Slide 1: Quick Heal Technologies Limited Investor Presentation May 2017
Quick Heal Technologies Limited Investor Presentation May 2017 1
Slide 2: Disclaimer
DISCLAIMER This presentation and the following discussion may contain “forward looking statements” by Quick Heal Technologies Limited (“Quick Heal” or the “Company”) that are not historical in nature. These forward looking statements, which may include statements relating to future results of operat
Slide 3: Discussion Summary
DISCUSSION SUMMARY • KEY HIGHLIGHTS • COMPANY OVERVIEW • COMPETITIVE ADVANTAGES • BUSINESS MODEL • STRATEGY & OUTLOOK • Q4 & FY17 RESULT UPDATE • SHAREHOLDING STRUCTURE • ANNEXURE – CASE STUDIES 3
Slide 4: Key Highlights – Moving in Right Direction
KEY HIGHLIGHTS – MOVING IN RIGHT DIRECTION STEADY GROWTH DESPITE ECONOMIC CHALLENGES • Difficult business environment in H2 FY17 post ‘Demonetisation’; however active licenses witnessed steady growth from 7.3 mn as on Mar-16 to 7.8 mn as on Mar-17 • Active Retail licenses grew by 9.3% to 6.6 mn • Ac
Slide 5: Key Highlights – Recent Cyber Attacks
KEY HIGHLIGHTS – RECENT CYBER ATTACKS GOVERNMENT AND RECENT CYBER EVENTS IMPACT IMPACT QUICK HEAL INITIATIVES The virus blocks access to data “WannaCry” ransomware attack Govt. Of India launched Cyber on one’s computer. CERT-In will work with banks to hits more than 154 countries Swachhta Kendra in
Slide 6: Key Highlights – Cyber Swachhta Kendra Project
KEY HIGHLIGHTS – ‘CYBER SWACHHTA KENDRA’ PROJECT QUICK HEAL COLLABORATES WITH CERT-IN FOR ‘CYBER SWACHHTA KENDRA’ What is a ‘Botnet’? • ~ 50% of PCs and laptops in India do not have a security software installed • Botnet is a group of computers controlled by cybercriminals to spread malware and laun
Slide 7: Company Overview
COMPANY OVERVIEW QUICK HEAL – BRIEF PROFILE BUSINESS OVERVIEW KEY STRENGTHS STRONG FINANCIALS • Incorporated in 1995, Quick Heal is the pioneer • Established and proven technology over a span • Consolidated Revenues, EBITDA and PAT excl. in Indian IT Security Software and is currently of 22 years ex
Slide 8: Quick Heal Journey
COMPANY OVERVIEW QUICK HEAL JOURNEY 1995 - 1998 2006 - 2007 2009 - 2010 2011 • Incorporation as ‘CAT Computer • Company renamed as Quick Heal • Private Equity Investment firm Sequoia • Incorporates Quick Heal in Kenya Services Pvt. Ltd.’ Technologies Pvt. Ltd. from CAT Capital, invests in Quick Heal
Slide 9: Technology & Market Leadership
COMPANY OVERVIEW TECHNOLOGY & MARKET LEADERSHIP International Certificates Awards in India • 2017: Quick Heal Total Security for Android (v2.01) gives 100% malware detection – Latest AV-Test results. • 2016: Seqrite Endpoint Security (EPS) and Quick Heal Total Security recognized as a ‘Top Product’
Slide 10: Board of Directors
COMPANY OVERVIEW BOARD OF DIRECTORS KAILASH KATKAR SANJAY KATKAR ABHIJIT JORVEKAR CEO & MD CTO & MD Executive Director & VP Promoter of the Company since Promoter of the Company since Responsible for Sales & incorporation incorporation Marketing SHAILESH LAKHANI APURVA JOSHI SUNIL SETHY Non-Executiv
Slide 11: Strong Brand Recognition and Recall
COMPANY OVERVIEW STRONG BRAND RECOGNITION AND RECALL 7.8 m 1.8x Growth 30% + Preferred Choice of IT technicians for PC Active Licenses across more Active Licenses over last Retail Market Share in India Virus Cleaning than 80 countries 5 years 15,093 Retail, 491 Enterprise, 102 Government and 1,660 M
Slide 12: Expanding Presence Across International Markets
COMPANY OVERVIEW EXPANDING PRESENCE ACROSS INTERNATIONAL MARKETS INDIA (HO) UAE KENYA Quick Heal Technologies Quick Heal Technologies Quick Heal Technologies Ltd. (MENA) FZE Africa Ltd. JAPAN DUBAI USA Seqrite Technologies Quick Heal Technologies Quick Heal Japan KK. DMCC America Inc 12
