Goodwill and Acquired Intangible Assets

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Acquired Intangible Assets

Goodwill and Acquired Intangible Assets

Goodwill

We recorded as goodwill the excess of the purchase price over the estimated fair values of identifiable assets and liabilities acquired as part of the Nitro acquisition in the first quarter of 2022 and the Scholly acquisition in the third quarter of 2023. At December 31, 2023, we had $56 million in total goodwill. See Notes to Consolidated Financial Statements, Note 2, “Significant Accounting Policies — Business Combination,” in this Form 10-K for additional details on our acquisitions of Nitro and Scholly.

Goodwill is not amortized but is tested periodically for impairment. We test goodwill for impairment annually in the fourth quarter of the year, or more frequently if we believe that indicators of impairment exist. As a part of the 2023 annual impairment testing, we conducted a quantitative impairment test of goodwill associated with our education business services reporting unit. We utilized the income approach to estimate the fair value of the reporting unit. The income approach measures the value of the reporting unit’s future economic benefit determined by its discounted cash flows derived from our reporting unit’s internal forecast. Based on the quantitative analysis, we determined that the fair value of the reporting unit exceeded its carrying value. Thus, no impairment charges were recorded during the year ended December 31, 2023.

Acquired Intangible Assets

Our intangible assets include acquired trade name and trademarks, customer relationships, developed technology, and partner relationships. We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

In the fourth quarter of 2023, we determined that it was more likely than not that the Nitro trade name and trademark assets would not be used as originally intended due to changes in business strategy and, therefore, no longer held value. As a result, the Company performed an impairment review and wrote down the Nitro trade name and trademark to zero, which resulted in the recognition of a non-cash pre-tax impairment loss of $56 million. That impairment loss was recorded to acquired intangible assets impairment and amortization expense.

Acquired intangible assets include the following:

		December 31, 2023						December 31, 2022
(Dollars in thousands)	Useful Life (in years)(1)	Cost Basis		Accumulated Amortization		Net		Cost Basis		Accumulated Amortization		Net
Trade name and trademarks(2)(3)	4.0	$	6,040	$	(629)	$	5,411	$	68,470	$	(5,706)	$	62,764
Customer relationships(2)	4.6	8,920		(4,013)		4,907		5,670		(1,723)		3,947
Developed technology(2)	3.5	2,590		(908)		1,682		1,260		(350)		910
Partner relationships	2.5	730		(122)		608		—		—		—
Total acquired intangible assets		$	18,280	$	(5,672)	$	12,608	$	75,400	$	(7,779)	$	67,621

(1)     The weighted average useful life of acquired intangible assets related to the Nitro acquisition is 4.3 years and the weighted average useful life of the acquired intangible assets related to the Scholly acquisition is 3.9 years.

(2) Trade name and trademarks, customer relationships, and developed technology at December 31, 2023 include $6 million, $3 million, and $1 million, respectively, related to the Scholly acquisition.

(3) In 2023, we fully impaired the Nitro trade name and trademarks asset for $56 million.

We recorded amortization of acquired intangible assets totaling approximately $10 million and $8 million in the years ended December 31, 2023 and 2022, respectively. We will continue to amortize our intangible assets with definite useful lives over their remaining estimated useful lives. We estimate amortization expense associated with these intangible assets will be approximately $5 million, $4 million, $3 million, and $1 million in 2024, 2025, 2026, and 2027.