Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2022

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. For the fiscal year 2022, the Company identified impairment triggering events during the third and fourth quarters.

During the third quarter of 2022, the Company lowered its financial expectations for the remainder of 2022 due to continued appreciation of the U.S. Dollar and a tougher economic environment causing a temporary slowdown in demand for our products. The slower increase in projected revenue, as well as the rising interest rate and the cost of capital constituted an interim triggering event during the third quarter of 2022. As a result, the Company performed an impairment analysis with regard to its goodwill and indefinite-lived intangible assets as of September 30, 2022. The goodwill impairment test concluded that the fair value of the Company's reporting units (Spark and Zoosk) exceeded their carrying amounts, and no goodwill impairment was recognized.

During the fourth quarter of 2022, the Company further lowered its financial expectations due to the continued difficulty in the economic environment explained above. Interest rates and cost of capital continued to rise in the fourth quarter. This constituted a triggering event, and as a result the Company performed an impairment analysis as of December 31, 2022 with regard to its goodwill and indefinite-lived intangible assets. The goodwill impairment test concluded that the fair value of the Spark reporting unit exceeded the carrying amounts, and no goodwill impairment was recognized. Goodwill assigned to the Spark reporting unit was $24.4 million. For the Zoosk reporting unit, the fair value did not exceed the carrying value, and the Company recorded a goodwill impairment charge of $15.4 million. Impairment charges were recognized for indefinite-lived intangible assets related to the Zoosk trade name are further explained in the section below.

During the second quarter of 2021, the Company lowered its financial expectations for the remainder of 2021 due to increased cyberattacks, delays in product initiatives and a more uncertain COVID-19 outlook. These factors constituted an interim triggering event as of the end of the Company's second quarter of 2021. The Company performed an impairment analysis with regard to its indefinite-lived intangible assets and goodwill, and recognized $21.8 million goodwill impairment charges for its Zoosk reporting unit.

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


(in thousands)
Balance as of January 1, 2022	$	134,744

Impairment charges	(15,433)
Impact of currency translation	(35)
Balance as of December 31, 2022	$	119,276

Balance as of January 1, 2021	$	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 as of December 31, 2022 and 2021 was $99.9 million and $84.5 million, respectively.

Intangible Assets

Intangible assets consists of the following as of December 31, 2022 and 2021:


		December 31, 2022
(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	$	(51,151)	$	—	$	—	$	12,649
Long-lived intangible assets:
Brands and trademarks	3.8	86		—		(58)		(2)		26
Acquired technology	0.5	5,910		—		(5,286)		—		624
Customer relationships	0.0	10,780		—		(10,780)		—		—
Licenses and domains	0.0	205		—		(204)		(1)		—
Other	0.0	470		—		(470)		—		—
Total intangible assets	4.3	$	81,251	$	(51,151)	$	(16,798)	$	(3)	$	13,299


		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

During the third and fourth quarter of 2022, the Company recognized impairment charges of $11.8 million and $3.0 million, respectively, related to the Zoosk indefinite-lived trade name that resulted from the slower increase in projected revenue and higher weighted average cost of capital. 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 3% and weighted average cost of capital of 23%-27.5% to estimate the fair value of Zoosk trade name.

For the interim assessment for the quarter ended June 30, 2021, the Company recognized a Zoosk trade name impairment charge of $10.3 million. The royalty rate and weighted average cost of capital used to estimate the fair value of Zoosk trade name was 4% and 14.5%, respectively. As part of the Company's annual assessment during the quarter ended December 31, 2021, the Company recognized an additional impairment charge of $15.1 million for Zoosk using a royalty rate of 4% and a discount rate of 21%.

Amortization expense for the years ended December 31, 2022 and 2021 was $1.3 million and $4.2 million, respectively.

At December 31, 2022, amortization of long-lived intangible assets for each of the next five years is estimated to be as follows:


(in thousands)	Amortization Expense
2023	$	632
2024	8
2025	8
2026	2
2027	—