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Revenue Recognition
12 Months Ended
Dec. 31, 2024
Revenue from Contract with Customer [Abstract]  
Revenue Recognition
Note 4—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 and conduit, Edge Cloud, 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 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 Latin American, ILEC and EMEA businesses prior to their sales on August 1, 2022, October 3, 2022 and November 1, 2023, respectively:

Year Ended December 31, 2024
Total 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$1,733 (256)1,477 
Nurture1,015 — 1,015 
Harvest441 — 441 
Other190 (1)189 
Total Large Enterprise Revenue3,379 (257)3,122 
Mid-Market Enterprise
Grow841 (25)816 
Nurture690 — 690 
Harvest320 (4)316 
Other36 (5)31 
Total Mid-Market Enterprise Revenue1,887 (34)1,853 
Public Sector
Grow596 (85)511 
Nurture355 — 355 
Harvest389 (4)385 
Other509 — 509 
Total Public Sector Revenue1,849 (89)1,760 
Wholesale
Grow1,048 (287)761 
Nurture740 (19)721 
Harvest1,079 (140)939 
Other— 
Total Wholesale Revenue2,875 (446)2,429 
International and Other
Grow155 (4)151 
Nurture161 — 161 
Harvest42 — 42 
Other15 — 15 
Total International and Other373 (4)369 
Business Segment by Product Category
Grow4,373 (657)3,716 
Nurture2,961 (19)2,942 
Harvest2,271 (148)2,123 
Other758 (6)752 
Total Business Segment Revenue10,363 (830)9,533 
Mass Markets Segment by Product Category
Fiber Broadband736 (13)723 
Other Broadband1,167 (105)1,062 
Voice and Other842 (31)811 
Total Mass Markets Revenue2,745 (149)2,596 
Total Revenue$13,108 (979)12,129 
Timing of revenue
Goods and services transferred at a point in time$136 
Services performed over time11,993 
Total revenue from contracts with customers$12,129 

Year Ended December 31, 2023
Total 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$1,709 (179)1,530 
Nurture1,172 — 1,172 
Harvest537 — 537 
Other200 (5)195 
Total Large Enterprise Revenue3,618 (184)3,434 
Mid-Market Enterprise
Grow807 (28)779 
Nurture829 — 829 
Harvest372 (4)368 
Other36 (4)32 
Total Mid-Market Enterprise Revenue2,044 (36)2,008 
Public Sector
Grow473 (81)392 
Nurture399 — 399 
Harvest383 (1)382 
Other534 — 534 
Total Public Sector Revenue1,789 (82)1,707 
Wholesale
Grow1,052 (251)801 
Nurture827 (25)802 
Harvest1,261 (165)1,096 
Other12 — 12 
Total Wholesale Revenue3,152 (441)2,711 
International and Other
Grow453 (115)338 
Nurture266 — 266 
Harvest126 — 126 
Other135 — 135 
Total International and Other980 (115)865 
Business Segment by Product Category
Grow4,494 (654)3,840 
Nurture3,493 (25)3,468 
Harvest2,679 (170)2,509 
Other917 (9)908 
Total Business Segment Revenue11,583 (858)10,725 
Mass Markets Segment by Product Category
Fiber Broadband637 (16)621 
Other Broadband1,395 (126)1,269 
Voice and Other942 (36)906 
Total Mass Markets Revenue2,974 (178)2,796 
Total Revenue$14,557 (1,036)13,521 
Timing of revenue
Goods and services transferred at a point in time$178 
Services performed over time13,343 
Total revenue from contracts with customers$13,521 

Year Ended December 31, 2022
Total 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$1,653 (199)1,454 
Nurture1,274 — 1,274 
Harvest690 (2)688 
Other210 (7)203 
Total Large Enterprise Revenue3,827 (208)3,619 
Mid-Market Enterprise
Grow768 (32)736 
Nurture949 — 949 
Harvest494 (6)488 
Other31 (2)29 
Total Mid-Market Enterprise Revenue2,242 (40)2,202 
Public Sector
Grow445 (79)366 
Nurture492 — 492 
Harvest466 (3)463 
Other460 (2)458 
Total Public Sector Revenue1,863 (84)1,779 
Wholesale
Grow991 (271)720 
Nurture1,012 (23)989 
Harvest1,551 (215)1,336 
Other51 — 51 
Total Wholesale Revenue3,605 (509)3,096 
International and Other
Grow761 (176)585 
Nurture401 — 401 
Harvest210 — 210 
Other190 — 190 
Total International and Other1,562 (176)1,386 
Business Segment by Product Category
Grow4,618 (757)3,861 
Nurture4,128 (23)4,105 
Harvest3,411 (226)3,185 
Other942 (11)931 
Total Business Segment Revenue13,099 (1,017)12,082 
Mass Markets Segment by Product Category
Fiber Broadband604 (18)586 
Other Broadband2,163 (200)1,963 
Voice and Other1,612 (135)1,477 
Total Mass Markets Revenue4,379 (353)4,026 
Total Revenue$17,478 (1,370)16,108 
Timing of revenue
Goods and services transferred at a point in time$154 
Services performed over time15,954 
Total revenue from contracts with customers$16,108 
______________________________________________________________________
(1)Includes regulatory revenue and lease revenue not within the scope of ASC 606.

