When running a License Audit for Strategy 2019, a Distribution Services contact will consume one Server-Distribution, named "User License," and either one Server-Reporter or Server-Intelligence, named "User License."

This is an expected behavior as a contact is one individual who is receiving information from the Strategy Secure Enterprise platform. For the Distribution Services contact, it will consume either Server-Intelligence or Server-Reporter dependent on the user who is linked to the contact. If the base Strategy user consumes Server-Reporter themselves, then their contact will also consume Server-Reporter, and similarly for Server-Intelligence.
If an environment is out of compliance on Server-Distribution or base Server Module Users (Server-intelligence or Reporter) due to the extensive use of Distribution Services Contacts, then the complete set of contacts should be reviewed for duplicates. The duplicates could be made into a Strategy user and shared so that multiple users sending emails to one recipient do not count multiple times in the audit.
Your Strategy Account team may also assist you if additional named users of Server-Distribution and Server_Intelligence or Reporter are needed to fulfill the business requirements.