Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The changes in carrying amounts of goodwill for the years ended December 31, 2023 and 2022 are as follows (in thousands):


	Digital Media		Cybersecurity and Martech		Consolidated
Balance as of January 1, 2022	$	996,659	$	534,796	$	1,531,455
Goodwill acquired (Note 4)	95,737		—		95,737

Goodwill impairment	(27,369)		—		(27,369)
Purchase accounting adjustments (1)	4,475		(137)		4,338
Foreign exchange translation	(3,513)		(9,174)		(12,687)
Balance as of December 31, 2022	$	1,065,989	$	525,485	$	1,591,474
Goodwill acquired (Note 4)	6,451		—		6,451

Goodwill impairment	(56,850)		—		(56,850)
Purchase accounting adjustments (1)	(72)		—		(72)
Foreign exchange translation	1,362		3,700		5,062
Balance as of December 31, 2023	$	1,016,880	$	529,185	$	1,546,065

(1)Purchase accounting adjustments relate to measurement period adjustments to goodwill in connection with prior business acquisitions (see Note 4 — Business Acquisitions).

During the years ended December 31, 2023 and 2022, the Company reassessed the fair value of certain reporting units within the Digital Media reportable segment as a result of a forecasted reduction in revenue and profitability in those reporting units, as well as an increase in interest rates and market volatility that would affect the Company’s assumptions on its discount rate. Based on the quantitative fair value test in each period, the carrying value of the reporting unit that was tested exceeded its fair value, and the Company recorded an impairment of approximately $56.9 million during the year ended December 31, 2023, and approximately $27.4 million during the year ended December 31, 2022. Following the impairment during the year ended December 31, 2023, there was no excess of fair value over the carrying value at the reporting unit, so any further decrease in estimated fair value that exceeds the carrying value, would result in an additional impairment charge to goodwill. As of December 31, 2023, this reporting unit had goodwill of approximately $79.2 million. Changes in market conditions, and key assumptions made in future quantitative assessments, including expected cash flows, competitive factors, and discount rates, could negatively impact the results of future impairment testing and could result in the recognition of an impairment charge.

In each period, the fair value of the reporting unit was determined using an equal weighting of an income approach that was based on the discounted estimated future cash flows of the reporting unit and a market approach that uses the guideline public company approach. We believe the combination of these approaches provides an appropriate valuation because it incorporates the expected cash generation of the reporting unit in addition to how a third-party market participant would value the reporting unit. As the business is assumed to continue in perpetuity, the discounted future cash flows include a terminal value. Determining fair value using a discounted estimated future cash flow analysis requires the exercise of significant judgment with respect to several items, including the amount and timing of expected future cash flows and appropriate discount rates. The expected cash flows used in the discounted cash flow analyses were based on the most recent forecast for the reporting unit. For years beyond the forecast period, the estimates were based, in part, on forecasted growth rates. The discount rate the Company used represents the estimated weighted average cost of capital, which reflects the overall level of inherent risk involved in its reporting unit operations and the rate of return a market participant would expect to earn. Determining fair value using a market approach considers multiples of financial metrics based on trading multiples of a selected peer group of companies. From the comparable companies, a representative market multiple is determined, which is applied to financial metrics to estimate the fair value of the reporting unit.

During the year ended December 31, 2022, the Company realigned two reporting units within the Digital Media reportable segment. The Company re-allocated goodwill between the two identified reporting units based upon the relative fair value of the respective reporting units. Immediately before and immediately following this change in reporting units, the Company performed a quantitative fair value assessment using the income approach and market approach noted above, and each of these reporting units exceeded their respective carrying values and, therefore, there was no impairment to goodwill.

During the year ended December 31, 2021, the Company recorded an impairment of approximately $32.6 million related to the Company’s B2B Backup business (included in the Cybersecurity and Martech reportable segment). In 2021, the Company received an offer to purchase the B2B Backup business and management determined that the fair value of that business less cost to sell was lower than its carrying amount. The fair value of the business was determined based upon the offer price. The fair value of the remaining reporting unit was determined using an equal weighting of an income approach and a market approach, and was in excess of the remaining carrying value of the reporting unit.

Goodwill as of December 31, 2023 and 2022 reflects accumulated impairment losses of $84.2 million and $27.4 million, respectively, in the Digital Media reportable segment.

Intangible Assets Subject to Amortization

As of December 31, 2023, intangible assets subject to amortization relate primarily to the following (in thousands):


	Historical Cost		Accumulated Amortization		Net
Trade names and trademarks	$	347,895	$	192,111	$	155,784
Customer relationships	692,634		555,384		137,250
Other purchased intangibles	379,703		347,331		32,372
Total	$	1,420,232	$	1,094,826	$	325,406

As of December 31, 2022, intangible assets subject to amortization relate primarily to the following (in thousands):


	Historical Cost		Accumulated Amortization		Net
Trade names and trademarks(1)	$	360,170	$	169,150	$	191,020
Customer relationships	687,798		479,741		208,057
Other purchased intangibles(1)	383,417		319,679		63,738
Total	$	1,431,385	$	968,570	$	462,815

(1)The Company reclassified its trademarks as of December 31, 2022 from ‘other purchased intangibles’ to ‘trade names and trademarks’ to conform to current period presentation. The trademarks totaled $54.8 million of carrying value as of December 31, 2022 ($98.5 million of historical cost and $43.7 million of accumulated amortization).

Expected amortization expenses for intangible assets subject to amortization at December 31, 2023 are as follows (in thousands):


Fiscal Year:
2024	$	90,774
2025	71,314
2026	56,952
2027	42,989
2028	21,421
Thereafter	41,956
Total expected amortization expense	$	325,406

Amortization expense, included in ‘General, administrative, and other related costs’ on our Consolidated Statements of Operations was approximately $144.9 million, $156.7 million, and $185.7 million for the years ended December 31, 2023, 2022 and 2021, respectively.