Business Combinations

3 Months Ended

Mar. 31, 2021

Business Combinations [Abstract]

Business Combinations

Business Combinations

On January 8, 2021, we acquired all outstanding stock of Element AI Inc. ("Element"), a leading enterprise artificial intelligence (“AI”) solution provider for $228 million in an all-cash transaction. We have included the financial results of Element in the condensed consolidated financial statements from the date of acquisition, which were not material to date. The purchase price was allocated based on the estimated fair value of developed technology intangible asset of $85 million (five-year estimated useful life), net tangible assets of $16 million and goodwill of $126 million, which is partially deductible for income tax purposes. We established an unrecognized tax benefit of $43 million on pre-acquisition net operating loss carryforwards and other tax attributes. Goodwill is primarily attributed to the assembled workforce and expanded market opportunities.

The fair values assigned to tangible and intangible assets acquired and liabilities assumed are based on management’s estimates and assumptions and may be subject to change as additional information is received. The provisional measurements of fair value for income taxes payable and deferred taxes may be subject to change as additional information is received and certain tax returns are finalized. The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

Aggregate acquisition-related costs associated with business combinations are not material for the three months ended March 31, 2021 and 2020 and are included in general and administrative expenses in our condensed consolidated statements of comprehensive income as incurred. The results of operations of these business combinations have been included in our condensed consolidated financial statements from their respective dates of purchase.