Revenue
Disaggregation of Revenue
The Company primarily generates its revenue through providing cloud computing services, which include both committed contracts and on-demand services. Revenue recognized related to customer commitments, including revenue from delivering capacity prior to commitment start dates, represented 98%, 96%, and 88% of total revenue for the years ended December 31, 2025, 2024, and 2023, respectively.
Deferred Revenue
Deferred revenue, including current and non-current balances as of December 31, 2025 and 2024 was $8.2 billion and $4.1 billion, respectively. For the years ended December 31, 2025 and 2024, revenue recognized from deferred revenue at the beginning of the period was $780 million and $225 million, respectively. The increase in deferred revenue balances as of December 31, 2025 as compared to December 31, 2024 is attributed to the growth in RPO from committed contracts, which typically provide for certain prepayments at contract inception.
Remaining Performance Obligations
As of December 31, 2025, the Company had $60.7 billion of unsatisfied RPO, of which 43% is expected to be recognized over the initial 24 months ending December 31, 2027, 38% between months 25 and 48, and the remaining balance recognized between months 49 and 84.
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.