Intangible assets and goodwill

6 Months Ended

Jul. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets

During the three months ended July 31, 2019, the Company acquired the right to act as custodian of a portfolio of HSA Members for $6.5 million, which is expected to be paid in October 2019 upon conversion of the accounts to the Company's proprietary platform. The cost was recorded in accrued liabilities on the condensed consolidated balance sheet and allocated to acquired intangible member assets as of July 31, 2019. The Company has determined the acquired intangible member assets to have a useful life of 15 years. The assets will be amortized using the straight-line amortization method, which has been determined appropriate to reflect the pattern over which the economic benefits of existing member assets are realized.

During the three months ended July 31, 2019 and 2018, the Company capitalized software development costs of $4.0 million and $2.1 million, respectively, and $7.7 million and $4.2 million for the six months ended July 31, 2019 and 2018, respectively, related to significant enhancements and upgrades to its proprietary system.

The gross carrying amount and associated accumulated amortization of intangible assets were as follows as of July 31, 2019 and January 31, 2019:



(in thousands)	July 31, 2019			January 31, 2019
Amortized intangible assets:
Capitalized software development costs	$	48,410		$	40,583
Software	6,430			4,252
Other intangible assets	2,882			2,882
Acquired intangible member assets	92,084			85,110
Intangible assets, gross	149,806			132,827
Accumulated amortization	(61,038		)	(53,161		)
Intangible assets, net	$	88,768		$	79,666

During the three months ended July 31, 2019 and 2018, the Company expensed a total of $3.8 million and $3.4 million, respectively, and $7.7 million and $6.6 million for the six months ended July 31, 2019 and 2018, respectively, in software development costs primarily related to the post-implementation and operation stages of its proprietary software.

Amortization expense for the three months ended July 31, 2019 and 2018 was $4.0 million and $3.5 million, respectively, and $7.9 million and $7.2 million for the six months ended July 31, 2019 and 2018, respectively.

Goodwill

There were no changes to the goodwill carrying value during the three and six months ended July 31, 2019 and 2018.