Goodwill and Acquired Intangible Assets, Net

9 Months Ended

Oct. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Acquired Intangible Assets, Net

The following table summarizes the changes in the carrying amount of goodwill during the periods presented (in thousands):


	October 31, 2023		January 31, 2023
Balance, beginning of the year	$	57,779	$	57,775
Increase in goodwill related to business combinations	11,900		4
Balance, end of the year	$	69,679	$	57,779

On September 27, 2023, the Company acquired the assets of Grainite, Inc. (“Grainite”), for total cash consideration of $15.0 million. Grainite is a stream processing application company and the transaction is intended to accelerate the development of the Company’s stream processing offering. The Company accounted for the transaction as a business combination under ASC 805, Business Combinations, after determining that the acquired set of assets, the fair value of which was not concentrated in a single asset, or group of similar assets, and included (a) an assembled workforce and (b) intangible asset, met the definition of a business. As a result, the Company allocated the estimated fair value of $3.1 million of the identifiable asset acquired to the developed technology intangible asset. The fair value assigned to the intangible asset was determined through the use of a third-party valuation firm using replacement cost approach methodology, and includes the expected profit margin of a hypothetical third-party developer and a market participant’s opportunity cost. Judgment was applied for a number of assumptions used in the valuation of the identified intangible asset. The excess of the cash consideration over the identifiable intangible assets in the amount of $11.9 million was allocated to goodwill. This transaction is accounted for as an asset acquisition for tax purposes, and therefore both the goodwill and acquired intangible asset are deductible for tax purposes. The fair value assigned to acquired assets is based on management’s best estimates and assumptions as of the acquisition date and is considered preliminary pending finalization of the analyses. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair value of the intangible asset acquired and goodwill. Acquisition-related transaction costs were not material and have been expensed as incurred and included in general and administrative expenses in the condensed consolidated statements of operations. The business combination did not have a material impact on the Company’s condensed consolidated financial statements for the periods ended October 31, 2023.

The gross carrying amounts and accumulated amortization of the Company’s intangible assets were as follows (in thousands):


	October 31, 2023
	Gross Carrying Value		Accumulated Amortization		Net Book Value		Weighted-Average Remaining Useful Life (in years)
Developed technology	$	41,200	$	(34,243)	$	6,957	0.9
Customer relationships	15,200		(15,030)		170		0.5
Total	$	56,400	$	(49,273)	$	7,127


	January 31, 2023
	Gross Carrying Value		Accumulated Amortization		Net Book Value		Weighted-Average Remaining Useful Life (in years)
Developed technology	$	38,100	$	(29,122)	$	8,978	1.7
Customer relationships	15,200		(12,750)		2,450		0.8
Total	$	53,300	$	(41,872)	$	11,428

Acquired intangible assets are amortized on a straight-line basis. Amortization expense of intangible assets was $2.8 million and $7.4 million for the three and nine months ended October 31, 2023, respectively, and $2.3 million and $6.9 million for the three and nine months ended October 31, 2022, respectively. Amortization expense for developed technology was included as research and development expense in the Company’s interim unaudited condensed consolidated statements of operations. Amortization expense for customer relationships was included as sales and marketing expense in the Company’s interim unaudited condensed consolidated statements of operations.

As of October 31, 2023, future amortization expense related to the intangible assets is as follows (in thousands):


Years Ending January 31,
Remainder of 2024	$	3,170
2025	3,164
2026	680
2027	113
2028	—

Total	$	7,127