the maintenance mode, but it is towards like developing the next-generation existing business as usual product part of it. If you don't work on that for the new upgradation part of it, then you will be out of the market. So entire -- all competition work on that, and we have to also work on that based on the new digital world coming up. Based on that, we have to work towards it. And what I wanted to see that from a revenue point of view, of course, the revenue is being generated by the existing products, which is business as usual. And the new products, which I'm talking about zero trust and data privacy, we are still into the development mode. Some of these products have already came out into the market as a beta versions. As I said in my speech, one of the zero trust product as we have captured 1 paid customer in this quarter. This was the first customer for ZTUA, that is a zero trust user access product. And in the coming future, when I see that the other products also will get launched into the market, they will also start generating the revenue part of it.

Sir, my question was about 2 things. One, are you satisfied with the performance? Second is a kind of we want, sir, outlook on -- not on the products, what you launched or the maintenance plan because my interest is more on what is your revenue target of CAGR growth target for next 3 to 5 years? And what is the net profit CAGR target?

See, definitely, if you are asking me, if I am satisfied with the performance, I will say, yes, I'm satisfied. And let me tell you, as a promoter, we have major stake in this organization. If I would have not been satisfied, I would have thought of diluting my stake. I'm very much confident about the company, about the products, about the product releases and everything. And as I said in earlier investor calls also, my focus is in coming 2 years, we will reach to 50-50 ratio, about the revenue ratio of 50%-50% from a retail as well as the enterprise part of it. That is my confidence, which gives that comfort zone for myself and my other colleagues as well.

Sir, what is your outlook for CAGR growth...?

Sorry to interrupt Mr. [ Bohra ], I would request you to rejoin the queue as there are other participants waiting for their turn.

Okay. Because my question is not answered, so I was asking again. Thank you so much.

The next question is from the line of [ Jaka Kumar ], an individual investor.

So my question is [indiscernible].

Sir, you are not audible. We cannot hear you. Kindly...

Is it fine?

No, sir. [Operator Instructions]

Am I audible now?

Yes. Please proceed.

So my question is, right, sir, in line with the previous caller what he was asking. So we, as a company, right, both the retail and the enterprise, so we are not considering anything about the brand building, like [indiscernible] we are doing a [indiscernible], but whereas we are not concerned about the [indiscernible] level, something like a brand [indiscernible] there are something. We're not putting in -- where we are very slow, our decision making is very less. But when it comes to dividend and buyback, so the promoters are participating in buybacks and [indiscernible] the money from that [indiscernible]. But still rather than getting that money in that way, if the company value is doubled, right, so [indiscernible]. So they will -- it will give more value, right? So whatever the [ cash, INR 150 crores ] that we are having, why don't we use it for the brand building. And also when you say investing [indiscernible] Israel company, so -- I mean investments are only very [indiscernible] scale. So considering the competition, we don't have the major clients [indiscernible] companies which are having more than 50,000 employees. So we are not having any best [ client ]. So actually, what is lacking? Maybe in the leading side, we are lacking or something like a specific product [indiscernible] CEO, who has different mindset. So mindset [indiscernible] why we are slow in the decision making on one side? Another side, dividends [indiscernible] buyback. So there is no growth there. So that's why [indiscernible] dividend and buyback. So that is the one question.

While Mr. [indiscernible], your question was long, I could able to understand 3 part in your question. One, you are talking about whether we are doing right exercise for branding, for better branding for our products or let's say better brand presence. This was first question. Second, why promoters are participating in buyback. And third question was with respect to our investment in Israel. So with respect to brand recognition, et cetera, see, while we appreciate suggestions from everyone, but we have experts who work for us who decide that what is right brand building, the methodology or technique for products like us or distribution channel like us. It cannot be -- it cannot go in one direction. A lot of efforts are required and a lot of multiple way of branding is being done, and that is being taken care by experts. Thanks for your suggestion. We will keep it in mind for any -- making any strategy. Second part, with respect to participation of promoters, see, you might be aware that promoters' share is 70% to 73% in the organization. If a buyback happens without participation from promoters, then certainly, their shareholding would increase beyond 75%, which is not permissible under SEBI law. Hence, if the money has to return to shareholders through buyback route, participation of promoter is must. And similar -- in similar way, even if we choose for dividend, which is -- which takes higher leakage, tax leakage, there also it goes to promoters. So probably, your question with respect to buyback, probably is not rational, I would say. And third part with respect to investment in Israel, probably need to understand that the technology with this Israeli company has where our investment that is different from what technology we have. This is a feature -- this is technology of future. And while the investment is small, but we have a sizable stake in this entity and this entity is moving in right direction through product development, et cetera. Had our investments were not made in endpoint security 5, 7 years ago when we were predominantly taking a lead on retail business? Probably, this entity currently would have been at minus [ INR 82 crores or ] INR 85 crores revenue what this endpoint security or enterprise business has delivered. So probably, as a business, we need to understand and appreciate that, one, while we keep looking at how our current is, but at the same time, we need to keep [indiscernible] things for future. And exactly that was what management is doing. But nevertheless, we keep ourselves challenged every time, we keep checking our strategy. And that's why we have onboarded, as we said that we have onboarded one of the -- 1 of the big 3 multinational consulting firm who is helping us with -- helping us in making right strategy for the company for future. Hope this addresses all 3 parts of your question.

