Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

The following table sets forth the Company’s acquired intangible assets by major asset class as of December 31, 2022 and 2021, respectively (in thousands, except for useful life data):

	December 31, 2022
	Weighted Average Remaining Useful Life (in Years)	Gross		Accumulated Amortization		Net Book Value
Purchased technology	7	$	13,529	$	(5,835)	$	7,694
Customer relationships	12	27,548		(4,490)		23,058
Customer contracts	1	7,000		(5,673)		1,327
Software license	7	5,419		(1,552)		3,867
Non-compete	0	283		(273)		10
Patents	5	600		(236)		364
Total		$	54,379	$	(18,059)	$	36,320

	December 31, 2021
	Weighted Average Remaining Useful Life (in Years)	Gross		Accumulated Amortization		Net Book Value
Purchased technology	8	$	13,529	$	(3,764)	$	9,765
Customer relationships	13	27,549		(2,405)		25,144
Customer contracts	2	7,000		(4,441)		2,559
Software license	9	5,419		(793)		4,626
Non-compete	1	283		(196)		87
Patents	5	600		(150)		450
Total		$	54,380	$	(11,749)	$	42,631

Intangible assets amortization expense was $6.3 million and $8.1 million for the years ended December 31, 2022 and 2021, respectively.

Future amortization expense related to intangible assets as of December 31, 2022 are as follows (in thousands):

Year Ending December 31,
2023	$	5,874
2024	5,635
2025	5,402
2026	5,007
2027 and thereafter	14,402
Total	$	36,320

During the first quarter of 2021, the Company received a customer contract termination notice related to a customer contract acquired in the acquisition of Circle’s operator business in February 2020, which was otherwise set to expire in the second quarter of 2024. The contract was terminated effective April 15, 2021; however, in accordance with its terms, Smith Micro continues to deliver wind-down services under the contract. The terms of the contract allow for a wind-down period of up to two years post termination and the Company continued services under this contract throughout 2022. The Company determined the customer contract should be accounted for under the contract modification guidance in Topic 606. As a result, the Company recognized deferred revenue of $0.6 million in 2021 which was being amortized over the customer contract term and amortized the remaining $0.3 million throughout 2022. Additionally, the Company reviewed its customer contract

intangible asset associated with this customer contract and determined that the carrying value was in excess of its fair value. Accordingly, the Company recorded a $1.5 million impairment charge within “amortization of intangible assets” in the consolidated statements of operations during the year ended December 31, 2021 and amortized the remaining $0.4 million in 2022 over the estimated remaining service period.

Smith Micro reviews the recoverability of the carrying value of the Company's single reporting unit goodwill at least annually or whenever events or circumstances indicate a potential impairment. The annual impairment testing date is December 31, 2022. Recoverability of goodwill is determined by comparing the estimated fair value of reporting units to the carrying value of the underlying net assets in the reporting units. If the estimated fair value of a reporting unit is determined to be less than the fair value of its net assets, goodwill is deemed impaired, and an impairment loss is recognized to the extent that the carrying value of goodwill exceeds the difference between the estimated fair value of the reporting unit and the fair value of its other assets and liabilities. Smith Micro determined that there was not any impairment of the Company’s goodwill at December 31, 2022 and 2021.