XML 22 R10.htm IDEA: XBRL DOCUMENT v3.20.2
Revenue from Contracts with Customers
 9 Months Ended
Sep. 30, 2020
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:
Three Months Ended September 30,Nine months ended September 30,
in millions2020201920202019
Americas
Recurring $221 $222 $656 $652 
Perpetual software licenses and hardware14 — 28 31 
Consulting services26 34 80 111 
Total Americas261 256 764 794 
EMEA
Recurring92 75 263 223 
Perpetual software licenses and hardware1 12 14 29 
Consulting services22 31 74 101 
Total EMEA115 118 351 353 
APJ
Recurring52 46 149 137 
Perpetual software licenses and hardware2 4 6 16 
Consulting services24 35 75 105 
Total APJ78 85 230 258 
Total Revenue$454 $459 $1,345 $1,405 
Rental revenue, which is included in recurring revenue in the above table, was as follows:
Three Months Ended September 30,Nine Months Ended September 30,
in millions2020201920202019
Rental revenue* $28 $22 $72 $52 
*Rental revenue includes hardware maintenance.
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 millionsSeptember 30, 2020December 31, 2019
Accounts receivable, net$321 $398 
Contract assets$11 $8 
Current deferred revenue$482 $472 
Long-term deferred revenue$38 $61 
Revenue recognized during the nine months ended September 30, 2020 from amounts included in deferred revenue at the beginning of the period was $370 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, 2020:
in millionsTotal at September 30, 2020Year 1Year 2 and Thereafter
Remaining unsatisfied obligations$2,577 $1,393 $1,184 
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 $1,772 million of the amount is under contracts that are subject to customer-only general cancellation for convenience terms that the Company is contractually obligated to perform unless the customer notifies us of cancellation. The Company expects to recognize revenue of approximately $322 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 not seen significant 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 the 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, net 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 millionsDecember 31, 2019CapitalizedAmortizationSeptember 30, 2020
Capitalized contract costs$91 $23 $(25)$89 
in millionsDecember 31, 2018CapitalizedAmortizationSeptember 30, 2019
Capitalized contract costs$54 $37 $(14)$77