Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Intangible Assets

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Goodwill and Intangible Assets
 9 Months Ended
Sep. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Goodwill and Intangible Assets
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:
Nine Months Ended September 30,
2024 2023
(in thousands)
Beginning balance $ 318,588  $ 306,739 
Acquisitions (Note 3)
 —  11,717 
Ending balance $ 318,588  $ 318,456 
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 nine months ended September 30, 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:
September 30, 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 7.0 $ 23,857  $ (2,172) $ 21,685  $ 20,133  $ (1,431) $ 18,702 
Developed technology 6.9 311,261  (280,443) 30,818  311,261  (263,635) 47,626 
Trademarks and trade names 6.2 14,800  (14,383) 417  14,800  (14,276) 524 
Customer relationships 5.0 128,800  (127,502) 1,298  128,800  (126,347) 2,453 
Patents 7.0 4,780  (967) 3,813  4,780  (455) 4,325 
6.1 $ 483,498  $ (425,467) $ 58,031  $ 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 September 30, Nine Months Ended September 30,
2024 2023 2024 2023
(in thousands) (in thousands)
Cost of net revenue $ 3,745  $ 8,581  $ 17,549  $ 27,372 
Research and development —  —  —  2 
Selling, general and administrative 591  653  1,774  2,290 
$ 4,336  $ 9,234  $ 19,323  $ 29,664 
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:
Nine Months Ended September 30,
2024 2023
(in thousands)
Beginning balance $ 73,630  $ 109,316 
Additions 4,961  6,198 
Other disposals —  (769)
Amortization (19,323) (29,664)
Impairment losses (1,237) (2,438)
Ending balance $ 58,031  $ 82,643 
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 each of the three and nine months ended September 30, 2024, impairment losses related to finite-lived intangible assets of $1.2 million were recognized. During the three and nine months ended September 30, 2023, impairment losses related to finite-lived intangible assets of $0 and $2.4 million were recognized, respectively. The impairment losses were attributable to abandonment of certain purchased licensed technology.
The following table presents future amortization of the Company’s finite-lived intangible assets at September 30, 2024:
Amount
(in thousands)
2024 (3 months) $ 3,992 
2025 14,619 
2026 13,916 
2027 10,437 
2028 5,099 
Thereafter 9,968 
Total $ 58,031