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 December 31,
2024
2023
 (Dollars in millions)
Customer receivables, less allowance of $50 and $60
$1,193 1,256 
Contract assets
19 29 
Contract liabilities
733 698 

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 years ended December 31, 2024 and December 31, 2023, we recognized $443 million and $434 million, respectively, of revenue that was included in contract liabilities of $698 million and $715 million as of January 1, 2024 and 2023, respectively, including contract liabilities that were classified as held for sale.
Performance Obligations

As of December 31, 2024, we expect to recognize approximately $6.4 billion of revenue in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied. As of December 31, 2024, the transaction price related to unsatisfied performance obligation that are expected to be recognized in 2025, 2026 and thereafter was $2.9 billion, $1.7 billion and $1.8 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:
Year Ended December 31, 2024
Acquisition CostsFulfillment Costs
 (Dollars in millions)
Beginning of period balance$182 184 
Costs incurred151 176 
Amortization(130)(138)
End of period balance$203 222 

Year Ended December 31, 2023
Acquisition CostsFulfillment Costs
 (Dollars in millions)
Beginning of period balance$202 192 
Costs incurred136 157 
Amortization(152)(140)
Classified as held for sale
(4)(25)
End of period balance$182 184 

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 12 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 12 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.
Governmental Funding

Lumen participates in various U.S. federal and state programs under which government support payments are received to offset costs associated with providing services in targeted locations such as unserved or underserved high-cost or rural areas, or for certain types of customers, including non-profit organizations, educational institutions and local governmental bodies. In certain instances, support payments are conditioned on specified infrastructure buildouts by milestone deadlines or provision of services at specified locations and speed requirements. Commitments may be made annually, on a multi-year basis ranging from one to 10 years or be on-going subject to periodic change or termination. Consistent with customary practice and as referenced in ASC 832 Government Assistance, Lumen applies a grant model of accounting by which it accounts for these transactions as non-ASC 606 revenue over the periods in which the costs for which the funding is intended to compensate are incurred. This non-ASC 606 revenue is included in operating revenue in our consolidated statements of operations. Corresponding receivables are recorded when services have been provided to the customers and costs incurred, but the cash has not been received. These amounts are included in our accounts receivable, less allowance in our consolidated balance sheets. Certain programs are subject to audits of compliance with program commitments and, subject to the outcomes of those assessments, Lumen may be required to reimburse the government entity for cash previously received, or, in some cases, pay a penalty. Lumen evaluates each program and establishes a liability under the principles of ASC 450 if it is probable support payments will be recaptured or a penalty will be imposed.

For the years ended December 31, 2024 and 2023, Lumen recorded non-customer revenue of $83 million and $85 million, respectively, under government assistance programs, of which 18% and 17%, respectively, was associated with state universal service fund support programs.

Between 2015 and 2021, we received approximately $500 million annually through the Federal Communications Commission (the "FCC")'s Connect America Fund II ("CAF II"), a federal multi-year recurring subsidy program for more extensive broadband deployment in price-cap ILEC territories. For this program, which ended on December 31, 2021, we were required to meet certain specified infrastructure buildout requirements in 33 states by the end of 2021, which required substantial capital expenditures. In the first quarter of 2022, we recognized $59 million of previously deferred revenue related to the conclusion of the CAF II program based upon our final buildout and filing submissions. The government has the right to audit our compliance with the CAF II program and the ultimate outcome of any remaining examinations is unknown, but could result in a liability to us in excess of our accruals established for these matters.

In early 2020, the FCC created the Rural Digital Opportunity Fund (the “RDOF”) program, a federal support program designed to fund broadband deployment in rural America. For the first phase of this program, RDOF Phase I, the FCC ultimately awarded $6.4 billion support payments to be paid in equal monthly installments over 10 years. We were awarded RDOF funding in several of the states in which we operate and began receiving monthly support payments during the second quarter of 2022. We received approximately $17 million in annual RDOF Phase I support payments for the years ended December 31, 2023 and 2022. In the third quarter of 2024, we relinquished rights to develop certain RDOF census blocks in four states, which resulted in (i) a reduction of the anticipated RDOF Phase I support payments to approximately $16 million for the year ending December 31, 2024 and $15 million each year thereafter through the program period and (ii) an expectation of payment to the federal government, which we anticipate will be approximately $10 million.

Lumen participates in multiple state sponsored programs for broadband deployment in unserved and underserved areas for which the states have state universal service funds sourced from fees levied on telecommunications providers and passed on to consumers. During the years ending December 31, 2024 and 2023, Lumen participated in these types of programs primarily in the states of Nebraska, New Mexico and Minnesota.