Slide 13: Large and Growing User Base
COMPANY OVERVIEW LARGE AND GROWING USER BASE ACTIVE LICENSES (‘000) Retail Enterprise & Government Mobile 7,847 7,847 7,323 123 7,323 279 1,112 6,317 994 5,450 4,386 6,612 6,050 MAR-13 MAR-14 MAR-15 MAR-16 MAR-17 MAR-16 MAR-17 13
Slide 14: Comprehensive Product Portfolio – Retail / SMB
COMPETITIVE ADVANTAGE Retail / SMB COMPREHENSIVE PRODUCT PORTFOLIO Features Core Protection Anti-Keylogger Web Security Improved Scan Engine Email Security Virtual Keyboard Data Theft Protection Privacy Protection Safe Banking Features QH Remote Device Management Parental Controls PC2Mobile Scan Ste
Slide 15: Comprehensive Product Portfolio – Mobile Security
COMPETITIVE ADVANTAGE Mobile Security / Fontastic COMPREHENSIVE PRODUCT PORTFOLIO /Gadget Securance Features Background Scan Virus Protection Security Advisor Mobile Tracker Privacy Advisor Cloud Backup Call & Message Filter Insurance cover - Theft Register with TRAI Physical and Liquid Damage Anti-
Slide 16: Comprehensive Product Portfolio – Seqrite Endpoint Security
COMPETITIVE ADVANTAGE SEQRITE ENDPOINT COMPREHENSIVE PRODUCT PORTFOLIO SECURITY Features Asset Management File Activity Monitor Advance Device Control Vulnerability Scan Other AV Removal Remote Client management Web Security Core Protection (AV, Firewall, IDS/IPS) Application Control Data Loss Preve
Slide 17: Comprehensive Product Portfolio – Data Loss Prevention
COMPETITIVE ADVANTAGE DATA LOSS PREVENTION COMPREHENSIVE PRODUCT PORTFOLIO (DLP) WINDOWS & MAC 17
Slide 18: Comprehensive Product Portfolio – Seqrite Terminator
COMPETITIVE ADVANTAGE SEQRITE TERMINATOR COMPREHENSIVE PRODUCT PORTFOLIO Features Firewall ISP Load Balance Antivirus ISP Failover Mail Protection Link Aggregation Content Filtering Bandwidth Management IPS User / Group management Application Control Monitoring and Reporting 18
Slide 19: Comprehensive Product Portfolio – Seqrite Enterprise Cloud Platform
COMPETITIVE ADVANTAGE SEQRITE ENTERPRISE COMPREHENSIVE PRODUCT PORTFOLIO CLOUD PLATFORM Features Get status, security and compliance info from EPS, Terminator products Access Seqrite products from anywhere and anytime Apply uniform security policies at all locations Backup important Seqrite product
Slide 20: Comprehensive Product Portfolio – Seqrite Mobile Device Management
COMPETITIVE ADVANTAGE SEQRITE MOBILE COMPREHENSIVE PRODUCT PORTFOLIO DEVICE MANAGEMENT Features Manage users, devices, groups OTA provisioning of devices Remotely push configuration and policies Application control Anti-theft (ring / lock / locate / trace) Remote wipe 20
Slide 21: Comprehensive Product Portfolio – Seqrite Secure Chat
COMPETITIVE ADVANTAGE SEQRITE SECURE CHAT COMPREHENSIVE PRODUCT PORTFOLIO Features Manage chat groups, policies One-to-One chat Share files (image, audio, video, etc.) Group Chat Evaporated & Private messages 21
Slide 22: Extensive Pan-India Distribution Network
COMPETITIVE ADVANTAGE EXTENSIVE PAN-INDIA DISTRIBUTION NETWORK Customer Centric Approach Domestic & International Support Quick Heal – 63 offices & warehouses across 35 cities in India Centre (Telephone, SMS, Online chat, forum, Remote and on-site ground support) Enterprise & Government Retail Netwo
Slide 23: Superior Customer Support
COMPETITIVE ADVANTAGE SUPERIOR CUSTOMER SUPPORT Strong Emphasis on Remote Access Support – Maintain High Levels of User Efficient Customer Service Key Differentiator Satisfaction and Retention STRONG CUSTOMER SUPPORT – SINGLE LARGEST DIFFERENTIATOR • Multi-lingual end user support in English, Hindi
Slide 24: Seasonality Impact on Revenues & Margins
