Autodesk 2015 Annual Report Download - page 115

2015 Form 10-K 23
extent to which piracy of our software products exists and we expect that software piracy will remain a persistent problem,
particularly in emerging economies. Furthermore, our means of protecting our proprietary rights may not be adequate.
Additionally, we actively protect the secrecy of our confidential information and trade secrets, including our source code.
If unauthorized disclosure of our source code occurs, we could potentially lose future trade secret protection for that source
code. The loss of future trade secret protection could make it easier for third parties to compete with our products by copying
functionality, which could adversely affect our financial performance and our reputation. We also seek to protect our
confidential information and trade secrets through the use of non-disclosure agreements with our customers, contractors,
vendors, and partners. However, it is possible that our confidential information and trade secrets may be disclosed or published
without our authorization. If this were to occur, it may be difficult and/or costly for us to enforce our rights, and our financial
performance and reputation could be negatively impacted.
We may face intellectual property infringement claims that could be costly to defend and result in the loss of significant rights.
As more software patents are granted worldwide, the number of products and competitors in our industry segments grows
and the functionality of products in different industry segments overlaps, we expect that software product developers will be
increasingly subject to infringement claims. Infringement or misappropriation claims have in the past been, and may in the
future be, asserted against us, and any such assertions could harm our business. Additionally, certain patent holders without
products have become more aggressive in threatening and pursuing litigation in attempts to obtain fees for licensing the right to
use patents. Any such claims or threats, whether with or without merit, have been and could in the future be time-consuming to
defend, result in costly litigation and diversion of resources, cause product shipment delays, or require us to enter into royalty or
licensing agreements. In addition, such royalty or license agreements, if required, may not be available on acceptable terms, if
at all, which would likely harm our business.
A significant portion of our revenue is generated through maintenance revenue. Decreases in maintenance attach or renewal
rates or a decrease in the number of new licenses we sell would negatively impact our future revenue and financial results.
Our maintenance customers have no obligation to attach maintenance to their initial license or renew their maintenance
contract after the expiration of their initial maintenance period, which is typically one year. Our customers' attach and renewal
rates may decline or fluctuate as a result of a number of factors, including the overall global economy, the health of their
businesses, and the perceived value of the maintenance program. If our customers do not attach maintenance to their initial
license or renew their maintenance contract for our products, our maintenance revenue will decline and our financial results will
suffer.
In addition, a portion of the growth of our maintenance revenue has typically been associated with growth of the number
of licenses that we sell. Any reduction in the number of licenses that we sell, even if our customers' attach rates do not change,
will have a negative impact on our future maintenance revenue. This in turn would impact our business and harm our financial
results.
We recognize maintenance revenue ratably over the term of the maintenance contracts, which is predominantly one year,
but may also range up to five years. Decreases in maintenance billings will negatively impact future maintenance revenue,
however future maintenance revenue will also be impacted by other factors such as the amount, timing, and mix of contract
terms of future billings.
From time to time we realign or introduce new business and sales initiatives; if we fail to successfully execute and manage
these initiatives, our results of operations could be negatively impacted.
As part of our effort to accommodate our customers' needs and demands and the rapid evolution of technology, we from
time to time evolve our business and sales initiatives such as realigning our development and marketing organizations, and
expanding our portfolio of suites and our offering of software as a service, and realigning our internal resources in an effort to
improve efficiency. We may take such actions without clear indications that they will prove successful, and at times, we have
been met with short-term challenges in the execution of such initiatives. Market acceptance of any new business or sales
initiative is dependent on our ability to match our customers' needs at the right time and price. Often we have limited prior
experience and operating history in these new areas of emphasis. If any of our assumptions about expenses, revenue or revenue
recognition principles from these initiatives proves incorrect, or our attempts to improve efficiency are not successful, our
actual results may vary materially from those anticipated, and our financial results will be negatively impacted.
2015 Annual Report