Autodesk 2015 Annual Report Download - page 111

2015 Form 10-K 19
If we do not maintain good relationships with the members of our distribution channel, or achieve anticipated levels of sell-
through, our ability to generate revenue will be adversely affected. If our distribution channel suffers financial losses, becomes
financially unstable or insolvent, or is not provided the right mix of incentives to sell our products, our ability to generate
revenue will be adversely affected.
We sell our software products both directly to end-users and through a network of distributors and resellers. For fiscal
2015 and fiscal 2014, approximately 83% and 84% of our revenue was derived from indirect channel sales through distributors
and resellers, respectively, and we expect that the majority of our revenue will continue to be derived from indirect channel
sales in the future. Our ability to effectively distribute our products depends in part upon the financial and business condition of
our distributor and reseller network. Computer software distributors and resellers typically are not highly capitalized, have
previously experienced difficulties during times of economic contraction and experienced difficulties during the past several
years. We have processes to ensure that we assess the creditworthiness of distributors and resellers prior to our sales to them. In
the past we have taken steps to support them, and may take additional steps in the future, such as extending credit terms and
providing temporary discounts. These steps, if taken, could harm our financial results. If our distributors and resellers were to
become insolvent, they would not be able to maintain their business and sales, or provide customer support services, which
would negatively impact our business and revenue.
We rely significantly upon major distributors and resellers in both the U.S. and international regions, including the
distributor Tech Data Corporation and its global affiliates (“Tech Data”). Tech Data accounted for 25% and 24% of our total net
revenue for fiscal 2015 and 2014, respectively. Although we believe that we are not substantially dependent on Tech Data, if
Tech Data were to experience a significant disruption with its business or if our relationship with Tech Data were to
significantly deteriorate, it is possible that our ability to sell to end users would be, at least temporarily, negatively impacted.
This could in turn negatively impact our financial results.
Over time, we have modified and will continue to modify aspects of our relationship with our distributors and resellers,
such as their incentive programs, pricing to them and our distribution model to motivate and reward them for aligning their
businesses with our strategy and business objectives. Changes in these relationships and underlying programs could negatively
impact their business and harm our business. In addition, the loss of or a significant reduction in business with those distributors
or resellers or the failure to achieve anticipated levels of sell-through with any one of our major international distributors or
large resellers could harm our business. In particular, if one or more of such distributors or resellers were unable to meet their
obligations with respect to accounts payable to us, we could be forced to write off such accounts and may be required to delay
the recognition of revenue on future sales to these customers. These events could have a material adverse effect on our financial
results.
Our financial results fluctuate within each quarter and from quarter to quarter making our future revenue and financial results
difficult to predict.
Our quarterly financial results have fluctuated in the past and will continue to do so in the future. These fluctuations could
cause our stock price to change significantly or experience declines. In addition to the other factors described in this Part I, Item
1A, some of the factors that could cause our financial results to fluctuate include:
• general market, economic, business, and political conditions in particular geographies, including Europe, APAC, and
emerging economies;
• failure to produce sufficient revenue, billings or subscription growth, and profitability;
• failure to achieve anticipated levels of customer acceptance to our business model transition, including the impact of
the end of upgrades and perpetual licenses;
• weak or negative growth in one or more of the industries we serve, including AEC, manufacturing, and digital media
and entertainment markets;
• fluctuations in foreign currency exchange rates and the effectiveness of our hedging activity;
• failure to achieve and maintain cost reductions and productivity increases;
• dependence on and the timing of large transactions;
2015 Annual Report