Autodesk 2016 Annual Report Download - page 92

2016 Form 10-K 20
• inadequate local infrastructure;
• greater difficulty in protecting intellectual property;
• software piracy; and
• other factors beyond our control, including popular uprisings, terrorism, war, natural disasters, and diseases.
Some of our business partners also have international operations and are subject to the risks described above. Even
if we are able to successfully manage the risks of international operations, our business may be adversely affected if our
business partners are not able to successfully manage these risks.
Existing and increased competition and rapidly evolving technological changes may reduce our revenue and profits.
The software industry has limited barriers to entry, and the availability of computing devices with continually
expanding performance at progressively lower prices contributes to the ease of market entry. The industry is presently
undergoing a platform shift from the personal computer to cloud and mobile computing. This shift further lowers barriers
to entry and poses a disruptive challenge to established software companies. The markets in which we compete are
characterized by vigorous competition, both by entry of competitors with innovative technologies and by consolidation of
companies with complementary products and technologies. In addition, some of our competitors in certain markets have
greater financial, technical, sales and marketing, and other resources. Furthermore, a reduction in the number and
availability of compatible third-party applications, or our inability to rapidly adapt to technological and customer
preference changes, including those related to cloud computing, mobile devices, and new computing platforms, may
adversely affect the sale of our products. Because of these and other factors, competitive conditions in the industry are
likely to intensify in the future. Increased competition could result in price reductions, reduced net revenue and profit
margins and loss of market share, any of which would likely harm our business.
We are exposed to fluctuations in currency exchange rates that could negatively impact our financial results and cash
flows.
Because we conduct a substantial portion of our business outside the U.S. and we make certain business and
resource decisions based on assumptions about foreign currency, we face exposure to adverse movements in foreign
currency exchange rates. These exposures may change over time as business practices evolve and economic conditions
change, and they could have a material adverse impact on our financial results and cash flows.
We use derivative instruments to manage a portion of our cash flow exposure to fluctuations in foreign currency
exchange rates. As part of our risk management strategy, we use foreign currency contracts to manage a portion of our
exposures of underlying assets, liabilities, and other obligations, which exist as part of our ongoing business operations.
These foreign currency instruments have maturities that extend for one to twelve months in the future, and provide us
with some protection against currency exposures. However, our attempts to hedge against these risks may not be
completely successful, resulting in an adverse impact on our financial results.
The fluctuations of currencies in which we conduct business can both increase and decrease our overall revenue and
expenses for any given fiscal period. Although our foreign currency cash flow hedge program extends beyond the current
quarter in order to reduce our exposure to foreign currency volatility, we do not attempt to completely mitigate this risk,
and in any case, will incur transaction fees in adopting such hedging programs. Such volatility, even when it increases our
revenues or decreases our expenses, impacts our ability to accurately predict our future results and earnings.
A breach of security in our products, services or computer systems may compromise the integrity of our products or
services, harm our reputation, create additional liability and adversely impact our financial results.
We make significant efforts to maintain the security and integrity of our source code and computer systems. The
risk of a security breach or disruption, particularly through cyber attack or cyber intrusion, including by computer
hackers, foreign governments and cyber terrorists, has increased as the number, intensity and sophistication of attempted
attacks and intrusions from around the world have increased. These threats include but are not limited to identity theft,
unauthorized access, DNS attacks, wireless network attacks, viruses and worms, advanced persistent threat (APT),
application centric attacks, peer-to-peer attacks, phishing, backdoor trojans and distributed denial of service (DDoS)
attacks. Any of the foregoing could attack our products, services or computer systems. Despite significant efforts to create
2016 Annual Report