Intangible Assets and Goodwill

6 Months Ended

Jun. 30, 2023

Intangible Assets and Goodwill

Intangible Assets and Goodwill

6. Intangible Assets and Goodwill

Intangible Assets

Intangible assets are stated at cost or acquisition-date fair value less accumulated amortization and impairment. The following table summarizes intangible assets as of June 30, 2023.

	Weighted			Accumulated
	Average	Intangible		Amortization		Intangible
	Useful Life	Assets,		And		Assets,
	(in years)	gross		Impairment		Net
Customer relationships	9.0	$	69,505	$	(19,494)	$	50,011
Acquired technology	5.0		36,041		(19,175)		16,866
Trademarks and tradenames	10.0		23,443		(5,609)		17,834
Non-compete agreements	3.0		616		(431)		185
Value of business acquired	1.0		400		(400)		—
Renewal rights	6.0		9,734		(2,764)		6,970
Insurance licenses	Indefinite		4,960		—		4,960
Total intangible assets		$	144,699	$	(47,873)	$	96,826

The following table summarizes intangible assets as of December 31, 2022.

	Weighted
	Average	Intangible				Intangible
	Useful Life	Assets,		Accumulated		Assets,
	(in years)	gross		Amortization		Net
Customer relationships	9.0	$	69,730	$	(15,079)	$	54,651
Acquired technology	5.0		37,932		(16,468)		21,464
Trademarks and tradenames	10.0		25,071		(5,724)		19,347
Non-compete agreements	3.0		619		(407)		212
Value of business acquired	1.0		400		(400)		—
Renewal rights	6.0		9,734		(2,113)		7,621
Insurance licenses	Indefinite		4,960		—		4,960
Total intangible assets		$	148,446	$	(40,191)	$	108,255

The aggregate amortization expense related to intangibles was $4.9 million and $5.4 million for the three months ended June 30, 2023 and 2022, respectively, and $9.8 million and $10.9 million for the six months ended June 30, 2023 and 2022, respectively.

During the six months ended June 30, 2023, we recorded impairment charges of $2.0 million, primarily related to acquired technology, trademarks and tradenames, and customer relationships for an asset group within the Vertical Software segment. Impairment charges are included in impairment loss on intangible assets and goodwill in the unaudited condensed consolidated statements of operations.

Goodwill

The following table summarizes the changes in the carrying amount of goodwill for the six months ended June 30, 2023.

	Goodwill
Balance as of December 31, 2022, net of accumulated impairment of $43.8 million	$	244,697
Acquisition		2,421
Impairment loss		(55,211)
Balance as of June 30, 2023, net of accumulated impairment of $99.0 million	$	191,907

During the first and second quarters of 2023, management identified various qualitative factors that collectively indicated triggering events, including a sustained decrease in stock price, increased costs due to inflationary pressures, hardening of the reinsurance markets, volatile weather, and a deterioration of the macroeconomic environment in the housing and real estate and insurance industries. We performed a valuation of the Vertical Software and Insurance reporting units using a combination of market and income approaches based on peer performance and discounted cash flow or dividend discount model methodologies. The goodwill impairment analysis required significant judgments to calculate the fair value of the reporting units, including internal forecasts and determination of weighted average cost of capital. Management considers historical experience and all available information at the time the fair values are estimated. Assumptions are subject to a high degree of judgment and complexity.

The results of the quantitative impairment assessment as of March 31, 2023, indicated that the fair value of our Vertical Software reporting unit exceeded its carrying value by less than 5%, and the fair value of our Insurance reporting unit exceeded its carrying value by less than 10%.

The results of the quantitative impairment assessment as of June 30, 2023, indicated that the carrying value of the Insurance reporting unit exceeded its estimated fair value. As such, we determined that the goodwill allocated to the

Insurance reporting unit was impaired as of June 30, 2023. Impairment charges are included in impairment loss on intangible assets and goodwill in the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2023.

The results of the quantitative impairment assessment as of June 30, 2023, indicated that the fair value of our Vertical Software reporting unit exceeded its carrying value by less than 10%. As a result, our remaining goodwill balance is at risk of future impairment. We monitor our reporting units at risk of impairment for interim impairment indicators and believe that the estimates and assumptions used in the calculations are reasonable as of June 30, 2023. We also reconcile the fair value of our reporting units to our market capitalization. Should the fair value of any of our reporting units fall below its carrying amount because of reduced operating performance, market declines including a deterioration of the macroeconomic environment in the housing and real estate or insurance industries, changes in the discount rate, or other adverse conditions, goodwill impairment charges may be necessary in future periods.