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Revenue Recognition
 12 Months Ended
Dec. 31, 2024
Revenue from Contract with Customer [Abstract]  
Revenue Recognition
Note 4—Revenue Recognition

We categorize our products and services revenue among the following categories:
•Grow, which includes existing and emerging products and services in which we are significantly investing, including our colocation, 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;
•Other, which includes primarily managed and professional service solutions and content delivery network ("CDN") revenue, prior to the sale of select CDN contracts in late 2023; and
•Affiliate Services, which includes communications services provided to our affiliates that we also provide to our external customers.
From time to time, we may change the categorization of our products and services.
Reconciliation of Total Revenue to Revenue from Contracts with Customers

The following tables provide our total revenue by product and service 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 and EMEA businesses prior to their sales on August 1, 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)
Grow$3,837 (603)3,234 
Nurture1,523 (14)1,509 
Harvest756 — 756 
Other118 — 118 
Affiliate Services262 (262)— 
Total Revenue$6,496 (879)5,617 
Timing of revenue:
Goods transferred at a point in time$20 
Services performed over time5,597 
Total revenue from contracts with customers$5,617 

Year Ended December 31, 2023
Total Revenue
Adjustments for Non-ASC 606 Revenue (1)
Total Revenue from Contracts with Customers
(Dollars in millions)
Grow$3,898 (595)3,303 
Nurture1,699 (15)1,684 
Harvest972 — 972 
Other244 — 244 
Affiliate Services224 (224)— 
Total Revenue$7,037 (834)6,203 
Timing of revenue:
Goods transferred at a point in time$— 
Services performed over time6,203 
Total revenue from contracts with customers$6,203 
Year Ended December 31, 2022
Total Revenue
Adjustments for Non-ASC 606 Revenue (1)
Total Revenue from Contracts with Customers
(Dollars in millions)
Grow$3,964 (665)3,299 
Nurture1,902 (15)1,887 
Harvest1,139 — 1,139 
Other261 — 261 
Affiliate Services227 (227)— 
Total Revenue$7,493 (907)6,586 
Timing of revenue:
Goods transferred at a point in time$4 
Services performed over time6,582 
Total revenue from contracts with customers$6,586 
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(1)     Includes lease revenue which is not within the scope of ASC 606.

We do not have any single external customer that comprises more than 10% of our total consolidated operating revenue. Substantially all of our consolidated revenue comes from customers located in the United States.

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 $12 and $13
$529 544 
Contract assets
12 8 
Contract liabilities
267 222 

Contract liabilities are consideration we have received from our customers or billed in advance of providing the 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 in our consolidated balance sheets. During the years ended December 31, 2024 and 2023, we recognized $120 million and $139 million, respectively, of revenue that was included in contract liabilities of $222 million and $281 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 $4.2 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 $2.0 billion, $1.2 billion and $1.0 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 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$70 97 
Costs incurred55 103 
Amortization(48)(73)
End of period balance$77 127 

Year Ended December 31, 2023
Acquisition CostsFulfillment Costs
(Dollars in millions)
Beginning of period balance(1)
$76 106 
Costs incurred55 87 
Amortization(57)(69)
Classified as held for sale
(4)(27)
End of period balance
$70 97 
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(1)Beginning of period balance for the year ended December 31, 2023 excludes $6 million of acquisition costs and no 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 expected contract life of approximately 36 months for our business customers. We include amortized fulfillment costs in cost of services and products and amortized acquisition costs in Selling, general and administrative expenses in our consolidated statements of operations. We include the amount of deferred costs that are anticipated to be amortized in the next 12 months in other current assets on our consolidated balance sheets. The amount of deferred costs expected to be amortized beyond 12 months is included in other non-current assets on our consolidated balance sheets. We assess deferred acquisition and fulfillment costs for impairment on a quarterly basis.