BUSINESS MODEL SEASONALITY IMPACT ON REVENUES & MARGINS 38 - 45% 27 - 29% SEASONALITY IMPACT ON REVENUES & MARGINS: • Revenues are higher in Q2 and Q4. • R&D, G&A expenses are spread across all 17 - 19% four quarters 15 - 17% • Hence, there is variation in EBITDA margin on quarterly basis Q1 Q2 Q3 Q
Slide 25: Thrust on Research & Development
BUSINESS MODEL THRUST ON RESEARCH & DEVELOPMENT R&D DEPARTMENT STRUCTURE CONTINUOUS FOCUS AND INVESTMENTS IN R&D CTO 555 494 433 318 Business Development Quality Incidence Logic Team Team Response Team 191 Assurance Team Threat Research & IoT(1) Team Response Team FY13 FY14 FY15 FY16 FY17 No. of R&D
Slide 26: Strong Drivers for Long-Term Growth
STRONG DRIVERS FOR LONG-TERM GROWTH • Work ongoing on several new technologies such as • Develop product for IoT and home upcoming platforms like • Focus on international security automation Androids, Windows, expansion through Linux, iOS to address • Has 4 US patents to consistent brand opportuniti
Slide 27: Q4 & FY17 Results Highlights
Q4 & FY17 RESULTS HIGHLIGHTS FY17 YoY ANALYSIS In Rs. Million REVENUES * EBITDA and EBITDA MARGIN PAT and PAT MARGIN # CASH PROFIT @ 879.5 3,020.9 2,999.7 33.7% 19.2% 19.0% 816.3 30.0% 1,019.2 579.2 570.0 901.4 0.7 % 12 % 1.6 % 8% FY16 FY17 FY16 FY17 FY16 FY17 FY16 FY17 EBIDTA EBIDTA Margin % PAT PA
Slide 28: Q4 & FY17 – Revenue Analysis
Q4 & FY17 – REVENUE ANALYSIS In Rs. Million Q4 FY17 YoY ANALYSIS FY17 YoY ANALYSIS SEGMENT BREAKUP * SEGMENT BREAKUP * 1,294.8 3,380.7 3,329.8 21.4 61.4 85.7 155.6 1,033.1 437.1 569.6 22.7 40 % 6% 188.1 30 % 1,117.8 21 % 2,882.2 2,674.6 822.3 7% 26 % Q4 FY16 Q4 FY17 FY16 FY17 % Share Q4 FY16 Q4 FY17
Slide 29: Q4 & FY17 – Revenue Analysis
Q4 & FY17 – REVENUE ANALYSIS Q4 FY17 YoY ANALYSIS FY17 YoY ANALYSIS NUMBER OF LICENSES SOLD (‘000) NUMBER OF LICENSES SOLD (‘000) 2,744 6,831 145 6,222 41 452 923 126 52 % 13 % 913 1,913 20 261 42 % 1% 2,251 5,763 5,183 1,632 27 % 10 % Q4 FY16 Q4 FY17 FY16 FY17 % Share Q4 FY16 Q4 FY17 % Share FY16 F
Slide 30: Q4 & FY17 – Revenue Analysis
Q4 & FY17 – REVENUE ANALYSIS FY16 FY17 DEALER CONCENTRATION PROFILE DEALER CONCENTRATION PROFILE % of Total Revenues % of Total Revenues 47% 45% 36% 33% 8% 8% Top 1 Top 10 Top 20 Top 1 Top 10 Top 20 30
Slide 31: Q4 & FY17 – Employee Breakup
Q4 & FY17 – EMPLOYEE BREAKUP March 2016 – 1,392 December 2016 – 1,388 March 2017 – 1,374 Sales & Marketing R&D Technical Support 218 208 208 Others 370 394 396 249 265 276 521 494 555 31
Slide 32: Q4 & FY17 – Cost Analysis
Q4 & FY17 – COST ANALYSIS Rs Million Consolidated Head Q4 FY17,a Q3 FY17,a Q2 FY17,a Q1 FY17, a Q4 FY16, a Operating Cost Salaries 116.5 118.7 122.4 120.8 109.6 Fees for technical services 24.9 24.9 25.2 25.1 19.0 Technology subscription charges 14.2 13.6 16.2 12.8 25.7 R&D Expenses (A) 155.6 157.3
Slide 33: Q4 & FY17 – Working Capital Analysis
Q4 & FY17 – WORKING CAPITAL ANALYSIS WORKING CAPITAL ANALYSIS – MARCH 2017 7 36 86 57 Receivables Days Inventory Days Payables Days Net Working Capital Days Note: Net Working Capital Days = (Net Working Capital / Fourth Quarter Sales * 91 days Calculation is based on net revenues before adjusting fo
Slide 34: Q4 & FY17 – Tactical Marketing Campaigns
Q4 & FY17 – TACTICAL MARKETING CAMPAIGNS QUICK HEAL ASSOCIATES WITH RISING PUNE SUPERGIANT IPL TEAM AS ‘SECURITY PARTNER’ • Quick Heal rolled out IPL (Indian Premier League) themed campaign across OOH, digital and social media channels • Quick Heal has the rights to feature Rising Pune Supergiant (R
Slide 35: Q4 & FY17 Consolidated Results – Profit & Loss
Q4 & FY17 CONSOLIDATED RESULTS – PROFIT & LOSS Rs Million Consolidated Head Q4 FY17,a Q4 FY16,a Growth % Change FY17,a FY16,a Growth % Change Revenue 921.7 1,123.7 -202.0 -18.0% 2,999.7 3,020.9 -21.2 -0.7% Direct Cost 59.8 83.9 24.1 28.7% 230.2 278.4 48.2 17.3% Gross profit 861.9 1,039.8 -177.9 -17.
