MaxLinear, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Intangible Assets

Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill arises from the acquisition method of accounting for business combinations and represents the excess of the purchase price over the fair value of the net assets and other identifiable intangible assets acquired. The fair values of net tangible assets and intangible assets acquired are based upon preliminary valuations and the Company’s estimates and assumptions are subject to change within the measurement period (potentially up to one year from the acquisition date).

The following table presents the changes in the carrying amount of goodwill for the periods indicated:


	Three Months Ended March 31,
	2024		2023
	(in thousands)
Beginning balance	$	318,588	$	306,739
Acquisitions (Note 3)	—		12,171


Ending balance	$	318,588	$	318,910

The Company performs an annual goodwill impairment assessment on October 31st each year, using a quantitative assessment comparing the fair value of each reporting unit, which the Company has determined to be the entity itself, with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recorded. As a result of the Company’s impairment assessment, no goodwill impairment was recognized as of October 31, 2023.

In addition to its annual review, the Company performs a test of impairment when indicators of impairment are present. During the three months ended March 31, 2024 and 2023, there were no indications of impairment of the Company’s goodwill balances.

Acquired Intangibles

Finite-lived Intangible Assets

The following table sets forth the Company’s finite-lived intangible assets resulting from business acquisitions and other purchases, which are amortized over their estimated useful lives:


		March 31, 2024						December 31, 2023
	Weighted Average Useful Life (in Years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
		(in thousands)
Licensed technology	6.9	$	20,188	$	(1,365)	$	18,823	$	20,133	$	(1,431)	$	18,702
Developed technology	6.9	311,261		(271,856)		39,405		311,261		(263,635)		47,626
Trademarks and trade names	6.2	14,800		(14,312)		488		14,800		(14,276)		524
Customer relationships	5.0	128,800		(126,731)		2,069		128,800		(126,347)		2,453


Patents	7.0	4,780		(626)		4,154		4,780		(455)		4,325
	6.1	$	479,829	$	(414,890)	$	64,939	$	479,774	$	(406,144)	$	73,630

The following table sets forth amortization expense associated with finite-lived intangible assets, which is included in the consolidated statements of operations as follows:


	Three Months Ended March 31,
		2024		2023
	(in thousands)
Cost of net revenue		$	8,468	$	9,458
Research and development		—		1
Selling, general and administrative		591		928
		$	9,059	$	10,387

Amortization of finite-lived intangible assets in cost of net revenue in the consolidated statements of operations results primarily from acquired developed technology.

The following table sets forth the activity related to finite-lived intangible assets:


	Three Months Ended March 31,
	2024		2023
	(in thousands)
Beginning balance	$	73,630	$	109,316

Additions	368		630
Other disposals	—		(769)

Amortization	(9,059)		(10,387)
Impairment losses	—		(2,438)
Ending balance	$	64,939	$	96,352

The Company regularly reviews the carrying amount of its long-lived assets subject to depreciation and amortization, as well as the related useful lives, to determine whether indicators of impairment may exist that warrant adjustments to carrying values or estimated useful lives. An impairment loss is recognized when the sum of the expected future undiscounted net cash flows is less than the carrying amount of the asset. Should impairment exist, the impairment loss is measured based on the excess of the carrying amount of the asset over the asset’s fair value. During the three months ended March 31, 2024, no impairment losses related to finite-lived intangible assets were recognized. During the three months ended March 31, 2023, impairment losses related to finite-lived intangible assets of $2.4 million, were recognized. The impairment losses were attributable to certain purchased licensed technology.

The following table presents future amortization of the Company’s finite-lived intangible assets at March 31, 2024:


	Amount
	(in thousands)
2024 (9 months)	$	14,673
2025	14,774
2026	13,735
2027	9,957
2028	4,620
Thereafter	7,180
Total	$	64,939