Revenue

12 Months Ended

Dec. 31, 2021

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

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

	Year Ended December 31,
	2021		2020		2019
Primary geographical markets(1)
United States	$	3,982	$	4,186	$	5,429
Europe	2,023		1,883		2,326
Canada	398		393		518
Other	635		560		793
Total Revenues	$	7,038	$	7,022	$	9,066
Major product and services lines
Equipment	$	1,581	$	1,564	$	2,062
Supplies, paper and other sales	1,001		885		1,165
Maintenance agreements(2)	1,787		1,803		2,372
Service arrangements(3)	1,991		2,014		2,517
Rental and other	457		530		706
Financing	221		226		244
Total Revenues	$	7,038	$	7,022	$	9,066
Sales channels:
Direct equipment lease(4)	$	664	$	573	$	672
Distributors & resellers(5)	1,130		910		1,343
Customer direct	788		966		1,212
Total Sales	$	2,582	$	2,449	$	3,227

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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 arrangements. Also includes revenues from embedded operating leases in our Managed Services arrangements, 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 $144 and $130 at December 31, 2021 and 2020, respectively. The majority of the balance at December 31, 2021 will 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:

	Year Ended December 31,
	2021		2020		2019
Incremental direct costs of obtaining a contract	$	61	$	62	$	78
Amortization of incremental direct costs	73		81		88

The balance of deferred incremental direct costs net of accumulated amortization at December 31, 2021 and 2020 was $132 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 also 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. Amounts deferred associated with contract fulfillment costs and inducements were $15 and $13 at December 31, 2021 and 2020, respectively, and related amortization was $6, $4 and $5 for the three years ended December 31, 2021, 2020 and 2019, 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.