Slide 36: Q4 & FY17 Consolidated Results – Ratio Analysis
Q4 & FY17 CONSOLIDATED RESULTS – RATIO ANALYSIS Ratio Analysis Consolidated Head Q4 FY17,a Q4 FY16,a FY17,a FY16,a Expenses Direct Cost / Revenue 6.5% 7.5% 7.7% 9.2% R&D / Revenue 16.9% 13.7% 21.2% 19.5% S&M / Revenue 22.4% 19.5% 24.3% 23.8% G&A / Revenue 14.6% 9.6% 16.8% 13.7% Total Cost / Revenue
Slide 37: Q4 & FY17 Consolidated Results – Balance Sheet
Q4 & FY17 CONSOLIDATED RESULTS – BALANCE SHEET Particulars (In Rs Mn) Mar-17 Mar-16 Particulars (In Rs Mn) Mar-17 Mar-16 Non-Current Assets: Share Holders’ Funds: Property, plant and equipment 1,782.2 1,323.5 Equity Share Capital 701.0 700.3 Capital work-in-progress 135.9 550.6 Other Intangible asse
Slide 38: Q4 & FY17 Standalone Results – Profit & Loss
Q4 & FY17 STANDALONE RESULTS – PROFIT & LOSS Rs Million Standalone Head Q4 FY17, a Q4 FY16, a Growth % Change FY17, a FY16, a Growth % Change Revenue 918.9 1,116.6 -197.7 -17.7% 2,990.2 2,984.9 5.3 0.2% Direct Cost 57.1 82.1 25.0 30.5% 217.2 253.2 36.0 14.2% Gross profit 861.8 1,034.6 -172.7 -16.7%
Slide 39: Q4 & FY17 Standalone Results – Ratio Analysis
Q4 & FY17 STANDALONE RESULTS – RATIO ANALYSIS Ratio Analysis Standalone Head Q4 FY17, a Q4 FY16, a FY17, a FY16, a Expenses Direct Cost / Revenue 6.2% 7.3% 7.3% 8.5% R&D / Revenue 16.9% 13.3% 21.2% 19.6% S&M / Revenue 21.4% 18.4% 22.8% 22.6% G&A / Revenue 13.9% 9.8% 16.2% 13.5% Total Cost / Revenue
Slide 40: Q4 & FY17 Standalone Results – Balance Sheet
Q4 & FY17 STANDALONE RESULTS – BALANCE SHEET Particulars (In Rs Mn) Mar-17 Mar-16 Particulars (In Rs Mn) Mar-17 Mar-16 Non-Current Assets: Share Holders’ Funds: Property, plant and equipment 1,780.7 1,321.6 Equity Share Capital 701.0 700.3 Capital work-in-progress 135.9 550.2 Share application money
Slide 41: Shareholding Structure
SHAREHOLDING STRUCTURE Public, 17.78 Institutions, 9.43 % Shareholding – March 2017 Promoter & Promoter Group, 72.79 Source – BSE 41
Slide 42: For Further Queries
FOR FURTHER QUERIES Mr Vijay Shirode Nilesh Dalvi / Vatsal Mehta Quick Heal Technologies Limited Dickenson Seagull IR Company Secretary IR Consultant Email ID: vijay.shirode@quickheal.co.in Email ID: nilesh.dalvi@dickensonir.com Contact No: +91 932 578 9617 vatsal.Mehta@dickensonir.com Contact No:+9
Slide 43: Annexure – Case Studies
ANNEXURE – CASE STUDIES AIMIL LIMITED Nature of Business – Civil Engineering CLIENT CHALLENGES QUICK HEAL SOLUTION Ensure uniformity and consistency across multiple company locations / endpoints Seqrite Cloud solution - Seqrite Endpoint Security’s roaming platform allows monitoring of all endpoi
Slide 44: Annexure – Case Studies
ANNEXURE – CASE STUDIES BOMBAY HOSPITAL, INDORE Nature of Business – Healthcare & Hospitals CLIENT CHALLENGES QUICK HEAL SOLUTION Seqrite Endpoint Security - allows the hospital to implement website Prevent loss of bandwidth due to employees accessing social media filtering to block individual s