Okay. That's great. So second part of my question, right? So we are launching a new [ product, ] right? So a new product where we acquired [indiscernible] That is good to know. Interesting to know. So just to show light maybe to give -- I'm not asking you to give an outlook or something. Just to see, so these products, how we are pitching to the customer, maybe the price [indiscernible] to the existing customers. So just maybe if you can -- I don't -- I understand something like confidential information. But see, what is your approach about new projects? And also, is there any investments that we need to rebuild or rebrand [indiscernible] reinvest, right? So though we have enough money to take care [indiscernible].

See, these are products -- so probably one side [indiscernible] all would not be the right thing here. So we are -- we have a large client base, and we are pitching these products to our existing client as well as new clients where the requirement is because -- just because we have product, we cannot pitch it. It requires a pull from client as well. And third, with respect to buybacks, even after paying -- taking care of this buyback and dividend, et cetera, we would have close to INR 200 crore available in our books, which shall be used for right organic and inorganic growth opportunities, exactly the way we keep doing. In fact, in last 2 years, we have invested close to INR 150 crores in R&D of the organization -- in the organization which takes care of both our existing products, making [indiscernible] existing product or improving features in existing products as well as developing new products.

If I can [indiscernible] a last question. So how is the attrition there? And how is [ the employee ] expense [indiscernible]? How is it impacting [indiscernible] strategy...?

Yes, our attrition is marginally lesser than industry standards. So you know the -- you must have seen result of sort of IT companies how their attrition is. Our attrition is slightly lower than industry standards.

The next question is from the line of Nikunj from [indiscernible] Energies Private Limited.

My question is relating to what is the approach that we are having to market our products in the enterprise business? So right now, as sir mentioned, we have been a strong holding small and medium enterprises. What is the approach to market the new product [ lines ] to create awareness and so that's...?

Yes. So as we launch a new product, we have our team which looks at the addressable market and we -- marketing plans there approach towards addressing -- reaching out to the target customers in those segments. One, as I and Navin rightly explained, we also pitch the products to our existing customers as well as we approach the newer customers. The approach is through multiple ways. We held a lot of events in -- for CSOs and CIOs in different metropolitan cities in India as well as reach out to certain forums like CSO forum or any other forums where in -- CII forum, DSCI, wherein we are able to reach out to more and more CSOs and CIOs who are the decision makers with respect to these kind of products...

The next question is from the line of Vivek Ganguly from Nine Rivers Capital.

Thank you. I had one question. Who would be in the Seqrite space? Who would be your main competitors? And would the -- suite product that you all are talking of, as far as they are concerned, are they already there in the market from a competitor's perspective? And are we like playing, if I may use the term, catch up to introduce these products in the market?

So in enterprise segment, our competition basis, our current portfolio would be companies like Trend Micro, [indiscernible] at some point. And this is the next generation products of zero trust and data privacy we are developing in-house. We will be completing the companies like [indiscernible] and even certain regular security vendors like [indiscernible].

Okay. And their products would already be there in the market? They're already catering to the enterprise segment?

No, early-stage products are there, and not mature products. So there are certain companies like [indiscernible] is having a certain level of maturity, but most of the competition is having early-stage products at this time [indiscernible].

And when would all of them, like say, you'll have classified your products into 3 or 4 categories, whether it's the dashboard or ZTUA. So would they be also classifying their products along similar lines or [indiscernible]?

Almost on the same lines actually.

On the same lines, they would be there. Okay. And with these 4 products, you all would be completing your suite, or you all would require to have -- you all would plan to introduce more such granular products?

So looking at the awareness and the demand, the basic need we'll be covering with these products actually. And as the [ maturity ] of the customers grow by then, we'll be looking at how to introduce the further suite of products. So we are doing research on that front as well.

As there are no further questions, I now hand the conference over to the management of Quick Heal Technologies Limited for closing comments.

Thank you all for participating in this earnings call. I hope we have been able to answer your questions satisfactorily. If you have any further questions or you would like to know more about the company, please reach out to our Investor Relations Manager at Valorem Advisors. Thank you. Stay safe and healthy.

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.