Annual report pursuant to Section 13 and 15(d)

Goodwill and Identified Intangible Assets

v3.10.0.1
Goodwill and Identified Intangible Assets
12 Months Ended
Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Identified Intangible Assets
Goodwill and Identified Intangible Assets
Changes in the carrying amount of goodwill during the years ended December 31, 2018 and 2017, were as follows, in thousands:
Balance at January 1, 2017
 
$
259,938

Goodwill acquired
 
491,079

Measurement period and other adjustments
 
35

Balance at December 31, 2017
 
751,052

Goodwill acquired
 
304,162

Measurement period and other adjustments
 
(2,095
)
Balance at December 31, 2018
 
$
1,053,119


We completed our annual goodwill impairment test during the fourth quarter of the fiscal year ended December 31, 2018. Based on the results of the quantitative analysis, we concluded that there was no impairment of goodwill. In 2017 or 2016, we performed qualitative assessments which did not result in the impairment of goodwill.
Intangible assets consisted of the following at December 31, 2018 and 2017:
 
 
December 31, 2018
 
December 31, 2017
 
 
Carrying
Amount
 
Accumulated
Amortization
 
Net
 
Carrying
Amount
 
Accumulated
Amortization
 
Net
 
 
(in thousands)
Finite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
Developed technologies
 
$
207,310

 
$
(100,445
)
 
$
106,865

 
$
164,640

 
$
(76,577
)
 
$
88,063

Client relationships
 
264,228

 
(107,155
)
 
157,073

 
213,728

 
(78,390
)
 
135,338

Vendor relationships
 
5,650

 
(5,650
)
 

 
5,650

 
(5,650
)
 

Trade names
 
22,956

 
(10,682
)
 
12,274

 
17,556

 
(4,325
)
 
13,231

Non-compete agreements
 
4,173

 
(1,395
)
 
2,778

 
4,173

 
(605
)
 
3,568

Total finite-lived intangible assets
 
504,317

 
(225,327
)
 
278,990

 
405,747

 
(165,547
)
 
240,200

Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
Trade names
 
8,388

 

 
8,388

 
12,137

 

 
12,137

Total intangible assets
 
$
512,705

 
$
(225,327
)
 
$
287,378

 
$
417,884

 
$
(165,547
)
 
$
252,337


Amortization expense for finite-lived intangible assets totaled $59.8 million, $31.9 million, and $24.5 million during the years ended December 31, 2018, 2017, and 2016, respectively.
The following table sets forth the estimated amortization of intangible assets for the years ending December 31, in thousands:
2019
$
61,916

2020
52,679

2021
45,446

2022
35,686

2023
28,553


In the fourth quarter of 2018, we recorded an impairment charge of $2.7 million related to the indefinite-lived trade name of our 2010 acquisition of Level One, based on the excess of the carrying value over its estimated fair value. Fair value was estimated using standard valuation methodologies (principally the income and market approach) incorporating market participant considerations and management’s assumptions on revenue growth rates, royalty rates and discount rates. The key factor contributing to the impairment was a change in our long-term marketing strategy for this product offering, which included a shift away from the use of a separate Level One branding and towards a RealPage Contact Center branding. The remaining balance of $1.0 million was reclassified to finite-lived intangible assets as of December 31, 2018 and will be amortized over its estimated remaining useful life of five years. The method utilized to estimate the fair value incorporated significant unobservable inputs, and we concluded that the measurement should be classified within Level 3 of the fair value hierarchy.
In 2016, we sold certain assets associated with our senior living referral services and recorded an impairment of the associated trade name of $0.8 million in connection with the disposition.
These impairment charges are included in “Sales and marketing” in the accompanying Consolidated Statements of Operations.