Revenue from Contracts with Customers

12 Months Ended

Dec. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Revenue from Contracts with Customers

Disaggregation of Revenue from Contracts with Customers

The following table presents a disaggregation of revenue for the years ended December 31:

In millions	2023		2022		2021
Americas
Recurring	$	947	$	889	$	879
Perpetual software licenses, hardware and other	14		23		24
Consulting services	128		126		141
Total Americas	1,089		1,038		1,044
EMEA
Recurring	363		330		371
Perpetual software licenses, hardware and other	20		33		37
Consulting services	92		102		135
Total EMEA	475		465		543
APJ
Recurring	182		200		214
Perpetual software licenses, hardware and other	11		9		16
Consulting services	76		83		100
Total APJ	269		292		330
Total Revenue	$	1,833	$	1,795	$	1,917

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, contract assets, and customer advances and deposits (deferred revenue or contract liabilities) on the consolidated balance sheet. Accounts receivable include amounts due from customers that are unconditional. Contract assets relate to the Company’s rights to consideration for goods delivered or services completed and recognized as revenue but billing and the right to receive payment is conditional upon the completion of other performance obligations. Contract assets are included in other current assets on the balance sheet and are transferred to accounts receivable when the rights become unconditional. Deferred revenue consists of advance payments and billings in excess of revenue recognized. Deferred revenue is classified as either current or noncurrent based on the timing of when the Company expects to recognize revenue. These assets and liabilities are reported on a contract-by-contract basis at the end of each reporting period. The following table provides information about receivables, contract assets and deferred revenue from contracts with customers:

In millions	December 31, 2023		December 31, 2022
Accounts receivable, net	$	286	$	364
Contract assets	$	9	$	7
Current deferred revenue	$	570	$	589
Long-term deferred revenue	$	22	$	8

Revenue recognized during the year ended December 31, 2023 from amounts included in deferred revenue at the beginning of the period was approximately $490 million.

Transaction Price Allocated to Unsatisfied Obligations

The following table includes estimated revenue expected to be recognized in the future related to the Company's unsatisfied (or partially satisfied) obligations at December 31, 2023:

In millions	December 31, 2023		Year 1		Year 2 and Thereafter
Remaining unsatisfied obligations	$	2,681	$	1,606	$	1,075

The amounts above represent the price of firm orders for which work has not been performed or goods have not been delivered and exclude unexercised contract options outside the stated contractual term that do not represent material rights to the customer. Although the Company believes that the contract value in the above table is firm, approximately $1,442 million of the amount includes customer-only general cancellation for convenience terms that the Company is contractually obligated to perform unless the customer notifies the Company otherwise. The Company expects to recognize revenue of approximately $646 million in the next year from contracts that are non-cancelable. The Company believes the inclusion of this information is important to understanding the obligations that the Company is contractually required to perform and provides useful information regarding remaining obligations related to these executed contracts.

Contract Costs

The Company capitalizes sales commissions and other contract costs that are incremental direct costs of obtaining customer contracts if the expected amortization period of the asset is greater than one year. These costs are recorded in Capitalized contract costs on the Company’s balance sheet. The capitalized amounts are calculated based on the sales commissions for individual multi-term contracts. The judgments made in determining the amount of costs incurred include whether the commissions are in fact incremental and would not have occurred absent the customer contract. Costs to obtain a contract are amortized as selling, general and administrative expenses on a straight-line basis over the expected period of benefit, which is typically four years. These costs are periodically reviewed for impairment. The following table identifies the activity relating to capitalized contract costs:

In millions	December 31, 2022		Capitalized		Amortization		December 31, 2023
Capitalized contract costs	$	92	$	16	$	(40)	$	68
In millions	December 31, 2021		Capitalized		Amortization		December 31, 2022
Capitalized contract costs	$	111	$	37	$	(56)	$	92