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Revenue Recognition
 6 Months Ended
Jun. 30, 2024
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition
Product and Service Categories

We categorize our products and services revenue among the following categories for the Business segment:

•Grow, which includes existing and emerging products and services in which we are significantly investing, including our dark fiber, Edge Cloud services, IP, managed security, software-defined wide area networks ("SD WAN"), Unified Communications and Collaboration ("UC&C") and wavelengths services;

•Nurture, which includes our more mature offerings, including ethernet and VPN data networks services;

•Harvest, which includes our legacy services managed for cash flow, including Time Division Multiplexing ("TDM") voice, and private line services; and

•Other, which includes equipment sales, managed and professional service solutions and other services.

We categorize our products and services revenue among the following categories for the Mass Markets segment:

•Fiber Broadband, under which we provide high speed broadband services to residential and small business customers utilizing our fiber-based network infrastructure;

•Other Broadband, under which we provide primarily lower speed broadband services to residential and small business customers utilizing our copper-based network infrastructure; and

•Voice and Other, under which we derive revenues from (i) providing local and long-distance voice services, professional services, and other ancillary services, and (ii) federal broadband and state support programs.

Reconciliation of Total Revenue to Revenue from Contracts with Customers

The following tables provide total revenue by segment, sales channel and product category. They also provide the amount of revenue that is not subject to ASC 606, "Revenue from Contracts with Customers" ("ASC 606"), but is instead governed by other accounting standards. The amounts in the tables below include revenue for the EMEA business prior to its sales on November 1, 2023. See Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses in our Annual Report on Form 10-K for the year ended December 31, 2023 for additional information on these divestitures.
Three Months Ended June 30, 2024Three Months Ended June 30, 2023
Total Revenue
Adjustments for Non-ASC 606 revenue (1)
Total revenue from Contracts with CustomersTotal Revenue
Adjustments for Non-ASC 606 revenue (1)
Total revenue from Contracts with Customers
(Dollars in millions)
Business Segment by Sales Channel and Product Category
Large Enterprise
Grow$424 (61)363 428 (47)381 
Nurture258 — 258 293 — 293 
Harvest112 — 112 133 — 133 
Other43 — 43 45 (1)44 
Total Large Enterprise Revenue837 (61)776 899 (48)851 
Mid-Market Enterprise
Grow210 (7)203 203 (8)195 
Nurture178 — 178 210 — 210 
Harvest82 (1)81 92 (1)91 
Other8 — 8 9 (1)8 
Total Mid-Market Enterprise Revenue478 (8)470 514 (10)504 
Public Sector
Grow127 (20)107 119 (19)100 
Nurture88 — 88 93 — 93 
Harvest92 (1)91 95 — 95 
Other141 — 141 108 — 108 
Total Public Sector Revenue448 (21)427 415 (19)396 
Wholesale
Grow264 (76)188 265 (62)203 
Nurture187 (7)180 206 (8)198 
Harvest271 (37)234 330 (43)287 
Other1 — 1 2 — 2 
Total Wholesale Revenue723 (120)603 803 (113)690 
International and Other
Grow38 (1)37 129 (31)98 
Nurture40 — 40 72 — 72 
Harvest9 — 9 41 — 41 
Other4 — 4 35 — 35 
Total International and Other91 (1)90 277 (31)246 
Business Segment by Product Category
Grow1,063 (165)898 1,144 (167)977 
Nurture751 (7)744 874 (8)866 
Harvest566 (39)527 691 (44)647 
Other197 — 197 199 (2)197 
Total Business Segment Revenue2,577 (211)2,366 2,908 (221)2,687 
Mass Markets Segment by Product Category
Fiber Broadband181 (3)178 158 (4)154 
Other Broadband298 (27)271 355 (32)323 
Voice and Other212 (9)203 240 (9)231 
Total Mass Markets Revenue691 (39)652 753 (45)708 
Total Revenue$3,268 (250)3,018 3,661 (266)3,395 
Six Months Ended June 30, 2024Six Months Ended June 30, 2023
Total Revenue
Adjustments for Non-ASC 606 revenue (1)
Total revenue from Contracts with CustomersTotal Revenue
Adjustments for Non-ASC 606 revenue (1)
Total revenue from Contracts with Customers
(Dollars in millions)
Business Segment by Sales Channel and Product Category
Large Enterprise
Grow$851 (110)741 849 (97)752 
Nurture526 — 526 593 — 593 
Harvest231 — 231 272 — 272 
Other87 (1)86 96 (2)94 
Total Large Enterprise Revenue1,695 (111)1,584 1,810 (99)1,711 
Mid-Market Enterprise
Grow417 (13)404 400 (15)385 
Nurture366 — 366 429 — 429 
Harvest165 (2)163 190 (2)188 
Other16 (1)15 18 (3)15 
Total Mid-Market Enterprise Revenue964 (16)948 1,037 (20)1,017 
Public Sector
Grow252 (41)211 236 (38)198 
Nurture175 — 175 200 — 200 
Harvest186 (2)184 194 — 194 
Other255 — 255 217 — 217 
Total Public Sector Revenue868 (43)825 847 (38)809 
Wholesale
Grow524 (138)386 536 (133)403 
Nurture379 (14)365 421 (14)407 
Harvest546 (75)471 662 (87)575 
Other4 — 4 7 — 7 
Total Wholesale Revenue1,453 (227)1,226 1,626 (234)1,392 
International and Other
Grow78 (2)76 257 (60)197 
Nurture82 — 82 144 — 144 
Harvest20 — 20 79 — 79 
Other8 — 8 76 — 76 
Total International and Other188 (2)186 556 (60)496 
Business Segment by Product Category
Grow2,122 (304)1,818 2,278 (343)1,935 
Nurture1,528 (14)1,514 1,787 (14)1,773 
Harvest1,148 (79)1,069 1,397 (89)1,308 
Other370 (2)368 414 (5)409 
Total Business Segment Revenue5,168 (399)4,769 5,876 (451)5,425 
Mass Markets Segment by Product Category
Fiber Broadband351 (7)344 310 (8)302 
Other Broadband613 (55)558 724 (65)659 
Voice and Other426 (18)408 489 (18)471 
Total Mass Markets Revenue1,390 (80)1,310 1,523 (91)1,432 
Total Revenue$6,558 (479)6,079 7,399 (542)6,857 
_____________________________________________________________________
(1)Includes regulatory revenue and lease revenue not within the scope of ASC 606.

