Contract Balances and Performance Obligations

12 Months Ended

Oct. 29, 2023

Revenue from Contract with Customer [Abstract]

Contract Balances and Performance Obligations

Contract Balances and Performance Obligations

Contract Assets and Liabilities

Contract assets primarily result from receivables for goods transferred to customers where payment is conditional upon technical sign off and not just the passage of time. Contract liabilities consist of unsatisfied performance obligations related to advance payments received and billings in excess of revenue recognized. Our contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period.

Contract assets are generally classified as current and are included in Other Current Assets in the Consolidated Balance Sheets. Contract liabilities are classified as current or non-current based on the timing of when performance obligations will be satisfied and associated revenue is expected to be recognized.

Contract balances at the end of each reporting period were as follows:

	October 29, 2023		October 30, 2022
	(In millions)
Contract assets	$	274	$	173
Contract liabilities	$	2,975	$	3,142

The increase in contract assets during fiscal 2023, was primarily due to an increase in unsatisfied performance obligations related to goods transferred to customers where payment was conditional upon technical sign off.

During fiscal 2023, we recognized revenue of approximately $2.9 billion related to contract liabilities at October 30, 2022. This reduction in contract liabilities was offset by new billings for products and services for which there were unsatisfied performance obligations to customers and revenue had not yet been recognized as of October 29, 2023.

There were no credit losses recognized on our accounts receivables and contract assets during fiscal 2023 and 2022.

Performance Obligations

As of October 29, 2023, the amount of remaining unsatisfied performance obligations on contracts, primarily consisting of written purchase orders received from customers, with an original estimated duration of one year or more was approximately $6.0 billion, of which approximately 59% is expected to be recognized within 12 months and the remainder is expected to be recognized within the following 24 months thereafter.

We have elected the available practical expedient to exclude the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less.