Revenue

6 Months Ended

Jun. 30, 2021

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

Revenues disaggregated by primary geographic markets, major product lines, and sales channels are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Primary geographical markets(1):
United States	$	1,015	$	925	$	1,989	$	2,039
Europe	514		356		1,013		837
Canada	104		76		197		184
Other	160		108		304		265
Total Revenues	$	1,793	$	1,465	$	3,503	$	3,325
Major product and services lines:
Equipment	$	429	$	310	$	810	$	635
Supplies, paper and other sales	241		150		462		390
Maintenance agreements(2)	448		366		883		895
Service arrangements(3)	508		460		997		1,026
Rental and other	111		123		240		264
Financing	56		56		111		115
Total Revenues	$	1,793	$	1,465	$	3,503	$	3,325
Sales channels:
Direct equipment lease(4)	$	189	$	111	$	336	$	237
Distributors & resellers(5)	289		136		543		359
Customer direct	192		213		393		429
Total Sales	$	670	$	460	$	1,272	$	1,025

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(1)Geographic area data is based upon the location of the subsidiary reporting the revenue.

(2)Includes revenues from maintenance agreements on sold equipment as well as revenues associated with service agreements sold through our channel partners as Xerox Partner Print Services (XPPS).

(3)Primarily includes revenues from our Managed Services offerings. Also includes revenues from embedded operating leases, which were not significant.

(4)Primarily reflects sales through bundled lease arrangements.

(5)Primarily reflects sales through our two-tier distribution channels.

Contract Assets and Liabilities: We normally do not have contract assets, which are primarily unbilled accounts receivable that are conditional on something other than the passage of time. Our contract liabilities, which represent billings in excess of revenue recognized, are primarily related to advanced billings for maintenance and other services to be performed and were approximately $129 and $130 at June 30, 2021 and December 31, 2020, respectively. The majority of the balance at June 30, 2021 is expected to be amortized to revenue over approximately the next 30 months.

Contract Costs: Incremental direct costs of obtaining a contract primarily include sales commissions paid to sales people and agents in connection with the placement of equipment with associated post sale services arrangements. These costs are deferred and amortized on the straight-line basis over the estimated contract term, which is currently estimated to be approximately four years. We pay commensurate sales commissions upon customer renewals, therefore our amortization period is aligned to our initial contract term.

Incremental direct costs are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Incremental direct costs of obtaining a contract	$	17	$	13	$	30	$	28
Amortization of incremental direct costs	18		20		37		41

The balance of deferred incremental direct costs net of accumulated amortization at June 30, 2021 and December 31, 2020 was $139 and $145, respectively. This amount is expected to be amortized over its estimated period of benefit, which we currently estimate to be approximately four years.

We may also incur costs associated with our services arrangements to generate or enhance resources and assets that will be used to satisfy our future performance obligations included in these arrangements. These costs are considered contract fulfillment costs and are amortized over the contractual service period of the arrangement to cost of services. In addition, we provide inducements to certain customers in various forms, including contractual credits, which are capitalized and amortized as a reduction of revenue over the term of the contract. As of June 30, 2021 and December 31, 2020 amounts deferred associated with contract fulfillment costs and inducements were $16 and $13, respectively. The related amortization was $2 and $1 for the three months ended June 30, 2021 and 2020, respectively, and $3 and $2 for the six months ended June 30, 2021 and 2020, respectively.

Equipment and software used in the fulfillment of service arrangements, and where the Company retains control, are capitalized and depreciated over the shorter of their useful life or the term of the contract if an asset is contract specific.