Revenue Recognition

3 Months Ended

Mar. 31, 2024

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition:

Disaggregation of Revenue

The following tables provide details of revenue by major products/service offerings and revenue by geography.

Revenue by Major Products/Service Offerings

(Dollars in millions)
For the three months ended March 31:	2024		2023 (1)
Hybrid Platform & Solutions	$	4,098	$	3,850
Transaction Processing	1,800		1,742
Total Software	$	5,899	$	5,591
Business Transformation	2,317		2,283
Application Operations	1,938		1,989
Technology Consulting	931		925
Total Consulting	$	5,186	$	5,197
Hybrid Infrastructure	1,803		1,709
Infrastructure Support	1,273		1,389
Total Infrastructure	$	3,076	$	3,098
Financing (2)	193		196
Other	108		169
Total revenue	$	14,462	$	14,252

(1)Recast to reflect segment changes.

(2)Contains lease and loan financing arrangements which are not subject to the guidance on revenue from contracts with customers.

Revenue by Geography

(Dollars in millions)
For the three months ended March 31:	2024		2023
Americas	$	7,296	$	7,078
Europe/Middle East/Africa	4,313		4,331
Asia Pacific	2,853		2,843
Total	$	14,462	$	14,252

Remaining Performance Obligations

The remaining performance obligation (RPO) disclosure provides the aggregate amount of the transaction price yet to be recognized as of the end of the reporting period and an explanation as to when the company expects to recognize these amounts in revenue. It is intended to be a statement of overall work under contract that has not yet been performed and does not include contracts in which the customer is not committed, such as certain as-a-Service, governmental, term software license and services offerings. The customer is not considered committed when they are able to terminate for convenience without payment of a substantive penalty. The disclosure includes estimates of variable consideration, except when the variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property. Additionally, as a practical expedient, the company does not include contracts that have an original duration of one year or less. RPO estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidations, adjustment for revenue that has not materialized and adjustments for currency.

At March 31, 2024, the aggregate amount of the transaction price allocated to RPO related to customer contracts that are unsatisfied or partially unsatisfied was approximately $56 billion. Approximately 70 percent of the amount is expected

to be recognized as revenue in the subsequent two years, approximately 27 percent in the subsequent three to five years and the balance thereafter.

Revenue Recognized for Performance Obligations Satisfied (or Partially Satisfied) in Prior Periods

For the three months ended March 31, 2024, revenue recognized for performance obligations satisfied or partially satisfied in prior periods was immaterial.

Reconciliation of Contract Balances

The following table provides information about notes and accounts receivable–trade, contract assets and deferred income balances.

(Dollars in millions)	At March 31, 2024		At December 31, 2023
Notes and accounts receivable — trade (net of allowances of $152 in 2024 and $192 in 2023)	$	6,041	$	7,214
Contract assets (1)	$	527	$	505
Deferred income (current)	$	14,051	$	13,451
Deferred income (noncurrent)	$	3,488	$	3,533

(1)Included within prepaid expenses and other current assets in the Consolidated Balance Sheet.

The amount of revenue recognized during the three months ended March 31, 2024 that was included within the deferred income balance at December 31, 2023 was $4.3 billion and was primarily related to software and services.

The following table provides roll forwards of the notes and accounts receivable–trade allowance for expected credit losses for the three months ended March 31, 2024 and the year ended December 31, 2023.

(Dollars in millions)
January 1, 2024	Additions / (Releases)	Write-offs (1)	Foreign currency and other	March 31, 2024
$192	$(8)	$(29)	$(3)	$152

January 1, 2023	Additions / (Releases)	Write-offs (1)	Foreign currency and other	December 31, 2023
$233	$32	$(79)	$6	$192

(1)The majority of the write-offs during the period related to receivables which had been previously reserved.

The contract assets allowance for expected credit losses was not material in any of the periods presented.