Contract Costs

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Disaggregation of Revenue from Contracts with Customers

The following table presents a disaggregation of revenue:



	Three months ended September 30,				Nine months ended September 30,
in millions	2019		2018		2019		2018
Americas
Recurring	$	222	$	198	$	652	$	590
Perpetual software licenses and hardware	—		31		31		93
Consulting services	34		48		111		145
Total Americas	256		277		794		828
EMEA
Recurring	75		70		223		207
Perpetual software licenses and hardware	12		26		29		69
Consulting services	31		43		101		139
Total EMEA	118		139		353		415
APAC
Recurring	46		44		137		129
Perpetual software licenses and hardware	4		20		16		81
Consulting services	35		46		105		123
Total APAC	85		110		258		333
Total Revenue	$	459	$	526	$	1,405	$	1,576

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 condensed 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:



	As of
in millions	September 30, 2019		December 31, 2018
Accounts receivable, net	$	328	$	588
Contract assets	$	8	$	14
Current deferred revenue	$	408	$	490
Long-term deferred revenue	$	68	$	105

Revenue recognized during the nine months ended September 30, 2019 from amounts included in deferred revenue at the beginning of the period was $468 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 September 30, 2019:



in millions	Total at September 30, 2019		Year 1		Year 2 and Thereafter
Remaining unsatisfied obligations	$	2,558	$	1,210	$	1,348

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 $1,831 million of the amount includes customer-only general cancellation for convenience terms that the Company is contractually obligated to perform unless the customer notifies us. The Company expects to recognize revenue of approximately $300 million in the next year from contracts that are non-cancelable. Customers typically do not cancel before the end of the contractual term and historically the Company has seen very little churn in its customer base. 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 Other Assets on the Company’s balance sheet. The capitalized amounts are calculated based on the annual recurring revenue and total contract value 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 around four years. These costs are periodically reviewed for impairment. The following table identifies the activity relating to capitalized contract costs:



in millions	December 31, 2018		Capitalized		Amortization			September 30, 2019
Capitalized contract costs	$	54	$	37	$	(14	)	$	77