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Goodwill and Intangible Assets | 12 Months Ended
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Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Intangible Assets | Note 7—Goodwill and Intangible Assets The following table summarizes the changes in the carrying amount of goodwill for the periods indicated (in thousands):
| Year Ended December 31,
| 2023 |  | 2022
Balance as of the beginning of the period | $ | 137,724 |  |  | $ | 1,371,064 |
Impairment | — |  |  | (1,045,022) |
Foreign currency translation adjustments | 653 |  |  | (188,318) |
Balance as of the end of the period | $ | 138,377 |  |  | $ | 137,724 |
Following the sale of Elo7 in the third quarter of 2023, management has determined that the Company has three operating segments, Etsy, Reverb, and Depop, and each operating segment is determined to be a reporting unit. As of December 31, 2022 and December 31, 2023, goodwill balances are allocated to Etsy and Reverb, which are the reporting units at which the Company tests goodwill for impairment. As of the annual impairment testing date in the fourth quarter of 2023, the Company completed a qualitative analysis for the Etsy reporting unit, which indicated no impairment; and a quantitative analysis for the Reverb reporting unit, which concluded that the fair value of the reporting unit was sufficiently in excess of its carrying value. As such, no goodwill impairment was identified as of the annual impairment testing date in 2023. During the third quarter of 2022, the carrying values of the Depop and Elo7 reporting units were determined to be in excess of their fair values such that non-cash impairment charges were recorded of $897.9 million and $147.1 million, representative of the full value of goodwill allocated to the Depop and Elo7 reporting units, respectively. The impairment charges were the result of continued adverse macroeconomic conditions, including reopening, inflationary pressures on consumer discretionary spending, foreign exchange rate volatility, and ongoing geopolitical events, and related headwinds on business performances; along with executive management changes at Depop and Elo7, all of which resulted in downward revisions to the projected future cash flows negatively impacting the reporting units’ fair values. In addition to these adverse changes to projected cash flows, discount rates as of September 30, 2022 increased as compared to those used in our interim quantitative analysis for Depop and Elo7 as of June 30, 2022. The updates to the discount rates and estimated future cash flows each had a significant adverse impact on the estimated fair values of Depop and Elo7 reporting units compared to our June 30, 2022 analysis, which ultimately resulted in impairments of their goodwill balances in the third quarter of 2022. The Company did not record any non-cash impairment charges to the finite-lived intangible assets or other long-lived assets of Depop and Elo7 for the quarter ended September 30, 2022. No further impairment charges were recorded within our Etsy or Reverb reporting units as of our annual impairment test in the fourth quarter of 2022. As of the annual impairment testing date in 2021, the Company completed a qualitative analysis for both the Etsy and the Reverb reporting units, which indicated no impairment; and completed a quantitative analysis for both the Depop and Elo7 reporting units. The quantitative analysis assumed that the purchase consideration for the Depop and Elo7 acquisitions approximated the fair value of each of the reporting units given the proximity to the respective acquisition dates. For the years ended December 31, 2023 and December 31, 2021, the Company did not record any goodwill impairment expense. For the year ended December 31, 2022, the Company recorded $1.0 billion of goodwill impairment expense. At December 31, 2023 and 2022, the gross book value and accumulated amortization of intangible assets were as follows (in thousands):
| As of December 31, 2023
| Gross book value |  | Accumulated amortization |  |  |  | Net book value |  | Weighted-Average Remaining Life (in years)
Trademark | $ | 308,583 |  |  | $ | (51,328) |  |  |  |  | $ | 257,255 |  |  | 16.0
Customer relationships | 229,737 |  |  | (53,034) |  |  |  |  | 176,703 |  |  | 10.6
Referral agreement | 35,135 |  |  | (19,393) |  |  |  |  | 15,742 |  |  | 4.5
Patent licenses | 9,617 |  |  | (2,177) |  |  |  |  | 7,440 |  |  | 9.2
Intangible assets | $ | 583,072 |  |  | $ | (125,932) |  |  |  |  | $ | 457,140 |  |  | 13.4
| As of December 31, 2022
| Gross book value |  | Accumulated amortization |  |  |  | Net book value |  | Weighted-Average Remaining Life (in years)
Trademark | $ | 318,489 |  |  | $ | (35,873) |  |  |  |  | $ | 282,616 |  |  | 16.7
Customer relationships | 265,429 |  |  | (39,808) |  |  |  |  | 225,621 |  |  | 11.9
Referral agreement | 34,050 |  |  | (15,404) |  |  |  |  | 18,646 |  |  | 5.5
Patent licenses | 9,617 |  |  | (1,094) |  |  |  |  | 8,523 |  |  | 9.9
Intangible assets | $ | 627,585 |  |  | $ | (92,179) |  |  |  |  | $ | 535,406 |  |  | 14.2
Amortization expense of intangible assets for the years ended December 31, 2023, 2022, and 2021 was $39.7 million, $41.3 million, and $28.4 million, respectively. During the second quarter of 2023, the Company concluded that the book value of the finite-lived intangible assets for the Elo7 reporting units were fully impaired, and recorded an impairment charge of $60.2 million in Asset Impairment charges in the Consolidated Statement of Operations, which primarily related to trademark and customer relationships. The impairment charge was the result of macroeconomic conditions at the time, challenges applying the Company’s technological, marketing, and operational expertise to help scale Elo7’s business, and the resultant headwinds to the business, which caused the Company to revise its business forecasts for Elo7 downwards. The Company prepared an updated fair value for the Elo7 reporting unit based on a quantitative assessment, which included estimates of future revenue, and the net available cash flows; as well as a determination that the Company would more likely than not use the Elo7 asset group for a period of less than twelve months. The Company completed the sale of Elo7 in the third quarter of 2023. Refer to “Note 6—Sale of Business” for further details. The Company did not recognize any intangible asset impairment losses in the years ended December 31, 2022 and 2021. Based on amounts recorded at December 31, 2023, the Company estimates future amortization expense of intangible assets as follows (in thousands):
2024 | $ | 38,079 |
2025 | 38,080 |
2026 | 37,758 |
2027 | 37,690 |
2028 | 35,680 |
Thereafter | 269,853 |
Total amortization expense | $ | 457,140 |

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