Acquired Intangible Assets, net

9 Months Ended

Jan. 31, 2013

Acquired Intangible Assets, net

6. Acquired Intangible Assets, net

On December 1, 2012, the Company closed an agreement to purchase customer contracts operated in Europe by Shopzilla, Inc. (“Shopzilla”) using PowerReviews technology under a license agreement between Shopzilla and PowerReviews. The Company determined that the transaction does not constitute a business combination. The entire purchase price of $4.7 million was allocated to a customer relationship intangible asset as the intent of the purchase was to gain access to Shopzilla’s contractual customer relationships. Cash remitted on the date of purchase was $4.2 million, and $0.5 million of the purchase price has been recorded as a holdback liability recorded in accrued expenses and other current liabilities. The remaining useful life of the acquired contractual customer relationships was determined to be ten years.

Acquired intangible assets, net as of January 31, 2013 from business combinations (see Note 4) and the intangible asset purchase described above are as follows (in thousands):

	Gross Fair Value		Accumulated Amortization			Net Book Value
Customer relationships	$	51,027	$	(2,622	)	$	48,405
Developed technology		5,400		(1,140	)		4,260
Domain name (indefinite useful life)		800		—			800
	$	57,227	$	(3,762	)	$	53,465

Intangible assets are amortized over their useful lives. Each period the Company evaluates the estimated remaining useful lives of its intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. The carrying amounts of these assets are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate.

For the three and nine months ended January 31, 2013, the Company incurred amortization expense on acquired intangible assets of $1.7 and $3.7 million, respectively, of which $0.5 and $1.2 million, respectively, was included in cost of revenue. The Company did not have any acquired intangible assets at April 30, 2012, nor did it incur any amortization expense for acquired intangible assets for the three and nine months ended January 31, 2012.