Quick Heal Technologies Ltd Q2 FY2026 Concall Summary

Key Takeaways

• Revenue rebounded, margin turned positive: Revenue rose to ₹83.5 cr (from ₹57 cr QoQ) and EBITDA margin swung to 11%, aided by seasonal Consumer strength and cost actions.
• Enterprise is the declared growth engine: Management expects Enterprise to overtake Consumer revenue "very soon," driven by mid-market focus and new product launches.
• Consumer decline is structural but managed: The global Consumer antivirus market is degrowing; Quick Heal claims the lowest activation decline among peers and held flattish last quarter via partner push.
• R&D spend is being optimized, not cut: R&D expenses declined this quarter as automation and AI tools were leveraged, but management insists continuous investment is existential and will keep growing, just slower than revenue.
• What to watch next quarter: Whether the CEO appointment closes, any tangible progress on DPDP product adoption beyond the single POC customer, and if collection issues from consumer partners actually ease.

Enterprise Business: The Growth Bet

• Mid-market focus: The company targets organizations with 1,000–5,000 endpoints and SMBs, a segment where multinational competitors like SentinelOne, Sophos, Trend Micro and CrowdStrike are less active, leaving the field open.
• Product mix dominance: EDR/XDR contributes over 90% of enterprise revenue, while newer products launched in the last 2–3 quarters have started to generate revenue.
• Sales investment ongoing: The company has continued to strengthen its Enterprise sales team over several quarters and will keep investing in sales and marketing, linked to revenue growth.
• Government pipeline: Government business showed robust growth this quarter. The company is being invited to demonstrate to departments, though big-ticket decisions take time and management "hopes for good entry into that vertical."
• Make in India tailwind: Geopolitical sentiment in India and regional markets like UAE is generating interest in domestic alternatives. Management aims to be the "top most alternative for any MNC product" on cybersecurity in India.

Katkar: "We ourselves are quite sure and we are making sure that we will be the, I will say, top most alternative for any MNC product that is being used across India on the cybersecurity front and on the cybersecurity lab as well."

Consumer Business: Managing a Structural Decline

• Market reality: The Consumer antivirus business is degrowing globally, a trend that has persisted for a couple of years. Quick Heal is not immune but claims its activation decline is the lowest among competitors.
• Seasonal lift: Q2 benefited from seasonal tailwinds including campaigns and back-to-school events that helped generate good revenue, after a prior quarter where the company held the decline flattish through schemes and partner push.
• Collection friction: Collection issues from some consumer partners have been partly resolved but challenges remain, with receivables increasing by ₹15 crores. Management is confident of exiting the situation in coming quarters.
• Revival attempt: The company hopes to revive the Consumer business with newer approaches and is trying to bring a turnback to that market, though no specific timeline or strategy was detailed.
• AntiFraud.AI launch: A new B2C product focused on protecting consumers from phone-based frauds was launched, distributed through channel partners and app stores, with a PC version bundled with Quick Heal Total Security.

Katkar: "The good news is that we can see that among the decline, Quick Heal is having the lowest decline in this, which is like we are able to hold quite well. The decline is lesser in terms of the activation for us than any other competition compared to because we do that comparison regularly."

DPDP Opportunity: Early and Unproven

• Product status: The data privacy product, targeting mid and large organizations, is new. The company is in a learning cycle with POCs underway and only one customer onboarded so far.
• Regulatory delay: The DPDP law is still not completely implemented on the ground, and potential customers are waiting for that trigger before committing.
• Product maturity gap: Management acknowledges there will be a period where the product needs maturity to meet enterprise expectations, and the company is entering that period now.
• Service potential: Management sees scope for a service layer to be added to the product over time, but the initial focus is on shaping the product for the customer.
• BHASHINI partnership: The data privacy solution is being brought in 22 Indian languages through a partnership with BHASHINI, a government language initiative.

Katkar: "I do see there is a scope for even service on this front. But then we are shaping our product for the consumer at the beginning and then gradually see if there is a service need to be added to that product as well. So, we ourselves are into the learning cycle."

R&D and Cost Structure

• Expensing policy: All R&D investments are expensed off, not capitalized, which puts direct pressure on EBITDA while the company works on new products.
• Optimization via AI: This quarter, R&D expenses declined as the company began leveraging automation and AI tools to optimize cost, alongside delayed hiring actions taken to address prior negative EBITDA.
• Investment philosophy: Management views continuous R&D spend as existential in cybersecurity, where innovation is not one-time but continuous due to daily new threats. R&D will keep growing, but at a lesser percentage rate than revenue growth.
• Margin trajectory: As the higher-margin Enterprise business grows its revenue share, overall margins will "certainly improve," though segment-level margins are not disclosed.

Maheshwari: "Unless we keep spending on our investments in R&D, we will not be relevant. And that is the reason we have been doing it for the last couple of years."

Katkar: "When it comes to cybersecurity, it is not a one-time innovation. It is a continuous innovation because every day, there is a new challenge, new problem, new attacks happening across the globe."

Capital Allocation and M&A

• Cash position: The company holds ₹179 crores in mutual funds, and analysts pressed on plans to redeploy this capital.
• M&A intent: Management is actively looking for acquisitions that align with its plan, vision, road map, target customers and product gaps, and will use funds "as and when required." No specific targets or timelines were disclosed.
• Guidance declined: Management explicitly declined to provide revenue growth aspirations or targets over a 3–5 year horizon, stating "we don't give any guidance on the revenue."
• Market aspiration: The serviceable obtainable market over 2–3 years is pegged at around ₹4,000 crores, and the company wants to "grab as much as possible," though the international share of that TAM has not been calculated.

Guidance & Commitments

Key Metrics