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Business Combinations, Definite-Lived Intangible Assets, Net and Goodwill
 6 Months Ended
Jul. 31, 2020
Business Combinations, Goodwill and Intangible Assets Disclosure [Abstract]  
Business Combinations, Definite-Lived Intangible Assets, Net and Goodwill Business Combinations, Definite-Lived Intangible Assets, Net and Goodwill
Business Combinations
Acquisition of Datrium, Inc.
During the second quarter of fiscal 2021, VMware completed the acquisition of Datrium, Inc., a provider of cloud-native disaster recovery solutions, to broaden the VMware Site Recovery Disaster Recovery as a Service offerings. The total purchase price, net of cash acquired, was $137 million. The purchase price primarily included $25 million of identifiable intangible assets and $91 million of goodwill that is not expected to be deductible for tax purposes. The identifiable intangible assets, which primarily consisted of completed technology, have estimated useful lives of three years to five years.
Acquisition of Lastline, Inc.
During the second quarter of fiscal 2021, VMware completed the acquisition of Lastline, Inc., a provider of network-based security breach detection products and services, to enhance capabilities for network detection and threat analysis on VMware NSX and SD-WAN offerings. The total purchase price, net of cash acquired, was $114 million. The purchase price primarily included $29 million of identifiable intangible assets and $86 million of goodwill that is not expected to be deductible for tax purposes. The identifiable intangible assets, which primarily consisted of completed technology, have estimated useful lives of one year to four years.
Acquisition of Nyansa, Inc.
During the first quarter of fiscal 2021, VMware completed the acquisition of Nyansa, Inc., a developer of artificial intelligence-based network analytics, to accelerate the delivery of end-to-end monitoring and troubleshooting capacities within VMware SD-WAN by VeloCloud. The total purchase price, net of cash acquired, was $38 million. The purchase price primarily included $14 million of identifiable intangible assets and $24 million of goodwill that is not expected to be deductible for tax purposes. The identifiable intangible assets, which primarily consisted of completed technology, have estimated useful lives of one year to four years.
Other Fiscal 2021 Acquisitions
During the second quarter of fiscal 2021, VMware completed two other acquisitions, which were not material individually to the condensed consolidated financial statements. VMware expects these acquisitions to enhance its product features and capabilities for its VMware Carbon Black Cloud and vRealize Operations offerings. The aggregate purchase price for these two acquisitions, net of cash acquired, was $40 million and primarily included $31 million of identifiable intangible assets and $16 million of goodwill, of which $24 million is expected to be deductible for tax purposes. The identifiable intangible assets, which primarily consisted of completed technology, have estimated useful lives of one year to five years.
The pro forma financial information assuming these fiscal 2021 acquisitions had occurred as of the beginning of the fiscal year prior to the fiscal year of acquisition, as well as the revenue and earnings generated during the current fiscal year, were not material for disclosure purposes.
Definite-Lived Intangible Assets, Net
As of the periods presented, definite-lived intangible assets consisted of the following (amounts in tables in millions):
 
July 31, 2020
 
Weighted-Average Useful Lives
(in years)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Book Value
Purchased technology
5.5
 
$
970

 
$
(432
)
 
$
538

Customer relationships and customer lists
11.4
 
730

 
(234
)
 
496

Trademarks and tradenames
7.6
 
132

 
(68
)
 
64

Other
2.0
 
21

 
(10
)
 
11

Total definite-lived intangible assets
 
 
$
1,853

 
$
(744
)
 
$
1,109

 
January 31, 2020
 
Weighted-Average Useful Lives
(in years)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Book Value
Purchased technology
5.7
 
$
1,030

 
$
(488
)
 
$
542

Customer relationships and customer lists
11.4
 
739

 
(200
)
 
539

Trademarks and tradenames
7.6
 
131

 
(58
)
 
73

Other
2.0
 
22

 
(4
)
 
18

Total definite-lived intangible assets
 
 
$
1,922

 
$
(750
)
 
$
1,172


Amortization expense on definite-lived intangible assets was $81 million and $161 million during the three and six months ended July 31, 2020, respectively, and $70 million and $140 million during the three and six months ended August 2, 2019, respectively.
Based on intangible assets recorded as of July 31, 2020 and assuming no subsequent additions, dispositions or impairment of underlying assets, the remaining estimated annual amortization expense over the next five fiscal years and thereafter is expected to be as follows (table in millions):
Remainder of 2021
$
163

2022
284

2023
234

2024
187

2025
101

Thereafter
140

Total
$
1,109


Goodwill
The following table summarizes the changes in the carrying amount of goodwill during the six months ended July 31, 2020 (table in millions):
Balance, January 31, 2020
$
9,329

Increase in goodwill related to business combinations
218

Balance, July 31, 2020
$
9,547