Operating Lease Revenue

Lumen Technologies leases various dark fiber (including conduit), office facilities, colocation facilities, switching facilities, other network sites and service equipment to third parties under operating leases. Lease and sublease revenue are included in Operating Revenue in our consolidated statements of operations.

For the three months ended June 30, 2024 and 2023, our gross rental revenue was $240 million and $257 million, respectively, which represented approximately 7% of our operating revenue for both the three months ended June 30, 2024 and 2023. For the six months ended June 30, 2024 and 2023, our gross rental revenue was $461 million and $526 million, respectively, which represented approximately 7% of our operating revenue for both the six months ended June 30, 2024 and 2023.

Customer Receivables and Contract Balances

The following table provides balances of customer receivables, contract assets and contract liabilities, net of amounts classified as held for sale, as of June 30, 2024 and December 31, 2023:

June 30, 2024December 31, 2023
 (Dollars in millions)
Customer receivables(1)
$1,263 1,256 
Contract assets
23 29 
Contract liabilities
701 698 
______________________________________________________________________
(1)Reflects gross customer receivables of $1.3 billion, net of allowance for credit losses of $55 million and $60 million, at June 30, 2024 and December 31, 2023, respectively.

Contract liabilities are consideration we have received from our customers or billed in advance of providing goods or services promised in the future. We defer recognizing this consideration as revenue until we have satisfied the related performance obligation to the customer. Contract liabilities include recurring services billed one month in advance and installation and maintenance charges that are deferred and recognized over the actual or expected contract term, which typically ranges from one to five years depending on the service. Contract liabilities are included within Deferred revenue on our consolidated balance sheets. During the three and six months ended June 30, 2024, we recognized $43 million and $343 million, respectively, of revenue that was included in contract liabilities of $698 million as of January 1, 2024. During the three and six months ended June 30, 2023, we recognized $42 million and $347 million, respectively, of revenue that was included in contract liabilities of $715 million as of January 1, 2023, including contract liabilities that were classified as held for sale.

Performance Obligations

As of June 30, 2024, we expect to recognize approximately $6.8 billion of revenue in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied. As of June 30, 2024, the transaction price related to unsatisfied performance obligations that are expected to be recognized for the remainder of 2024, 2025 and thereafter was $1.7 billion, $2.3 billion and $2.8 billion, respectively.

These amounts exclude (i) the value of unsatisfied performance obligations for contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed (for example, uncommitted usage or non-recurring charges associated with professional or technical services to be completed) and (ii) contracts that are classified as leasing arrangements or government assistance that are not subject to ASC 606.
Contract Costs

The following tables provide changes in our contract acquisition costs and fulfillment costs:

Three Months Ended June 30, 2024Three Months Ended June 30, 2023
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
(Dollars in millions)(Dollars in millions)
Beginning of period balance(1)
$182 189 192 182 
Costs incurred35 49 29 39 
Amortization(32)(34)(39)(36)
Change in contract costs held for sale— — 1 1 
End of period balance(3)
$185 204 183 186 

Six Months Ended June 30, 2024Six Months Ended June 30, 2023
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
(Dollars in millions)(Dollars in millions)
Beginning of period balance(2)
$182 184 202 192 
Costs incurred68 85 65 79 
Amortization(65)(65)(80)(71)
Change in contract costs held for sale— — (4)(14)
End of period balance(3)
$185 204 183 186 
______________________________________________________________________
(1)Beginning of period balance for the three months ended June 30, 2023 excludes $11 million of acquisition costs and $15 million fulfillment costs classified as held for sale related to the EMEA business.
(2)Beginning of period balance for the six months ended June 30, 2023 excludes $6 million of acquisition costs and no fulfillment costs classified as held for sale related to the EMEA business.
(3)End of period balance for the three and six months ended June 30, 2023 excludes $10 million of acquisition costs and $14 million of fulfillment costs classified as held for sale related to the EMEA business.

Acquisition costs include commission fees paid to employees as a result of obtaining contracts. Fulfillment costs include third party and internal costs associated with the provision, installation and activation of services to customers, including labor and materials consumed for these activities.

We amortize deferred acquisition and fulfillment costs based on the transfer of services on a straight-line basis over the average contract life of approximately 50 months for mass markets customers and 35 months for business customers. We include amortized fulfillment costs in cost of services and products and amortized acquisition costs in Selling, general and administrative in our consolidated statements of operations. We include the amount of these deferred costs that are anticipated to be amortized in the next twelve months in Other under Current Assets on our consolidated balance sheets. We include the amount of deferred costs expected to be amortized beyond the next twelve months in Other under Deferred Credits and Other Liabilities on our consolidated balance sheets. We assess deferred acquisition and fulfillment costs for impairment on a quarterly basis.