Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The Company completes its annual goodwill impairment test during the fourth quarter of each year, or more frequently if triggering events indicate a possible impairment in one or more of its reporting units. The fair value of the reporting units was determined using a combination of an income based approach based on a present value cash flow model and a market approach based on appropriate valuation multiples observed for the reporting unit's guideline public companies.

During the second quarter of 2021, the Company lowered its financial expectations for the remainder of 2021 due to introduction of enhanced cybersecurity measures to address increased risk of cybersecurity attacks, delays in product initiatives and a more uncertain COVID-19 outlook. The Company determined that these factors constituted an interim triggering event as of the end of the second quarter of 2021, and performed an impairment analysis with regard to its indefinite-lived intangible assets and goodwill. For the quarter ended June 30, 2021, as a result of the interim goodwill impairment test, the fair value of the Spark reporting unit exceeded the carrying amount, and as a result, no goodwill impairment was recorded. Goodwill assigned to the Spark reporting unit was $24.5 million. For the Zoosk reporting unit, the fair value did not exceed the carrying value, and the Company recorded a goodwill impairment charge of $21.8 million. In connection with its annual impairment assessment, the Company performed a quantitative impairment analysis for the Zoosk reporting unit and a qualitative impairment analysis for the Spark reporting unit, and based on the results of that test, no impairment was indicated.

For the year ended December 31, 2020, as a result of our annual goodwill impairment test, the fair value of the Spark reporting unit exceeded the carrying amount, and as a result, no goodwill impairment was recorded. For the Zoosk reporting unit, the fair value did not exceed the carrying value, and the Company recorded a goodwill impairment charge of $42.7 million. The impairment charge was attributed to declines in the estimated undiscounted cash flows and an increase in the discount rate, which resulted in the carrying value not being recoverable.

The following table summarizes the changes in the carrying amount of goodwill for the periods indicated:


(in thousands)
Balance as of January 1, 2020	$	199,238

Impairment charges	(42,713)
Impact of currency translation	57
Balance as of December 31, 2020	$	156,582
Impairment charges	(21,786)
Impact of currency translation	(52)
Balance as of December 31, 2021	$	134,744

The total accumulated impairment loss of the Company's goodwill was $84.5 million and $62.7 million as of December 31, 2021 and 2020.

Intangible assets consists of the following as of December 31, 2021:


		December 31, 2021
(in thousands)	Weighted-Average Remaining Amortization Period (Years)	Gross Carrying Amount		Accumulated Impairment Charges		Accumulated Amortization		Currency Translation Impact on Carrying Amount		Net Carrying Amount
Indefinite-lived intangible assets:
Brands and trademarks		$	63,800	$	(36,360)	$	—	$	—	$	27,440
Long-lived intangible assets:
Brands and trademarks	0.1	86		—		(50)		—		36
Acquired technology	1.5	5,910		—		(4,039)		—		1,871
Customer relationships	0.0	10,780		—		(10,780)		—		—
Licenses and domains	0.0	205		—		(183)		—		22
Other	0.0	470		—		(470)		—		—
Total intangible assets	1.6	$	81,251	$	(36,360)	$	(15,522)	$	—	$	29,369

Intangible assets consists of the following as of December 31, 2020:


		December 31, 2020
(in thousands)	Weighted-Average Remaining Amortization Period (Years)	Gross Carrying Amount		Accumulated Impairment Charges		Accumulated Amortization		Currency Translation Impact on Carrying Amount		Net Carrying Amount
Indefinite-lived intangible assets:
Brands and trademarks		$	63,800	$	(10,960)	$	—	$	—	$	52,840
Long-lived intangible assets:
Brands and trademarks	0.1	3,025		(2,573)		(409)		4		47
Acquired technology	1.3	7,300		—		(3,997)		—		3,303
Customer relationships	0.4	11,420		—		(8,762)		—		2,658
Licenses and domains	0.0	410		—		(361)		3		52
Other	0.0	5,203		—		(5,102)		(2)		99
Total intangible assets	1.8	$	91,158	$	(13,533)	$	(18,631)	$	5	$	58,999

For the interim assessment for the quarter ended June 30, 2021, the Company recognized an impairment charge of $10.3 million for the Zoosk indefinite-lived trade name. The Company estimated the fair value using an income approach, specifically the relief-from-royalty method, based on the present value of future cash flows. The Company used a royalty rate of 4% and discount rate of 14.5%. As part of the Company's annual assessment, the Company performed a qualitative assessment for Jdate and Christian Networks and a quantitative assessment for Zoosk. The Company recognized an additional impairment charge of $15.1 million for Zoosk using a royalty rate of 4% and discount rate of 21%. No impairment charge was recorded for the long-lived intangible assets for the years ended December 31, 2021 and 2020.

For the annual assessments in 2020, we performed a qualitative assessment for Jdate and Christian Networks and a quantitative assessment for Zoosk. The qualitative assessment performed, there were no impairments of indefinite-lived intangible assets, while we recorded an impairment charge of $8.5 million for Zoosk for the year ended December 31, 2020. The Company used a royalty rate of 4% and a discount rate of 13.5%.

Amortization expense for the years ended December 31, 2021 and 2020 were $4.2 million and $7.3 million, respectively.

At December 31, 2021, amortization of long-lived intangible assets for each of the next five years is estimated to be as follows:


(in thousands)						Amortization Expense
2022						1,279
2023						632
2024						8
2025						8
2026						2