Autodesk 2014 Annual Report Download - page 83

2013 Annual Report
2014 Form 10-K 9
MARKETING AND SALES
We license or sell our products and services globally, primarily through indirect channels consisting of distributors and
resellers. To a lesser extent we also transact directly with customers who are primarily large corporations. Our indirect channel
model includes both a two-tiered distribution structure, where distributors sell to resellers, and a one-tiered structure, where
Autodesk sells directly to resellers. We have a network of approximately 2,500 resellers and distributors worldwide. For fiscal
2014, approximately 84% of our revenue was derived from indirect channel sales through distributors and resellers, and we
expect that the majority of our revenue will continue to be derived from indirect channel sales in the future. We employ a
variety of incentive programs and promotions to align our reseller channel with our business strategies. Sales through our
largest distributor, Tech Data Corporation and its affiliates, accounted for 24%, 23% and 21% of our net revenue for fiscal years
2014, 2013 and 2012, respectively. We believe our business is not substantially dependent on Tech Data. Our customers through
Tech Data are the resellers and end users who purchase our software licenses and services. Should any of the agreements
between us and Tech Data be terminated for any reason, we believe the resellers and end users who currently purchase our
products through Tech Data would be able to continue to do so under substantially the same terms from one of our many other
distributors without substantial disruption to our revenue. No other distributor, reseller, or direct customer accounted for 10% or
more of our revenue.
Our customer-related operations are divided into three geographic regions, the Americas; Europe, Middle East and Africa
(“EMEA”); and Asia Pacific (“APAC”). Each geographic region is supported by global marketing and sales organizations.
These organizations develop and manage overall marketing and sales programs and work closely with a network of domestic
and international sales offices. Fiscal 2014 net revenue in the EMEA, Americas and APAC was $851.8 million (37%), $818.9
million (36%) and $603.2 million (27%), respectively. We intend to continue to make our products available in foreign
languages. We believe that international sales will continue to comprise the majority of our total net revenue. Adverse economic
conditions in the countries that contribute a significant portion of our net revenue, including emerging economies, may have an
adverse effect on our business in those countries and our overall financial performance. A summary of our financial information
by geographic location is found in Note 13, “Segments,” in the Notes to Consolidated Financial Statements. Our international
operations and sales subject us to a variety of risks; see Item 1A, “Risk Factors,” for further discussion.
We also work directly with reseller and distributor sales organizations, computer manufacturers, other software
developers and peripherals manufacturers in cooperative advertising, promotions and trade-show presentations. We employ
mass-marketing techniques such as webcasts, seminars, telemarketing, direct mailings, advertising in business and trade
journals and social media. We have a worldwide user group organization and we have created online user communities
dedicated to the exchange of information related to the use of our products.
In addition to sales of new perpetual use software licenses, we generate revenue through several subscription-based
business models. The largest is our maintenance program, under which customers who own a perpetual use license for the most
recent version of the underlying product are able to purchase maintenance that provides them with unspecified upgrades when-
and-if-available and are able to download e-Learning courses and receive online support over a one year or multi-year
maintenance service period.
We also offer more flexible term-based license offerings to our customers. Our subscription-based business models help
our customers reduce up-front licensing costs, provide more flexibility with how they use our products and address new
categories of customers such as project-based users and small businesses. Over the next few years, we expect to significantly
increase our subscription base and the annual value per subscription, which will ultimately drive billings growth.
Our ability to effectively distribute our products depends in part upon the financial and business condition of our
distributor and reseller networks. The loss of, or a significant reduction in, business with any one of our major distributors or
large resellers could harm our business; see Item 1A, “Risk Factors,” for further discussion.
CUSTOMER AND RESELLER SUPPORT
We provide technical support and training to customers through a leveraged support model, augmented by direct
programs designed to address certain specific needs. Our customers rely primarily on the resellers and distributors from which
they purchased licenses to our products for technical support; however, we do provide certain direct support for some of our
customers. We support our resellers and distributors through technical product training, sales training classes, the Internet and
telephone. We also provide online support directly to our customers through our maintenance program. There are also a number
of user group forums in which customers are able to share information.