RTX CorpRTX

RTX Corp Revenue Disclosure

10-KFiled Feb 6, 20262 min read
NOTE 6: CONTRACT ASSETS AND LIABILITIES
Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billings. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. We receive payments from customers based on the terms established in our contracts. Total contract assets and contract liabilities as of December 31, 2025 and 2024 were as follows:
(dollars in millions)20252024
Contract assets, net$17,092 $14,570 
Contract liabilities(21,615)(18,616)
Net contract liabilities$(4,523)$(4,046)
Contract assets, net increased $2.5 billion during 2025 primarily due to sales in excess of billings on certain contracts at Pratt & Whitney, partially offset by an increase in the allowance for expected credit losses due to a customer bankruptcy recorded at Pratt & Whitney in the second quarter of 2025. Contract liabilities increased $3.0 billion during 2025 primarily due to billings in excess of sales on certain contracts at Pratt & Whitney and Raytheon.
In 2025, 2024, and 2023, we recognized revenue of $8.1 billion, $7.2 billion, and $5.3 billion related to our Contract liabilities at January 1, 2025, January 1, 2024, and January 1, 2023, respectively.
Contract assets, net consisted of the following at December 31:
(dollars in millions)20252024
Revenue recognized in advance of customer billings$35,023 $30,226 
Progress payments(17,931)(15,656)
Total contract assets, net$17,092 $14,570 
For U.S. government contracts that provide progress payments, the U.S. government has title to the asset related to unbilled amounts.
The changes in the allowance for expected credit losses related to contract assets were as follows:
(dollars in millions)202520242023
Balance as of January 1
$491 $197 $319 
Current period provision, changes in estimates, and recoveries, net185 294 210 
Write-offs and other— — (332)
Balance as of December 31$676 $491 $197 

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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