Intangible Assets and Goodwill

9 Months Ended

Sep. 30, 2021

Intangible Assets and Goodwill

Intangible Assets and Goodwill

6. Intangible Assets and Goodwill

The following table provides the components of the Company’s intangible assets (in thousands, except weighted average amortization period in years):

	Weighted
	Average	As of September 30, 2021						As of December 31, 2020
	Amortization	Initial		Accumulated		Net		Initial		Accumulated		Net
	Period	Cost		Amortization		Balance		Cost		Amortization		Balance
Franchise agreements	12.6	$	272,028	$	(118,362)	$	153,666	$	176,354	$	(106,552)	$	69,802
Other intangible assets:
Software (a)	4.4	$	49,119	$	(27,012)	$	22,107	$	44,389	$	(18,926)	$	25,463
Trademarks	8.3		2,352		(1,471)		881		2,325		(1,274)		1,051
Non-compete agreements	5.0		12,897		(3,868)		9,029		3,920		(2,814)		1,106
Training materials	5.0		2,400		(1,480)		920		2,400		(1,120)		1,280
Other	5.3		1,670		(888)		782		1,670		(601)		1,069
Total other intangible assets	4.7	$	68,438	$	(34,719)	$	33,719	$	54,704	$	(24,735)	$	29,969

(a) As of September 30, 2021 and December 31, 2020, capitalized software development costs of $3.5 million and $1.4 million, respectively, were related to technology projects not yet complete and ready for their intended use and thus were not subject to amortization.

Amortization expense was $7.9 million and $6.3 million for the three months ended September 30, 2021 and 2020, respectively. Amortization expense was $20.6 million and $17.8 million for the nine months ended September 30, 2021 and 2020. The prior year amounts have been adjusted to reflect the immaterial correction of amortization for certain acquired Independent Regions. See Note 13, Immaterial Corrections to Prior Period Financial Statements for additional information.

The estimated future amortization expense related to intangible assets includes the estimated amortization expense associated with the Company’s intangible assets assumed with the Company’s acquisitions (in thousands):

As of September 30, 2021
Remainder of 2021	$	8,749
2022		32,598
2023		28,011
2024		24,569
2025		20,163
Thereafter		73,295
	$	187,385

The following table presents changes to goodwill by reportable segment (in thousands):

	Real Estate		Mortgage		Total
Balance, January 1, 2021	$	146,725	$	18,633	$	165,358
Purchase price adjustments		133		—		133
Goodwill recognized from acquisitions		108,269		—		108,269
Impairment charge		(5,123)		—		(5,123)
Effect of changes in foreign currency exchange rates		(247)		—		(247)
Balance, September 30, 2021	$	249,757	$	18,633	$	268,390

Impairment charge - goodwill

We assess goodwill for impairment at least annually or whenever an event occurs, or circumstances change that would indicate impairment may have occurred at the reporting unit level. Reporting units are driven by the level at which segment management reviews operating results.

​
During the third quarter of 2021, the Company identified impairment indicators associated with its First Leads, Inc. (“First”) reporting unit in the Real Estate segment, primarily lower than expected adoption rates of the technology in the third quarter and lower expected adoption rates estimated for the fourth quarter. This also resulted in a downward revision to the long-term adoption rate, which is a significant input in calculating the fair value of the reporting unit. Because of this, the Company performed an interim impairment test on the goodwill at its First reporting unit, as of August 31, 2021, using a discounted cash flow method. As a result of this impairment test, the Company recorded a non-cash impairment charge of $5.1 million, recorded in “Settlement and impairment charges” in the accompanying Condensed Consolidated Statements of Income (Loss).