Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill represents the excess purchase price over the fair value of net assets acquired, or net liabilities assumed, in a business combination. In accordance with ASC Topic 350, Intangibles – Goodwill and Other, the Company performs an annual impairment review in the fourth quarter and more frequently if events or changes in circumstances indicate that goodwill might be impaired. There was no indication that goodwill became impaired for the three and six months ended June 30, 2024.

Other intangible assets include customer relationships, non-compete arrangements, trade names, customer backlog, and developed software, which are being amortized over the assets’ estimated useful lives using the straight-line method. Estimated useful lives range from less than one year to ten years. Amortization of customer relationships, non-compete arrangements, trade names, customer backlog, and developed software is considered an operating expense and is included in “Amortization” in the accompanying Unaudited Condensed Consolidated Statements of Operations. The Company periodically reviews the estimated useful lives of its identifiable intangible assets, taking into consideration any events or circumstances that might result in a lack of recoverability or revised useful life. There was no indication that other intangible assets became impaired for the three and six months ended June 30, 2024.

Goodwill

The changes in the carrying amount of goodwill for the six months ended June 30, 2024 are as follows (in millions):


Balance at December 31, 2023	$	581.4
Purchase price allocation for SMEDIX	32.5
Effect of foreign currency translation adjustments	(5.1)
Balance at June 30, 2024	$	608.8

Intangible Assets with Definite Lives

The following table presents a summary of the Company’s intangible assets that are subject to amortization (in millions):


	June 30, 2024 (unaudited)						December 31, 2023
	Gross Carrying Amounts		Accumulated Amortization		Net Carrying Amounts		Gross Carrying Amounts		Accumulated Amortization		Net Carrying Amounts
Customer relationships	$	114.2	$	(46.7)	$	67.5	$	116.1	$	(47.3)	$	68.8
Non-compete agreements	1.2		(0.7)		0.5		1.1		(0.6)		0.5
Customer backlog	1.7		(0.8)		0.9		—		—		—
Trade name	0.9		(0.8)		0.1		0.8		(0.8)		—
Developed software	9.1		(7.6)		1.5		8.5		(6.7)		1.8
Total	$	127.1	$	(56.6)	$	70.5	$	126.5	$	(55.4)	$	71.1

The estimated useful lives of identifiable intangible assets are as follows:


Customer relationships			5 - 10 years
Non-compete agreements			4 - 5 years
Customer backlog			1 year
Trade name			1 year
Developed software			1 - 7 years

Estimated annual amortization expense for the next five years ended December 31 and thereafter is as follows (in millions):


2024 remaining	$	9.0
2025	$	13.4
2026	$	10.9
2027	$	8.5
2028	$	7.4
Thereafter	$	21.3

PERFICIENT INC 10-Q