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Goodwill and Other Intangible Assets, Net
 9 Months Ended
Sep. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets, Net Goodwill and Other Intangible Assets, Net
Goodwill
Changes in the carrying amount of goodwill by operating segment during the nine months ended September 30, 2024, consisted of the following (in thousands):
Array Legacy Operations
STI OperationsTotal
Beginning balance
$69,727 $365,864 $435,591 
Foreign currency translation— (22,718)(22,718)
Impairment charge
— (162,000)(162,000)
Ending balance (1)
$69,727 $181,146 $250,873 
(1) Goodwill attributable to Array Legacy Operations is net of cumulative impairments of $51.9 million.

During the three months ended September 30, 2024, the Company experienced a sustained decline in its stock price, which hit a 52-week low during the quarter, resulting in a decrease in market capitalization. In addition, the Company updated its long-term projections for the Company’s reporting units and further evaluated the execution risk associated with the Company’s projections. As a result, the Company identified indicators of impairment related to the Company’s reporting units. Management, with the assistance of a third-party valuation specialist, performed an interim quantitative goodwill impairment test of the Array Legacy Operations and STI Operations reporting unit as of September 30, 2024.

The fair value of the Array Legacy Operations and STI Operations reporting unit were determined using the income approach and then compared to the Guideline publicly traded companies (“GPC”) marketplace EBITDA multiples to corroborate the fair value of the reporting unit. As a result of these tests, the Company recorded an impairment of goodwill of $162.0 million related to STI Operations based on an estimated fair value of the STI Operations reporting unit of $455.9 million. Subsequent to recording the impairment of goodwill, the Company reconciled the overall market capitalization of the Company, within a reasonable range, to the sum of the estimated fair values of both of the Company’s reporting units. The estimated fair value of the Array Legacy Operations reporting unit was significantly higher than the carrying balance of the reporting unit.

The significant assumptions used in determining the fair value of the STI Operations reporting unit primarily relate to the revenue growth rate, the forecasted EBITDA margin, and the selected discount rate used in the discounted cash flow model under the income approach. Under the GPC method, the selection of EBITDA multiple to be used requires significant judgement. To the extent that the discount rate used in determining the present value of our cash flows increases, if we do not meet the cash flow projections for the reporting unit, or GPC multiples in the future decrease, additional impairment charges may be recorded in the future. In addition, a further decrease in the Company’s common stock share price and market capitalization could be an indication that there has been a further decrease in the fair value of the Company’s reporting units.
Long Lived Assets
As discussed above, there were indicators of impairment that required an interim impairment test for the Legacy Array and STI Operations reporting units. Management considered these events to be a triggering event requiring the long-lived assets associated with the STI Operations reporting unit be tested for impairment (which includes the amortizable intangible assets) as of September 30, 2024. Because the sum of future undiscounted cash flows for the underlying asset groups indicated that the carrying amount of the asset groups were recoverable, no impairment charge was recorded. The difference between the undiscounted cash flows of the Company’s reporting groups and carrying balance of its reporting groups was significant as of September 30, 2024.

As of September 30, 2024, no events or circumstances were noted that would indicate the carrying amount of any of Legacy Array’s asset groups may not be recoverable.

Other Intangible Assets, Net
Other intangible assets consisted of the following (in thousands, except useful lives):
Estimated Useful Lives (Years)September 30, 2024December 31, 2023
Amortizable:
Developed technology14$203,800 $203,800 
Computer software31,245 5,267 
Customer relationships10320,489 336,134 
Backlog150,605 54,438 
Trade name2026,000 27,061 
Total amortizable intangibles602,139 626,700 
Accumulated amortization:
Developed technology119,822 108,905 
Computer software522 1,274 
Customer relationships136,354 115,444 
Backlog50,605 54,322 
Trade name3,537 2,666 
Total accumulated amortization310,840 282,611 
Total amortizable intangibles, net291,299 344,089 
Non-amortizable:
Trade name10,300 10,300 
Total other intangible assets, net$301,599 $354,389 

Amortization expense related to intangible assets was $11.9 million and $12.8 million for the three months ended September 30, 2024 and 2023, respectively, of which $3.6 million was included in amortization of developed technology, a component of cost of revenue, in both periods and $8.3 million and $9.2 million, respectively, was included in depreciation and amortization, on the accompanying condensed consolidated statements of operations.
Amortization expense related to intangible assets was $36.6 million and $39.3 million for the nine months ended September 30, 2024 and 2023, respectively, of which $10.9 million was included in amortization of developed technology, a component of cost of revenue, in both periods and $25.7 million and $28.4 million, respectively, was included in depreciation and amortization, on the accompanying condensed consolidated statements of operations.

Estimated future amortization expense of intangible assets as of September 30, 2024, is as follows (in thousands):
Amount
Remainder of 2024$11,987 
202547,946 
202643,635 
202739,041 
202839,041 
Thereafter109,649 
$291,299