Revenue Recognition
Disaggregated Revenue
We report revenue in two categories: (i) parts and services and (ii) other.
Parts revenue is generated from the sale of alternative parts and vehicle products including collision parts, which are typically exterior components used in the collision repair process to restore a vehicle's appearance and safety; hard parts, which are typically internal components that are either mechanical in nature or functional components that are replaced as part of routine maintenance; major mechanical parts; and specialty products and accessories, which are vehicle products that improve the performance, functionality and appearance of vehicles. Services revenue includes additional services that are generally billed concurrently with the related product sales, such as the sale of service-type warranties, and diagnostic and repair services.
Other revenue includes sales of scrap and precious metals (platinum, palladium, and rhodium), bulk sales to mechanical manufacturers (including cores) and sales of aluminum ingots and sows from furnace operations; all of which are typically acquired as byproducts of our salvage operations. Revenue from the sale of hulks in our North America segment is recognized based on a price per ton of delivered material when the customer (processor) collects the scrap.
The following table sets forth our revenue disaggregated by category and reportable segment (in millions):
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| | 2025 | | 2024 | | 2023 |
| North America | $ | 5,329 | | | $ | 5,465 | | | $ | 4,974 | |
| Europe | 6,287 | | | 6,386 | | | 6,303 | |
| Specialty | 1,690 | | | 1,654 | | | 1,665 | |
| Parts and services | 13,306 | | | 13,505 | | | 12,942 | |
| North America | 321 | | | 297 | | | 307 | |
| Europe | 24 | | | 21 | | | 20 | |
| | | | | |
| Other | 345 | | | 318 | | | 327 | |
| Total revenue | $ | 13,651 | | | $ | 13,823 | | | $ | 13,269 | |
Variable Consideration
Amounts related to variable consideration on our Consolidated Balance Sheets are as follows (in millions):
| | | | | | | | | | | | | | | | | | | | |
| | | | December 31, |
| | | Classification | | 2025 | | 2024 |
| Return asset | | Prepaid expenses and other current assets | | $ | 66 | | | $ | 66 | |
| Refund liability | | Refund liability | | 122 | | | 125 | |
| Variable consideration reserve | | Receivables, net of allowance for credit losses | | 148 | | | 136 | |
Revenue by Geographic Area
Our net sales are attributed to geographic area based on the location of the selling operation. The following table sets forth our revenue by geographic area (in millions):
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| | 2025 | | 2024 | | 2023 |
| Revenue | | | | | |
| United States | $ | 6,221 | | | $ | 6,305 | | | $ | 6,229 | |
| Germany | 1,830 | | | 1,732 | | | 1,672 | |
| United Kingdom | 1,656 | | | 1,692 | | | 1,679 | |
| Other countries | 3,944 | | | 4,094 | | | 3,689 | |
| Total revenue | $ | 13,651 | | | $ | 13,823 | | | $ | 13,269 | |
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.