Annual report [Section 13 and 15(d), not S-K Item 405]

REVENUE RECOGNITION LONG-TERM CONTRACTS AND DEFERRED AND UNBILLED REVENUE REVENUE RECOGNITION LONG-TERM CONTRACTS AND DEFERRED AND UNBILLED REVENUE

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REVENUE RECOGNITION LONG-TERM CONTRACTS AND DEFERRED AND UNBILLED REVENUE REVENUE RECOGNITION LONG-TERM CONTRACTS AND DEFERRED AND UNBILLED REVENUE
 12 Months Ended
Dec. 31, 2025
Revenue from Contract with Customer [Abstract]  
Revenue from Contract with Customer
NOTE 2. REVENUE FROM CONTRACTS WITH CUSTOMERS
Long-term Contracts
We have certain arrangements, primarily long-term maintenance agreements, construction contracts, product sales with associated performance obligations extending beyond a year, product sales with lead times extending beyond one year that are non-cancellable or for which the customer incurs a penalty for cancellation and extended warranty coverage arrangements that span a period in excess of one year. The aggregate amount of the transaction price for these contracts, excluding extended warranty coverage arrangements, at December 31, 2025, was $6.3 billion. We expect to recognize the related revenue of $3.6 billion over the next 12 months and $2.7 billion over periods up to 10 years. See NOTE 13, “PRODUCT WARRANTY LIABILITY,” for additional disclosures on extended warranty coverage arrangements. Our other contracts generally are for a duration of less than one year, include payment terms that correspond to the timing of costs incurred when providing goods and services to our customers or represent sales-based royalties.
Deferred and Unbilled Revenue
The following is a summary of our unbilled and deferred revenue and related activity:
December 31,
In millions 2025 2024
Unbilled revenue $ 439  $ 403 
Deferred revenue 2,660  2,412 
We recognized revenue of $1.1 billion and $850 million in 2025 and 2024, respectively, that was included in the deferred revenue balance at the beginning of each year.
Disaggregation of Revenue
Consolidated Revenue
The table below presents our consolidated net sales by country based on the location of the customer:
Years ended December 31,
In millions 2025 2024 2023
United States $ 18,974  $ 19,422  $ 19,302 
China 3,298  2,948  3,115 
India 1,721  1,779  1,678 
Other international 9,677  9,953  9,970 
Total net sales $ 33,670  $ 34,102  $ 34,065 
Segment Revenue
Engine segment external sales by market were as follows:
Years ended December 31,
In millions 2025 2024 2023
Heavy-duty truck $ 2,544  $ 3,320  $ 3,391 
Medium-duty truck and bus 2,547  3,100  2,622 
Light-duty automotive 1,930  1,585  1,748 
Total on-highway 7,021  8,005  7,761 
Off-highway 1,083  982  1,113 
Total sales $ 8,104  $ 8,987  $ 8,874 
Components segment external sales by business were as follows:
Years ended December 31,
In millions 2025 2024 2023
Drivetrain and braking systems $ 3,983  $ 4,731  $ 4,822 
Emission solutions 3,034  3,180  3,425 
Components and software 1,203  1,106  1,225 
Automated transmissions 423  588  714 
Atmus —  289 
(1)
 1,345 
Total sales $ 8,643  $ 9,894  $ 11,531 
 (1) Included sales through the March 18, 2024, divestiture. See NOTE 21, “ATMUS DIVESTITURE,” for additional information.
Distribution segment external sales by region were as follows:
Years ended December 31,
In millions 2025 2024 2023
North America $ 8,619  $ 7,617  $ 7,054 
Europe 1,186  1,179  848 
Asia Pacific 1,150  1,243  1,091 
China 509  469  424 
India 363  310  264 
Latin America 293  266  224 
Africa and Middle East 266  268  294 
Total sales $ 12,386  $ 11,352  $ 10,199 
Distribution segment external sales by product line were as follows:
Years ended December 31,
In millions 2025 2024 2023
Power generation $ 4,928  $ 3,961  $ 2,496 
Parts 4,073  3,966  4,052 
Service 1,798  1,747  1,664 
Engines 1,587  1,678  1,987 
Total sales $ 12,386  $ 11,352  $ 10,199 
Power Systems segment external sales by product line were as follows:
Years ended December 31,
In millions 2025 2024 2023
Power generation $ 2,229  $ 1,896  $ 1,698 
Industrial 1,238  1,130  970 
Generator technologies 647  474  457 
Total sales $ 4,114  $ 3,500  $ 3,125