Goodwill and Intangible Assets, Net

3 Months Ended

Mar. 31, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets, Net

Goodwill and Intangible Assets, Net

Goodwill

During the three months ended March 31, 2023, a decline in our financial performance, overall negative trend in the video service provider channel and an uncertain economic environment contributed to a significant decline in our market capitalization. We considered this to be an impairment trigger. We, therefore, performed a quantitative valuation analysis under an income approach to estimate our reporting unit's fair value. The income approach used projections of estimated operating results and cash flows that were discounted using a discount rate based on the weighted-average cost of capital. The main assumptions supporting the cash flow projections include, but are not limited to, revenue growth, margins, discount rate, and terminal growth rate. The financial projections reflect our best estimate of economic and market conditions over the projected period, including forecasted revenue growth, margins, capital expenditures, depreciation and amortization. In addition to our valuation analysis under an income approach, we also considered the implied control premium compared to our market capitalization. We determined that the implied control premium over our market capitalization to be substantial, therefore, we recorded an impairment charge of $49.1 million during the three months ended March 31, 2023.

Intangible Assets, Net

The components of intangible assets, net were as follows:

	March 31, 2024						December 31, 2023
(In thousands)	Gross (1)		Accumulated Amortization (1)		Net		Gross (1)		Accumulated Amortization (1)		Net
Capitalized software development costs	$	2,246	$	(561)	$	1,685	$	2,161	$	(421)	$	1,740
Customer relationships	6,340		(3,984)		2,356		6,340		(3,803)		2,537
Developed and core technology	740		(327)		413		4,220		(3,754)		466
Patents	33,917		(13,321)		20,596		33,195		(12,686)		20,509
Trademarks and trade names	450		(368)		82		450		(353)		97
Total intangible assets, net	$	43,693	$	(18,561)	$	25,132	$	46,366	$	(21,017)	$	25,349

(1)This table excludes the gross value of fully amortized intangible assets totaling $48.5 million and $45.0 million at March 31, 2024 and December 31, 2023, respectively.

Amortization expense is recorded in selling, general and administrative expenses, except amortization expense related to capitalized software development costs, which is recorded in cost of sales. Amortization expense by statement of operations caption was as follows:

(In thousands)	Three Months Ended March 31,
	2024		2023
Cost of sales	$	140	$	8
Selling, general and administrative expenses	1,096		1,057
Total amortization expense	$	1,236	$	1,065

Estimated future annual amortization expense related to our intangible assets at March 31, 2024, was as follows:

(In thousands)
2024 (remaining 9 months)	$	3,920
2025	4,677
2026	4,030
2027	3,219
2028	2,591
Thereafter	6,695
Total	$	25,132