Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

The following table presents the changes in the carrying amount of goodwill by reportable segment on the Company’s condensed consolidated balance sheets for the periods indicated.

		Balance as of December 31, 2021		Allocations		Adjustments		Impairment Charges		Foreign Currency Translation Adjustments		Balance as of June 30, 2022
	(in thousands)
Degree Program Segment
Gross goodwill		$	—	$	198,378	$	(5,519)	$	—	$	—	$	192,859
Accumulated impairments		—		—		—		—		—		—
Net goodwill		—		198,378		(5,519)		—		—		192,859
Alternative Credential Segment
Gross goodwill		$	481,366	$	225,174	$	(10,983)	$	—	$	(1,234)	$	694,323
Accumulated impairments		(70,379)		—		—		(28,782)		—		(99,161)
Net goodwill		410,987		225,174		(10,983)		(28,782)		(1,234)		595,162
Unallocated goodwill		$	423,552	$	(423,552)	$	—	$	—	$	—	$	—
Total
Gross goodwill		$	904,918	$	—	$	(16,502)	$	—	$	(1,234)	$	887,182
Accumulated impairments		(70,379)		—		—		(28,782)		—		(99,161)
Net goodwill		$	834,539	$	—	$	(16,502)	$	(28,782)	$	(1,234)	$	788,021

During the first quarter of 2022, the Company completed the allocation of the preliminary goodwill balance resulting from the edX Acquisition to the Company’s reporting units. The goodwill was assigned to the reporting units that are expected to drive synergies from the acquisition, which is each of the Company’s four reporting units. In addition, during the six months ended June 30, 2022, the Company recorded working capital adjustments of $5.0 million, adjustments to the preliminary valuation of acquired assets and assumed liabilities of edX of $11.5 million, and a goodwill impairment charge of $28.8 million. Refer to Note 2 for further information about the goodwill impairment charge.

The following tables present the components of intangible assets, net on the Company’s condensed consolidated balance sheets as of each of the dates indicated.

		June 30, 2022						December 31, 2021
	Estimated Average Useful Life (in years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(in thousands)
Definite-lived intangible assets
Capitalized technology	3-5	$	209,976	$	(117,948)	$	92,028	$	199,766	$	(112,357)	$	87,409
Capitalized content development	4-5	258,285		(152,311)		105,974		243,687		(125,599)		118,088
University client relationships	9-10	211,171		(45,285)		165,886		211,680		(34,995)		176,685
Enterprise client relationships	10	14,300		(1,073)		13,227		14,300		(179)		14,121
Trade names and domain names	5-10	28,981		(19,210)		9,771		27,161		(12,941)		14,220
Total definite-lived intangible assets		$	722,713	$	(335,827)	$	386,886	$	696,594	$	(286,071)	$	410,523

		June 30, 2022						December 31, 2021
		Gross Carrying Amount		Accumulated Impairments*		Net Carrying Amount		Gross Carrying Amount		Accumulated Impairments		Net Carrying Amount
	(in thousands)
Indefinite-lived intangible assets
Trade names		$	255,000	$	(30,000)	$	225,000	$	255,000	$	—	$	255,000
Total indefinite-lived intangible assets		$	255,000	$	(30,000)	$	225,000	$	255,000	$	—	$	255,000

* During the three months ended March 31, 2022, the Company recorded a $30.0 million impairment charge related to its indefinite-lived intangible asset. Refer to Note 2 for further information about this impairment charge.

The amounts presented in the table above include $50.7 million and $46.3 million of in-process capitalized technology and content development as of June 30, 2022 and December 31, 2021, respectively.

The Company recorded amortization expense related to amortizable intangible assets of $28.5 million and $23.2 million for the three months ended June 30, 2022 and 2021, respectively. The Company recorded amortization expense related to amortizable intangible assets of $59.9 million and $44.8 million for the six months ended June 30, 2022 and 2021, respectively.

The following table presents the estimated future amortization expense of the Company’s amortizable intangible assets placed in service as of June 30, 2022.

	Future Amortization Expense
	(in thousands)
Remainder of 2022	$	49,109
2023	79,764
2024	59,764
2025	41,022
2026	28,016
Thereafter	78,575
Total	$	336,250