Business Combinations

6 Months Ended

Jun. 30, 2017

Business Combinations [Abstract]

Business Combinations

Business Combinations

2017 Business Combinations

DxContinuum

On January 20, 2017, we completed the acquisition of a privately-held company, DxContinuum, Inc. (DxContinuum), by acquiring all issued and outstanding common shares of DxContinuum for approximately $15.0 million in an all-cash transaction to enhance the predictive capabilities of our solutions.

The following table summarizes the allocation of the purchase price to the fair value of the tangible and intangible assets acquired and liabilities assumed as of the acquisition date:

	Purchase Price Allocation (in thousands)			Useful Life (in years)
Net tangible assets acquired	$	37
Intangible assets:
Developed technology	6,400			5
Goodwill	11,159
Net deferred tax liabilities(1)	(2,561		)
Total purchase price	$	15,035

(1) Deferred tax liabilities, net primarily relates to purchased identifiable intangible assets and is shown net of deferred tax assets.

The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. We believe the goodwill represents the synergies expected from expanded market opportunities when integrating DxContinuum technologies with our offerings. The goodwill balance is not deductible for income tax purposes.

Other 2017 Business Combination

On May 19, 2017, we completed the acquisition of a privately-held company, Qlue, Inc., for approximately $6.6 million in cash, and have included the results of operations of this company in our condensed consolidated financial statements from the date of purchase. In allocating the purchase price based on the estimated fair value, we recorded $5.0 million of goodwill, $2.6 million of developed technology intangible assets (to be amortized over an estimated useful life of 5 years), and $1.1 million of deferred tax liabilities. Amounts allocated to the remaining acquired tangible assets and assumed liabilities were not material. The goodwill balance associated with this business combination is not deductible for income tax purposes.

The results of operations of both of our 2017 business combinations have been included in our condensed consolidated financial statements from their respective dates of purchase. These business combinations did not have a material impact on our condensed consolidated financial statements, and therefore historical and pro forma disclosures have not been presented. Aggregate acquisition-related costs of $1.4 million for the six months ended June 30, 2017 are included in general and administrative expenses in our condensed consolidated statements of comprehensive loss.

2016 Business Combinations

BrightPoint Security

On June 3, 2016, we completed the acquisition of a privately-held company, BrightPoint Security, Inc. (BrightPoint), by acquiring all issued and outstanding common shares of BrightPoint for approximately $19.6 million in an all-cash transaction to expand our Security Operations solutions. The following table summarizes the allocation of the purchase price to the fair value of the tangible and intangible assets acquired and liabilities assumed as of the acquisition date:

	Purchase Price Allocation (in thousands)			Useful Life (in years)
Intangible assets:
Developed technology	$	8,100		6
Customer contracts and related relationships	500			1.5
Goodwill	15,258
Net tangible liabilities acquired	(1,339		)
Net deferred tax liabilities(1)	(2,890		)
Total purchase price	$	19,629

(1) Deferred tax liabilities, net primarily relates to purchased identifiable intangible assets and is shown net of deferred tax assets.

ITapp

On April 8, 2016, we completed the acquisition of a privately-held company, ITapp Inc. (ITapp), by acquiring all issued and outstanding common shares of ITapp for approximately $14.5 million in an all-cash transaction to expand our IT Operations Management solutions. The following table summarizes the allocation of the purchase price to the fair value of the tangible and intangible assets acquired and liabilities assumed as of the acquisition date:

	Purchase Price Allocation (in thousands)			Useful Life (in years)
Net tangible assets acquired	$	140
Intangible assets:
Developed technology	4,700			5
Customer contracts and related relationships	200			1.5
Goodwill	11,437
Net deferred tax liabilities(1)	(2,015		)
Total purchase price	$	14,462

(1) Deferred tax liabilities, net primarily relates to purchased identifiable intangible assets and is shown net of deferred tax assets.

For both of the 2016 business combinations, the excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. We believe the goodwill represents the synergies expected from expanded market opportunities when integrating the acquired technologies with our offerings. The goodwill balance for both business combinations is not deductible for income tax purposes. Aggregate acquisition-related costs of $1.0 million are included in general and administrative expenses in our condensed consolidated statements of comprehensive loss.

The results of operations of both BrightPoint and ITapp have been included in our condensed consolidated financial statements from their respective dates of purchase. The following pro forma consolidated financial information combines the results of operations from us, BrightPoint and ITapp for the three and six months ended June 30, 2016, as if the acquisitions of BrightPoint and ITapp had occurred on January 1, 2016 (in thousands, except share and per share data):

	Three Months Ended June 30, 2016			Six Months Ended June 30, 2016
Revenues	$	341,631		$	647,898
Net loss	$	(50,674	)	$	(386,299	)
Weighted-average shares used to compute net loss per share - basic and diluted	163,838,755			162,952,721
Net loss per share - basic and diluted	$	(0.31	)	$	(2.37	)

The pro forma results as presented above are based on estimates and assumptions, which we believe are reasonable. They are not necessarily indicative of our condensed consolidated results of operations in future periods or the results that actually would have been realized had we been a combined company during the periods presented. The pro forma results include adjustments primarily related to amortization of acquired intangible assets and acquisition-related costs.