REVENUE RECOGNITION

12 Months Ended

Dec. 31, 2024

REVENUE RECOGNITION

REVENUE RECOGNITION

NOTE 14.   REVENUE RECOGNITION

Contract Balances

Contract assets arise when we recognize revenue for providing a service in advance of billing our customers. Our contract assets typically relate to our long-term contracts where we recognize revenue using the cost-based input method and the revenue recognized exceeds the amount billed to the customer.

Our contract assets also include receivables related to sales-type leases recognized over the lease term as the customer is billed. Contract assets are amortized as the customer is billed for services. Contract assets are recorded in “Trade accounts receivable and contract assets, net” on our Consolidated Balance Sheets.

Contract liabilities arise when we bill our customers and receive consideration in advance of providing the service or equipment. Contract liabilities are recognized as revenue when the service or equipment has been provided to the customer. Contract liabilities are recorded in “Contract liabilities” or “Other non-current liabilities” on our Consolidated Balance Sheets.

The following table summarizes our contract asset and liability balances:

	As of December 31,
	2024		2023
	(In thousands)
Contract assets	$	108,007	$	66,095
Contract liabilities:
Current	$	81,558	$	116,187
Noncurrent		1,068		7,401
Total contract liabilities	$	82,626	$	123,588

Our beginning of period contract liability recorded as customer contract revenue during 2024 was $101 million.

The following table presents the activity in our allowance for credit losses:

	For the Years Ended December 31,
	2024		2023		2022
	(In thousands)
Balance, beginning of period	$	20,399	$	15,358	$	14,588
Current period provision for expected losses		25,653		34,085		32,910
Write-offs charged against allowance		(34,193)		(29,371)		(36,011)
Foreign currency translation		(545)		327		3,871
Balance, end of period	$	11,314	$	20,399	$	15,358

As of December 31, 2024, accounts receivable balances for certain customers in Mexico and Brazil have been fully reserved in “Other noncurrent assets, net” in the amount of $18 million.

Performance Obligations

As of December 31, 2024, the remaining performance obligations for our customer contracts was approximately $1.6 billion. Performance obligations expected to be satisfied within one year and greater than one year are 27% and 73%, respectively. This amount and percentages exclude leasing arrangements and agreements with consumer customers.

Contract Acquisition Costs

The following table presents the activity in our contract acquisition costs, net:

	For the Years Ended December 31,
	2024		2023		2022
	(In thousands)
Balance, beginning of period	$	49,343	$	64,447	$	82,986
Additions		47,883		44,459		57,627
Amortization expense		(38,290)		(60,512)		(76,760)
Foreign currency translation		(1,599)		949		594
Balance, end of period	$	57,337	$	49,343	$	64,447

Disaggregation of Revenue

Nature of Products and Services

The following tables present our revenue disaggregated by the nature of products and services. Substantially all of our revenue is related to our Hughes segment:

	For the Years Ended December 31,
	2024		2023		2022
	(In thousands)
Service revenue:
Services	$	1,196,394	$	1,401,438	$	1,564,819
Lease revenue		14,446		47,051		64,375
Total service revenue		1,210,840		1,448,489		1,629,194
Equipment sales and other revenue:
Equipment sales		205,178		140,429		119,107
Design, development and construction services		133,520		145,507		246,265
Lease revenue		10,835		13,431		8,777
Total equipment and other revenue		349,533		299,367		374,149
Total revenue	$	1,560,373	$	1,747,856	$	2,003,343