Acquisitions, Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2021

Business Combination and Asset Acquisition [Abstract]

Acquisitions, Goodwill and Intangible Assets

Acquisitions, Goodwill and Intangible Assets

Nimbella Corp.

On September 1, 2021, the Company consummated a business combination acquiring 100% of Nimbella pursuant to an Agreement and Plan of Reorganization. Nimbella provides a serverless platform, built on open source technologies, that is designed to simplify the cloud programming experience and help developers and SMBs focus more on application development and business outcomes and less on managing the underlying infrastructure. This acquisition has been accounted for as a business combination.

The total consideration was as follows:

Cash consideration transferred	$	6,025
Fair value of common stock issued(1)	27,566
Total consideration paid	$	33,591

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(1)Total shares issued in connection with the acquisition was 636,994, of which 436,790 were treated as consideration paid at a closing stock price of $63.11 on September 1, 2021 and 200,204 were treated as stock-based compensation that will be expensed over 36 months. See Note 10. Stock-Based Compensation, Restricted Shares for more details.

The acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations, and accordingly, the total fair value of the purchase consideration was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date.

The aggregate purchase consideration and estimated fair values of the assets acquired and liabilities assumed at the date of acquisition were as follows:

	Amounts Allocated		Useful Life (in years)
Net tangible assets (including cash acquired)	$	795	N/A
Developed technology	3,300		3
Goodwill	29,496		N/A
Total fair value of net assets acquired	$	33,591

Goodwill represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including an experienced workforce that will help accelerate product development and go to market strategy, and is not deductible for income tax purposes as the transaction was treated as a stock acquisition. Pro forma results of operations for this acquisition have not been presented because they were not material to the consolidated results of operations. The results of operations of Nimbella, which are not material, have been included in the consolidated financial statements from the date of purchase.

Nanobox, Inc.

On April 4, 2019, the Company acquired 100% of the outstanding equity of Nanobox, a deployment and management platform provider for cloud infrastructure for a purchase price of $3,544. The Company has accounted for this transaction as a business combination. In allocating the aggregate purchase price based on the estimated fair values, the Company recorded $910 as a developed technology intangible asset (to be amortized over an estimated useful life of three years) and $2,674 as goodwill, which is not deductible for income tax purposes as the transaction was treated as a stock acquisition.

Goodwill and Intangible Assets, net

Movements in goodwill during the years ended December 31, 2021 and 2020 were as follows:

Balance at January 1, 2020	$	2,674
Balance at December 31, 2020	2,674
Acquisition	29,496
Balance at December 31, 2021	$	32,170

Intangible assets, net consisted of the following amounts:

	December 31,
	2021		2020
Asset Type
IP addresses	$	39,906	$	34,270
Developed technology	4,210		910
Total carrying value	$	44,116	$	35,180
Accumulated Amortization
Developed technology	$	(1,201)	$	(531)
Total accumulated amortization	(1,201)		(531)
Total intangible assets, net	$	42,915	$	34,649

Amortization expense was $645 and $329 for the years ended December 31, 2021 and 2020, respectively. Amortization expense for the next five years and thereafter, based on valuations and determinations of useful lives, is expected to be as follows:

2022	$	1,176
2023	1,100
2024	733
Thereafter	—
Total estimated future intangible amortization expense	$	3,009