I attended their conference call today and here are my two cents.
Even though the company is operating in cybersecurity space, management was focused on increasing sales by hiring a sales team. They kept on pressing in their conf call that once their enterprise product clicks, they will increase spending on their sales team and give them aggressive targets.
Here is the problem with that approach. Selling a software product via sales team is a very 2000 era approach and no longer works in todayâs world. A good software product doesnât need an aggressive sales team for the product to sell. Take for example, Druva. Its a cybersecurity start up started in 2008 and started focusing on building a cloud based cybersecurity product in 2015. Today the start up is valued north of $2 Billion USD. Its one of the leading cybersecurity start ups in the world, built right next door to Quick Heal in Pune.
The management of Quick Heal is stuck in 2000âs era and hasnât updated itself or its strategies to compete with the changing industry dynamic. Not a single mention of âcloudâ was uttered in the entire conference call, even when they are building an enterprise product.
This mentality of management is reflected in the financials as well. Selling and General Administrative budget of the company is as much (and in some years) more than the entire R&D budget.
The company continues to sell its products on CDs (most laptops do not even have a CD Drive anymore) via distributors, in the age of cloud.
Most of this quarters increase came from increased laptop sales (management words, not mine) and 90%+ of their enterprise revenue is from government contracts. With startups like Druva, increasing their presence and getting aggressive about sourcing business in India, I personally think Quick Heal will have a hard time scaling its enterprise product, esp. if management sticks to strategies of the era gone by.
Kudos to them for building a great business esp. after coming from such humble background, but this business is more on the path to become story of yesterday rather than headlines of tomorrow.
Disclosure: My personal opinion, please do your own research. Not Invested, hold no positions.