MaxLinear, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Goodwill and Intangible Assets

Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2023

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:


	Year Ended December 31,
	2023		2022
	(in thousands)
Beginning balance	$	306,739	$	306,668
Acquisitions (Note 3)	11,849		71


Ending balance	$	318,588	$	306,739

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 years ended December 31, 2023, 2022, and 2021, 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:


		December 31, 2023						December 31, 2022
	Weighted Average Useful Life (in Years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Value		Accumulated Amortization		Net Carrying Amount
		(in thousands)
Licensed technology	7.0	$	20,133	$	(1,431)	$	18,702	$	21,764	$	(580)	$	21,184
Developed technology	7.0	311,261		(263,635)		47,626		311,261		(228,532)		82,729
Trademarks and trade names	6.2	14,800		(14,276)		524		14,800		(13,461)		1,339
Customer relationships	5.0	128,800		(126,347)		2,453		128,800		(124,807)		3,993

Backlog	5.3	500		(500)		—		500		(429)		71
Patents	7.0	4,780		(455)		4,325		—		—		—
	6.1	$	480,274	$	(406,644)	$	73,630	$	477,125	$	(367,809)	$	109,316

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


	Year Ended December 31,
		2023		2022		2021
	(in thousands)
Cost of net revenue		$	35,952	$	39,638	$	43,078
Research and development		2		4		4
Selling, general and administrative		2,881		11,955		23,625
		$	38,835	$	51,597	$	66,707

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:


	Year Ended December 31,
	2023		2022
	(in thousands)
Beginning balance	$	109,316	$	149,940

Additions	6,355		11,184
Transfers to developed technology from IPR&D	—		2,600
Amortization	(38,835)		(51,597)
Impairment losses	(2,438)		(2,811)
Ending balance	$	73,630	$	109,316

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 year ended December 31, 2023 and 2022, the Company recognized impairment losses related to finite-lived intangible assets of $2.4 million and $2.8 million respectively, which was attributable to certain acquired licensed technology. During the year ended December 31, 2021, no impairment losses related to finite-lived intangible assets were recognized.

The following table presents future amortization of the Company’s finite-lived intangible assets at December 31, 2023:


	Amount
	(in thousands)
2024	$	24,120
2025	14,862
2026	13,753
2027	9,905
2028	4,567
Thereafter	6,423
Total	$	73,630