3. Revenue Recognition:

Disaggregation of Revenue

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

Revenue by Major Products/Service Offerings

(Dollars in millions)	Cloud &		Global		Global
For the three months	Cognitive		Business		Technology				Global				Total
ended March 31, 2019:	Software		Services		Services		Systems		Financing		Other		Revenue

Cognitive Applications	$	1,308	$	—	$	—	$	—	$	—	$	—	$	1,308
Cloud & Data Platforms	1,917		—		—		—		—		—		1,917
Transaction Processing Platforms	1,812		—		—		—		—		—		1,812

Consulting	—		1,964		—		—		—		—		1,964
Application Management	—		1,908		—		—		—		—		1,908
Global Process Services	—		247		—		—		—		—		247

Infrastructure & Cloud Services	—		—		5,209		—		—		—		5,209
Technology Support Services	—		—		1,665		—		—		—		1,665

Systems Hardware	—		—		—		914		—		—		914
Operating Systems Software	—		—		—		414		—		—		414

Global Financing*	—		—		—		—		406		—		406

Other Revenue	—		—		—		—		—		417		417

Total	$	5,037	$	4,119	$	6,875	$	1,328	$	406	$	417	$	18,182

* Contains lease and loan/working capital 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	Total
ended March 31, 2019:	Revenue

Americas	$	8,493
Europe/Middle East/Africa	5,727
Asia Pacific	3,961

Total	$	18,182

Revenue by Major Products/Service Offerings

(Dollars in millions)	Cloud &		Global		Global
For the three months	Cognitive		Business		Technology				Global				Total
ended March 31, 2018:	Software*		Services*		Services*		Systems		Financing		Other*		Revenue

Cognitive Applications	$	1,286	$	—	$	—	$	—	$	—	$	—	$	1,286
Cloud & Data Platforms	1,950		—		—		—		—		—		1,950
Transaction Processing Platforms	1,880		—		—		—		—		—		1,880

Consulting	—		1,867		—		—		—		—		1,867
Application Management	—		2,002		—		—		—		—		2,002
Global Process Services	—		246		—		—		—		—		246

Infrastructure & Cloud Services	—		—		5,639		—		—		—		5,639
Technology Support Services	—		—		1,782		—		—		—		1,782

Systems Hardware	—		—		—		1,093		—		—		1,093
Operating Systems Software	—		—		—		407		—		—		407

Global Financing**	—		—		—		—		405		—		405

Other Revenue	—		—		—		—		—		515		515

Total	$	5,116	$	4,115	$	7,421	$	1,500	$	405	$	515	$	19,072

* Recast to conform to 2019 presentation.

** Contains lease and loan/working capital 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	Total
ended March 31, 2018:	Revenue

Americas	$	8,707
Europe/Middle East/Africa	6,176
Asia Pacific	4,188

Total	$	19,072

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. Remaining performance obligation 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, 2019, the aggregate amount of the transaction price allocated to RPO related to customer contracts that are unsatisfied or partially unsatisfied was $118 billion. Given the profile of contract terms, approximately 60 percent of this amount is expected to be recognized as revenue over the next two years, approximately 35 percent between three and five years and the balance (mostly Infrastructure & Cloud Services) thereafter.

At December 31, 2018, the aggregate amount of the transaction price allocated to RPO related to customer contracts that were unsatisfied or partially unsatisfied was $124 billion. Given the profile of contract terms, approximately 60 percent of this amount was expected to be recognized as revenue over the next two years, approximately 35 percent between three and five years and the balance (mostly Infrastructure & Cloud Services) thereafter.

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

For the three months ending March 31, 2019, the impact to revenue from performance obligations satisfied (or partially satisfied) in previous periods was immaterial. For the three months ending March 31, 2018, revenue was reduced by $22 million for performance obligations satisfied (or partially satisfied) in previous periods, mainly due to changes in estimates on percentage-of-completion based contracts. Refer to note A, “Significant Accounting Policies,” in the company’s 2018 Annual Report for additional information on percentage-of-completion contracts and estimates of costs to complete.

Reconciliation of Contract Balances

The following table provides information about notes and accounts receivables — trade, contract assets and deferred income balances:

	At March 31,		At December 31,
(Dollars in millions)	2019		2018
Notes and accounts receivable—trade (net of allowances of $316 and $309 at March 31, 2019 and December 31, 2018, respectively)	$	6,987	$	7,432
Contract assets (1)	528		470
Deferred income (current)	12,134		11,165
Deferred income (noncurrent)	3,481		3,445

(1) Included within prepaid expenses and other current assets in the Consolidated Statement of Financial Position.

The amount of revenue recognized during the three months ended March 31, 2019 that was included within the deferred income balance at December 31, 2018 was $3.5 billion and primarily related to services and software. The amount of revenue recognized during the three months ended March 31, 2018 that was included within the deferred income balance at January 1, 2018 was $3.5 billion and was also primarily related to services and software.