NOTE 2. REVENUE RECOGNITION
Revenue Recognition
Substantially all of our revenues are from contracts associated with the pickup, transportation and delivery of packages and freight ("transportation services"). These services may be carried out by or arranged by us and generally occur over a short period of time. Additionally, we provide value-added logistics services to customers through our global network of company-owned and leased distribution centers and field stocking locations.
Disaggregation of Revenue | | | | | | | | | | | | | | | | | |
| 2025 | | 2024 | | 2023 |
| Revenue: | | | | | |
| Next Day Air | $ | 9,652 | | | $ | 9,703 | | | $ | 9,894 | |
| Deferred | 4,446 | | | 4,757 | | | 5,093 | |
| Ground | 44,183 | | | 45,347 | | | 44,971 | |
Cargo & Other | 1,238 | | | 569 | | | 247 | |
| U.S. Domestic Package | $ | 59,519 | | | $ | 60,376 | | | $ | 60,205 | |
| | | | | |
| Domestic | $ | 3,401 | | | $ | 3,186 | | | $ | 3,144 | |
| Export | 14,479 | | | 14,142 | | | 14,003 | |
| Cargo & Other | 696 | | | 632 | | | 684 | |
| International Package | $ | 18,576 | | | $ | 17,960 | | | $ | 17,831 | |
| | | | | |
| Forwarding | $ | 2,916 | | | $ | 4,728 | | | $ | 5,534 | |
| Logistics | 5,855 | | | 6,437 | | | 5,927 | |
| Other | 1,795 | | | 1,569 | | | 1,461 | |
| SCS | $ | 10,566 | | | $ | 12,734 | | | $ | 12,922 | |
| | | | | |
| Consolidated revenue | $ | 88,661 | | | $ | 91,070 | | | $ | 90,958 | |
As of the fourth quarter of 2024, based on a change in our management reporting structure, U.S. Air Cargo revenue is presented within our U.S. Domestic Package segment and prior periods have been recast. Refer to note 14 for further information.
Accounts Receivable, Net
In 2025, we entered into accounts receivable factoring programs with third parties, in which we may sell certain customer receivables to third parties on a revolving periodic basis. Any such transactions are accounted for as sales and accordingly, receivables sold are removed from Accounts receivable, net in our consolidated balance sheets and the proceeds are reflected in Cash Flows from Operating Activities in our statements of consolidated cash flows. Our continuing involvement in these receivables is primarily limited to servicing and under limited circumstances, recourse.
Total accounts which may be outstanding under these programs are $860 million. In 2025, we sold $734 million of accounts receivable for net cash proceeds of $730 million. In connection with these programs, we recognized a liability, measured at fair value, related to our estimated recourse obligations recorded within Other current liabilities in our consolidated balance sheet. We also recorded an immaterial loss associated with the transactions within Other Income (Expense) in our statements of consolidated income. As of December 31, 2025, $491 million accounts receivable was outstanding under our factoring programs.
We continue to service the receivables and remit any collections to third-party purchasers. As of December 31, 2025, cash collections of $59 million were not yet remitted to third-party purchasers. These obligations are included within Other current
liabilities in our consolidated balance sheet, with changes in such obligations reflected within Cash Flows from Financing Activities in our statement of consolidated cash flows.
Our allowance for expected credit losses increased by $44 million during 2025 as a result of changes in the composition of invoice aging and certain customers' behaviors. Our allowance for credit losses as of December 31, 2025 and 2024 was $180 and $136 million, respectively. Amounts for credit losses charged to expense before recoveries during 2025, 2024 and 2023 were $371, $311, and $205 million, respectively.
Contract Assets and Liabilities
Contract assets were $275 and $307 million as of December 31, 2025 and 2024, respectively, and were recorded within Other current assets in our consolidated balance sheets. Contract liabilities recorded within Other Non-Current Liabilities were $49 and $27 million as of December 31, 2025 and 2024, respectively. Short-term contract liabilities were immaterial as of December 31, 2025 and 2024.