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Goodwill, Internal-use Software Development Costs and Intangible Assets
9 Months Ended
Sep. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill, Internal-use Software Development Costs and Intangible Assets

6. Goodwill, Internal-use Software Development Costs and Intangible Assets

Goodwill

The changes in the carrying amount of goodwill by reporting unit were as follows (in thousands):

 

 

United
States

 

 

Other

 

 

Total

 

Balance as of December 31, 2021

 

$

128,519

 

 

$

894

 

 

$

129,413

 

Foreign currency translation adjustments

 

 

 

 

 

(69

)

 

 

(69

)

Balance as of September 30, 2022

 

$

128,519

 

 

$

825

 

 

$

129,344

 

Internal-use Software Development Costs

The Company capitalizes qualifying internal-use software development costs related to its platform. The costs consist of personnel costs (including related benefits) that are incurred during the application development stage, as well as implementation costs incurred to fulfill our contracts with customers as they (1) relate directly to the contract, (2) are expected to generate resources that will be used to satisfy the performance obligation under the contract, and (3) are expected to be recovered through revenues generated under the contract. Capitalization of costs begins when two criteria are met: (1) the preliminary project stage is completed, and (2) it is probable that the software will be completed and used for its intended function. Capitalization ceases when the software is substantially complete and ready for its intended use, including the completion of all significant testing. Costs related to preliminary project activities and post-implementation operating activities are expensed as incurred. During the three months ended September 30, 2022 and 2021, the Company capitalized $7.8 million and $4.8 million in software development costs, respectively, and during the nine months ended September 30, 2022 and 2021, the Company capitalized $22.3 million and $13.5 million in software development costs, respectively.

Capitalized costs are amortized over the estimated useful life of the software, which management estimated to be a range of three to five years, and are recorded on a straight-line basis, which represents the manner in which the expected benefit will be derived. Amortization expense is recorded in cost of revenue and operating expenses in the condensed consolidated statement of operations aligned with the internal organizations that are the primary beneficiaries of such assets. During the three months ended September 30, 2022 and 2021, the Company recorded $2.4 million and $1.3 million of amortization expense in cost of revenue, and $1.4 million and $1.2 million of amortization expense in operating expenses, respectively. During the nine months ended September 30, 2022 and 2021, the Company recorded $6.1 million and $3.5 million of amortization expense in cost of revenue, and $4.3 million and $3.3 million of amortization expense in operating expenses, respectively.

Intangible Assets

Intangible assets, net consisted of the following (in thousands):

 

 

 

September 30, 2022

 

 

 

Gross
Carrying
Amount

 

 

Accumulated
Amortization

 

 

Net
Carrying
Amount

 

 

Weighted-
Average
Useful Life
(Years)

 

Technology

 

$

20,797

 

 

$

(11,131

)

 

$

9,666

 

 

 

4.0

 

License

 

 

2,479

 

 

 

(2,479

)

 

 

 

 

 

 

Customer relationship

 

 

33,781

 

 

 

(10,759

)

 

 

23,022

 

 

 

8.0

 

Software

 

 

1,109

 

 

 

(596

)

 

 

513

 

 

 

3.0

 

Trademark

 

 

4,193

 

 

 

(1,281

)

 

 

2,912

 

 

 

4.0

 

Total

 

$

62,359

 

 

$

(26,246

)

 

$

36,113

 

 

 

 

 

 

 

 

December 31, 2021

 

 

 

Gross
Carrying
Amount

 

 

Accumulated
Amortization

 

 

Net
Carrying
Amount

 

 

Weighted-
Average
Useful Life
(Years)

 

Technology

 

$

20,837

 

 

$

(8,655

)

 

$

12,182

 

 

 

4.0

 

License

 

 

2,652

 

 

 

(2,652

)

 

 

 

 

 

 

Customer relationship

 

 

33,830

 

 

 

(8,021

)

 

 

25,809

 

 

 

8.0

 

Software

 

 

893

 

 

 

(456

)

 

 

437

 

 

 

3.0

 

Trademark

 

 

4,193

 

 

 

(533

)

 

 

3,660

 

 

 

4.0

 

Total

 

$

62,405

 

 

$

(20,317

)

 

$

42,088

 

 

 

 

 

Amortization expense of intangible assets was $2.0 million and $1.0 million for the three months ended September 30, 2022 and 2021, respectively, and $6.2 million and $1.1 million for the nine months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022, future expected amortization expense is as follows (in thousands):

 

Years Ending December 31,

 

 

 

2022 (remaining three months)

 

$

2,066

 

2023

 

 

8,082

 

2024

 

 

7,807

 

2025

 

 

6,169

 

2026

 

 

3,283

 

Thereafter

 

 

8,706

 

Total future amortization expense

 

$

36,113