Starboard loses initial legal fight against Autodesk, but the battle may just be beginning

Autodesk, a global leader in design, engineering, and entertainment software solutions, is facing governance and accounting issues. The company recently launched an investigation into its free cash flow and non-GAAP operating margin practices. It found that Autodesk had pursued multi-year upfront contracts, exceeding historical levels, to meet its FY23 free cash flow goal. Additionally, the company appointed its CFO as the chief strategy officer, instead of terminating her, raising concerns about board oversight. Activist investor Starboard has urged for governance changes and requested the reopening of the nomination window for board seats. However, its claim was rejected by the court. A reconstituted board and management, improved operating margins, and enhanced governance could help increase shareholder value.