Autodesk 2016 Annual Report Download - page 90

2016 Form 10-K 18
believe will fulfill these challenges, if we fail to execute properly on that strategy or adapt that strategy as market
conditions evolve, we may fail to meet our customers' expectations, fail to compete with our competitors' products and
technology, and lose the confidence of our channel partners and employees. This in turn could adversely affect our
business and financial performance.
Our entry into 3D printing presents many of the risks described above concerning developing and introducing new
products as well as new risks for us. The manufacturing and 3D printing markets are highly competitive and some of our
competitors have superior experience and resources to us. We have limited experience designing, developing, and selling
hardware products and no experience developing and selling printers. The market for 3D printing is nascent and may not
develop as rapidly as we expect. Our sale of 3D printers could subject us to product and other liability that we do not
currently face. If any of these risks materialize, it could adversely affect our business and financial performance as well as
our reputation and brand.
Revenue from our offerings may be difficult to predict during our business model transition.
The discontinuance of our perpetual licenses for most individual software products on February 1, 2016 and for perpetual
suites on August 1, 2016 will result in the loss of future up-front licensing revenue. This also will freeze growth of our
maintenance subscription revenue because there will be no further opportunities to attach maintenance licensing once we
cease the sale of suites licenses. We expect our maintenance subscription revenue to decline over time, but it may decline
more quickly than anticipated due to low maintenance renewals. At the same time, our new model subscription revenue may
not grow as rapidly as anticipated. Our new model subscription pricing allows customers to use our offerings at a lower
initial cost when compared to the sale of a perpetual license. Although our new model subscriptions are designed to increase
the number of customers who purchase offerings and create a recurring revenue stream that is more predictable over time,
it creates risks related to the timing of revenue recognition and expected reductions in cash flows in the near term.
We may not be able to predict subscription renewal rates and their impact on our future revenue and operating results.
Our customers are not obligated to renew their subscriptions for our offerings, and they may elect not to renew. We
cannot assure renewal rates, or the mix of subscriptions renewals. Customer renewal rates may decline or fluctuate due to a
number of factors, including offering pricing, competitive offerings, customer satisfaction, and reductions in customer
spending levels or customer activity due economic downturns or financial markets uncertainty. If our customers do not renew
their subscriptions or if they renew on less favorable terms, our revenues may decline.
Actions that we are taking to restructure our business in alignment with our business model transition strategy may be
costly and may not be as effective as anticipated.
During the first quarter of fiscal 2017, we commenced a company-wide restructuring plan to accelerate the
Company’s move to the cloud and its transition to a subscription-based business model. Through the restructuring, we
seek to reduce expenses, streamline the organization, and reallocate resources to align more closely with the Company’s
needs going forward. As a result of these actions, we have incurred and will incur additional costs in the short term that
have the effect of reducing our operating margins. If we are unable to realize the expected outcomes from the
restructuring efforts, our business and operating results may be harmed.
Our software is highly complex and may contain undetected errors, defects or vulnerabilities, each of which could harm
our business and financial performance.
The software products that we offer are complex, and despite extensive testing and quality control, may contain
errors, defects or vulnerabilities. Some errors, defects and vulnerabilities in our software products may only be discovered
after the product or service has been released. Any errors, defects or vulnerabilities could result in the need for corrective
releases to our software products, damage to our reputation, loss of revenue, an increase in product returns or lack of
market acceptance of our products, any of which would likely harm our business and financial performance.
2016 Annual Report