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Goodwill and Intangible Assets | 3 Months Ended
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Mar. 31, 2023
Goodwill And Intangible Assets Disclosure [Abstract] |
Goodwill and Intangible Assets | 7. Goodwill and Intangible Assets We have two operating and reportable segments: (1) Software Products and (2) Professional Services. We assess goodwill for impairment at the reporting unit level. Our reporting units are determined based on the components of our operating segments that constitute a business for which discrete financial information is available and for which operating results are regularly reviewed by segment management. Our reporting units are the same as our operating segments. As of March 31, 2023, goodwill and acquired intangible assets in the aggregate attributable to our Software Products segment was $4,337.1 million and attributable to our Professional Services segment was $11.2 million. As of September 30, 2022, goodwill and acquired intangible assets in the aggregate attributable to our Software Products segment was $2,725.2 million and attributable to our Professional Services segment was $11.2 million. Acquired intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. We evaluate goodwill for impairment in the third quarter of our fiscal year, or on an interim basis if an event occurs or circumstances change that would, more likely than not, reduce the fair value of a reporting segment below its carrying value. If a reporting unit's carrying value exceeds its fair value, we record an impairment loss equal to the difference between the carrying value of goodwill and its estimated fair value. Factors we consider important, on an overall company basis and segment basis, when applicable, that could trigger an impairment review include significant under-performance relative to historical or projected future operating results, significant changes in our use of the acquired assets or the strategy for our overall business, significant negative industry or economic trends, a significant decline in our stock price for a sustained period and a reduction of our market capitalization relative to net book value. We completed our annual goodwill impairment review as of June 30, 2022. This review consisted of a qualitative assessment of our Software Products segment and a quantitative assessment of our Professional Services segment. Our qualitative assessment for Software Products included company-specific (e.g., financial performance and long-range plans), industry, and macroeconomic factors, as well as consideration of the fair value of each reporting unit relative to its carrying value at the last valuation date (June 27, 2020). Our quantitative assessment for the Professional Services segment compared the fair value of the reporting unit to its carrying value. We estimated the fair value of the Professional Services reporting unit using a discounted cash flow valuation model. Based on our qualitative assessment for the Software Products segment and quantitative assessment for the Professional Services segment as of June 30, 2022, no impairment was required. Through March 31, 2023, there were no events or changes in circumstances that indicated that the carrying values of goodwill or acquired intangible assets may not be recoverable. Goodwill and acquired intangible assets consisted of the following:
(in thousands) |  | March 31, 2023 |  |  | September 30, 2022 |
|  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Net Book Value |  |  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Net Book Value |
Goodwill (not amortized) |  |  |  |  |  |  |  | $ | 3,369,041 |  |  |  |  |  |  |  |  | $ | 2,353,654 |
Intangible assets with finite lives (amortized): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Purchased software |  | $ | 616,665 |  |  | $ | 376,637 |  |  | $ | 240,028 |  |  | $ | 502,859 |  |  | $ | 355,857 |  |  | $ | 147,002 |
Capitalized software |  |  | 22,877 |  |  |  | 22,877 |  |  |  | — |  |  |  | 22,877 |  |  |  | 22,877 |  |  |  | — |
Customer lists and relationships |  |  | 1,116,040 |  |  |  | 395,336 |  |  |  | 720,704 |  |  |  | 594,970 |  |  |  | 369,390 |  |  |  | 225,580 |
Trademarks and trade names |  |  | 36,968 |  |  |  | 18,479 |  |  |  | 18,489 |  |  |  | 27,546 |  |  |  | 17,410 |  |  |  | 10,136 |
Other |  |  | 3,903 |  |  |  | 3,903 |  |  |  | — |  |  |  | 3,766 |  |  |  | 3,766 |  |  |  | — |
Total intangible assets with finite lives |  | $ | 1,796,453 |  |  | $ | 817,232 |  |  | $ | 979,221 |  |  | $ | 1,152,018 |  |  | $ | 769,300 |  |  | $ | 382,718 |
Total goodwill and acquired intangible assets |  |  |  |  |  |  |  | $ | 4,348,262 |  |  |  |  |  |  |  |  | $ | 2,736,372 |
Goodwill Changes in goodwill presented by reportable segments were as follows:
(in thousands) |  | Software Products |  |  | Professional Services |  |  | Total |
Balance, October 1, 2022 |  | $ | 2,344,019 |  |  | $ | 9,635 |  |  | $ | 2,353,654 |
ServiceMax acquisition |  |  | 975,131 |  |  |  | — |  |  |  | 975,131 |
Foreign currency translation adjustment |  |  | 40,091 |  |  |  | 165 |  |  |  | 40,256 |
Balance, March 31, 2023 |  | $ | 3,359,241 |  |  | $ | 9,800 |  |  | $ | 3,369,041 |
Amortization of Intangible Assets The aggregate amortization expense for intangible assets with finite lives is classified in our Consolidated Statements of Operations as follows:
(in thousands) |  | Three months ended |  |  | Six months ended |
|  | March 31, 2023 |  |  | March 31, 2022 |  |  | March 31, 2023 |  |  | March 31, 2022 |
Amortization of acquired intangible assets |  | $ | 10,656 |  |  | $ | 8,450 |  |  | $ | 18,682 |  |  | $ | 16,934 |
Cost of license revenue |  |  | 9,834 |  |  |  | 5,921 |  |  |  | 15,976 |  |  |  | 12,414 |
Total amortization expense |  | $ | 20,490 |  |  | $ | 14,371 |  |  | $ | 34,658 |  |  | $ | 29,348 |

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- Definition The entire disclosure for goodwill and intangible assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -URI https://asc.fasb.org/topic&trid=2144416 + Details
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