Acquisitions, Intangible Assets, and Goodwill

9 Months Ended

Sep. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Acquisitions, Intangible Assets, and Goodwill

Acquisitions

Traffic Think Tank

On February 23, 2023, the Company completed a purchase agreement with Rank, LLC (“Traffic Think Tank”), acquiring certain intangible assets of Traffic Think Tank for total cash consideration of $1,800, of which $360 will be paid in 12 months (the “12-month holdback amount”) and $360 will be paid in 18 months (the “18-month holdback amount”). The remaining consideration was paid upon closing. The 12-month holdback amount and 18-month holdback amount are recorded in other current liabilities in the unaudited condensed consolidated balance sheet as of September 30, 2023. The primary purpose of the acquisition was to acquire valuable brand and content related to Traffic Think Tank’s SEO community and courses.

The Company has accounted for this transaction as a business combination under the acquisition method. The Company allocated $594 to the acquired intangible assets and the remaining purchase price was allocated to goodwill. This allocation was final as of September 30, 2023. The identifiable intangible assets consisted of trade names, content, and customer relationships, which the Company amortizes over the assets useful lives using a straight-line amortization method. The Company assigned useful lives to the acquired trade name, content, and customer relationships of six years, four years, and five years, respectively. Aggregate acquisition-related costs associated with this business combination were not material for the three and nine months ended September 30, 2023, and were included in general and administrative expenses in the unaudited condensed consolidated statements of operations and comprehensive income (loss).

This business combination did not have a material impact on the Company’s unaudited condensed consolidated financial statements. Therefore, actual results of operations subsequent to the acquisition date and pro forma results of operations have not been presented.

Kompyte

On March 14, 2022, the Company completed a purchase agreement with Intellikom, Inc., which does business under the name Kompyte (“Kompyte”) to acquire 100% of Kompyte’s assets for cash consideration of $10,000. The purpose of the acquisition of Kompyte was to acquire Kompyte’s assets, including its competitive intelligence automation platform. Aggregate acquisition-related costs associated with this business combination were not material for the three and nine months ended September 30, 2022, and were included in general and administrative expenses in the unaudited condensed consolidated statements of operations and comprehensive income (loss).

Upon the completion of the acquisition, Kompyte became a wholly owned subsidiary of the Company. The results of operations of Kompyte have been included in the Company’s unaudited condensed consolidated financial statements from the date of acquisition.

The Company has accounted for this transaction as a business combination under the acquisition method. The total purchase price was allocated to the tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values. The Company recorded the excess of the purchase price over those fair values as goodwill. The following table presents the purchase price allocation recorded in the Company’s unaudited condensed consolidated balance sheet as of the acquisition date, which was final as of June 30, 2022:


	Purchase Price
Assets acquired		Allocation
Fair value of tangible assets:
Other assets		$	328
Goodwill		4,928
Identifiable intangible assets		5,500
Total assets acquired		$	10,756
Liabilities assumed
Current and non-current liabilities		$	756
Total liabilities assumed		$	756
Net assets acquired		$	10,000

The Company allocated $5,500 of the purchase price to identifiable intangible assets consisting of developed technology, trade names, and customer relationships, which it amortizes over the assets’ useful lives using a straight-line amortization method. The Company assigned useful lives to the acquired developed technology, trade names, and customer relationships of six years, six years, and three years, respectively.

Backlinko

On January 13, 2022, the Company completed an asset purchase agreement with Backlinko, LLC (“Backlinko”), acquiring certain of Backlinko’s assets for cash consideration of $4,000. The purpose of this asset acquisition was to acquire valuable content and to access an existing revenue stream in Backlinko’s SEO courses.

The Company accounted for this transaction as an asset acquisition and allocated the cost of the asset acquisition to the individual assets acquired. The Company allocated $3,915 to the acquired intangible assets and the remaining cost of the acquisition was allocated to the other assets acquired, which were not material. The identifiable intangible assets consisted of trade names and intellectual property, which the Company amortizes over the assets’ useful lives using a straight-line amortization

method. The Company assigned useful lives to the acquired trade name and content of five years and four years, respectively.

Intangible Assets

Intangible assets consist of intangible assets resulting from the Company’s acquisitions and its capitalized internal-use software development costs. Intangible assets consist of the following:


	As of September 30, 2023
	Weighted
	Average
	Remaining	Gross				Net
	Useful Life	Carrying		Accumulated		Carrying
	(years)	Amount		Amortization		Amount
Developed technology	4.1	$	4,009	$	(1,267)	$	2,742
Trade name	3.9	4,035		(1,210)		2,825
Content	2.5	2,333		(873)		1,460
Customer relationships	2.1	744		(326)		418
Capitalized internal-use software	2.8	7,330		(1,874)		5,456
Total as of September 30, 2023		$	18,451	$	(5,550)	$	12,901


	As of December 31, 2022
	Weighted
	Average
	Remaining	Gross				Net
	Useful Life	Carrying		Accumulated		Carrying
	(years)	Amount		Amortization		Amount
Developed technology	4.8	$	4,007	$	(765)	$	3,242
Trade name	4.6	3,810		(656)		3,154
Content	3.1	1,958		(471)		1,487
Customer relationships	2.3	600		(159)		441
Capitalized internal-use software	2.6	3,415		(1,453)		1,962
Total as of December 31, 2022		$	13,790	$	(3,504)	$	10,286

During the three and nine months ended September 30, 2023, the Company capitalized $1,283 and $3,913, respectively, of software development costs, which are classified as intangible assets on the accompanying unaudited condensed consolidated balance sheets, and recorded amortization expense associated with its capitalized software development costs of $151 and $421, respectively. During the three and nine months ended September 30, 2022, the Company capitalized $491 and $1,005, respectively, of software development costs, and recorded amortization expense associated with its capitalized software development costs of $193 and $527, respectively.

Amortization expense for acquired intangible assets was $557 and $1,631 for the three and nine months ended September 30, 2023, respectively. Amortization expense for acquired intangible assets was $528 and $1,345 for the three and nine months ended September 30, 2022, respectively.

As of September 30, 2023, future amortization expense is expected to be as follows:


	Amount
Remainder of 2023	$	691
2024	2,710
2025	2,412
2026	1,635
2027 and thereafter	5,453
Total	$	12,901

Goodwill

The changes in the carrying value of goodwill during the nine months ended September 30, 2023 were as follows:


	Amount
Balance as of January 1, 2023	$	6,529
Traffic Think Tank acquisition	1,206
Foreign currency translation adjustment	3
Balance as of September 30, 2023	$	7,738