Revenue from Contracts with Customers

3 Months Ended

Mar. 31, 2022

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 March 31,
in millions	2022		2021
Americas
Recurring	$	246	$	218
Perpetual software licenses, hardware and other	12		7
Consulting services	32		38
Total Americas	290		263
EMEA
Recurring	89		101
Perpetual software licenses, hardware and other	11		13
Consulting services	29		33
Total EMEA	129		147
APJ
Recurring	51		53
Perpetual software licenses, hardware and other	3		3
Consulting services	23		25
Total APJ	77		81
Total Revenue	$	496	$	491

Rental revenue, which is included in recurring revenue in the above table, was as follows:

	Three Months Ended March 31,
in millions	2022		2021
Rental revenue*	$	50	$	39

*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 millions	March 31, 2022	December 31, 2021
Accounts receivable, net	330	$	336
Contract assets	17	10
Current deferred revenue	580	552
Long-term deferred revenue	19	27

Revenue recognized during the three months ended March 31, 2022 from amounts included in deferred revenue at the beginning of the period was $135 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 March 31, 2022:

in millions	Total at March 31, 2022		Year 1		Year 2 and Thereafter
Remaining unsatisfied obligations	$	2,281	$	1,506	$	775

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 $1,366 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 $446 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, net on the Company’s balance sheet. The capitalized amounts are calculated based on the annual recurring revenue and 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, 2021		Capitalized		Amortization		March 31, 2022
Capitalized contract costs	$	111	$	13	$	(15)	$	109

in millions	December 31, 2020		Capitalized		Amortization		March 31, 2021
Capitalized contract costs	$	98	$	13	$	(12)	$	99