Arthur J. Gallagher & Co.AJG

Arthur J. Gallagher & Co. Revenue Disclosure

10-KFiled Feb 17, 20263 min read
Contracts with Customers
Contract Assets and Liabilities/Contract Balances
Information about unbilled receivables, contract assets and contract liabilities from contracts with customers is as follows (in millions):
December 31, 2025December 31, 2024
Unbilled receivables$1,858 $1,274 
Deferred contract costs338 207 
Deferred revenue892 604 
The unbilled receivables, which are included in accounts receivable, net in our consolidated balance sheet, primarily relate to our rights to consideration for work completed but not billed at the reporting date. These are transferred to the billed accounts receivables when the client is invoiced. The deferred contract costs represent the costs we incur to fulfill a new or renewal contract with our clients prior to the effective date of the contract. These costs are expensed on the contract effective date. The deferred revenue in the consolidated balance sheet included amounts that represent the remaining performance obligations under our contracts and amounts collected related to advanced billings and deposits received from customers that may or may not ultimately be recognized as revenues in the future. Deposits received from customers could be returned to the customers based on lesser actual transactional volume than originally billed volume.
Significant changes in the deferred revenue balances, which include foreign currency translation adjustments, during the period are as follows (in millions):
BrokerageRisk
Management		Total
Deferred revenue at December 31, 2023$533 $172 $705 
Incremental deferred revenue305 91 396 
Revenue recognized during the year ended December 31, 2024 included in deferred revenue at December 31, 2023(390)(86)(476)
Net change in collected billings/deposits received from customers(40)(4)(44)
Impact of changes in foreign exchange rates— — — 
Deferred revenue recognized from business acquisitions23 — 23 
Deferred revenue at December 31, 2024431 173 604 
Incremental deferred revenue296 112 408 
Revenue recognized during the year ended December 31, 2025 included in deferred revenue at December 31, 2024(335)(88)(423)
Net change in collected billings/deposits received from customers(4)2 (2)
Impact of changes in foreign exchange rates(21)— (21)
Deferred revenue recognized from business acquisitions326 — 326 
Deferred revenue at December 31, 2025$693 $199 $892 
Revenue recognized during 2025 in the table above included revenue from 2024 acquisitions that would not be reflected in prior years.
Remaining Performance Obligations
Remaining performance obligations represent the portion of the contract price for which work has not been performed. As of December 31, 2025, the aggregate amount of the contract price allocated to remaining performance obligations was $892 million.
The estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period is as follows (in millions):
BrokerageRisk
Management		Total
2026$668 $47 $715 
202722 77 99 
20281 35 36 
20291 17 18 
2030— 8 8 
Thereafter1 15 16 
Total$693 $199 $892 
Deferred Contract Costs
We capitalize costs incurred to fulfill contracts as “deferred contract costs” which are included in other current assets in our consolidated balance sheet. Deferred contract costs were $338 million and $207 million as of December 31, 2025 and 2024, respectively. Capitalized fulfillment costs are amortized to expense on the contract effective date. The amount of amortization of the deferred contract costs was $909 million and $666 million for the years ended December 31, 2025 and 2024, respectively.
We have applied the practical expedient to recognize the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that we otherwise would have recognized is one year or less for our
brokerage segment. These costs are included in compensation and operating expenses in our consolidated statement of earnings.
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Historical Timeline

Fiscal YearFiled
2025Feb 17, 2026Showing above
2018Feb 8, 2019

About Revenue Disclosures

Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.

Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.

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