GOODWILL (Notes)

6 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

9. GOODWILL

The following table shows the carrying amount of goodwill as of December 31, 2019 and June 30, 2020 and the changes in goodwill for the six month period ended June 30, 2020 (in thousands):


Goodwill at December 31, 2019	$	156,059
Foreign currency translation adjustment	(3,977)

Goodwill at June 30, 2020	$	152,082

The amount of goodwill as of June 30, 2020 allocated to the Tech-focused reporting unit was $152.1 million. The annual impairment test for the Tech-focused reporting unit, which was performed as of October 1, 2019, resulted in the fair value of the reporting unit exceeding the carrying value by 37%. During the first quarter of 2020, because of the impacts of the

COVID-19 pandemic and its potential impact on future earnings and cash flows for the reporting unit, the Company performed an interim impairment analysis of goodwill. The results of the analysis indicated that the fair value of the Tech-focused reporting unit was not substantially in excess of the carrying value as of March 31, 2020. The percentage by which the estimated fair value exceeded carrying value for the Tech-focused reporting unit at March 31, 2020 was less than 1%. Revenues for the Tech-focused reporting unit during the second quarter of 2020 exceeded the projections used in the March 31, 2020 analysis by 3% and operating income margin for the Company exceeded the same projections by 3 percentage points. Additionally, the Company believes those projections beyond June 30, 2020 remain the Company's best estimate. As a result, no impairment test was performed during the second quarter of 2020.

Revenue projections for the Tech-focused reporting unit declined compared to the projections used in the October 1, 2019 analysis due to the COVID-19 pandemic. Revenue is projected to decline for the year ending December 31, 2020 compared to the year ended December 31, 2019 and then increase at rates approaching industry projections. The Company’s ability to achieve these revenue projections may be impacted by, among other things, the length and impacts of the COVID-19 pandemic, competition in the technology recruiting market, challenges in developing and introducing new products and product enhancements to the market and the Company’s ability to attribute value delivered to customers. Future cash flows are projected to decline for the year ending December 31, 2020 compared to the year ended December 31, 2019 as a result of the lower revenue, but the decline will be partially offset by reductions to operating expenses. Operating expenses are projected to decline for the year ending December 31, 2020 as compared to the year ended December 31, 2019, resulting in a small operating margin reduction, and then increase at levels that allow for modest operating margin improvements.

Determining the fair value of a reporting unit is judgmental in nature and requires the use of estimates and key assumptions, particularly assumed discount rates and projections of future operating results. The discount rate applied for the Tech-focused reporting unit in the March 31, 2020 analysis was 16.5%, compared to 13.2% at October 1, 2019. An increase to the discount rate applied or reductions to future projected operating results could result in future impairment of the Tech-focused reporting unit’s goodwill. It is reasonably possible that changes in judgments, assumptions and estimates the Company made in assessing the fair value of goodwill could cause the Company to consider some portion or all of the goodwill of the Tech-focused reporting unit to become impaired. In addition, a future decline in the overall market conditions, uncertainty related to COVID-19, political instability, and/or changes in the Company’s market share could negatively impact the estimated future cash flows and discount rates used to determine the fair value of the reporting unit and could result in an impairment charge in the foreseeable future.