Business Acquisitions

12 Months Ended

Dec. 31, 2019

Acquisition-related costs were $1.9 million, $1.0 million and $5.5 million during the years ended December 31, 2019, 2018 and 2017, respectively, and are included in general and administrative expense in the consolidated statements of income. Pro forma results of operations for the acquisitions completed in the years ended December 31, 2019 and 2017 have not been presented because the effects of the acquisitions, individually and in the aggregate, are not material to the Company's consolidated financial results. Revenue and earnings attributable to acquired operations since the dates of their acquisitions are included in the Company's consolidated statements of income and not presented separately because they are not material.

2019 Acquisitions

ChameleonX

On November 10, 2019, the Company acquired ChameleonX, Ltd. ("ChameleonX"), an Israel-based company with a solution designed to detect when a website contains or links to malware that causes end user data to be compromised, for $11.9 million in cash. The acquisition is expected to further strengthen the Company's security solutions portfolio. The Company allocated $7.1 million of the cost of the acquisition to goodwill and $6.1 million to a technology-related identifiable intangible asset with an average useful life of 7.1 years. The value of the goodwill is primarily attributable to synergies related to the integration of ChameleonX technology onto the Company's platform as well as a trained technical workforce. The total amount of goodwill related to the acquisition of ChameleonX expected to be deductible for tax purposes is $7.1 million.

Exceda

On November 1, 2019, in a series of stock and asset purchase transactions, the Company acquired the operations of a group of companies known as Exceda, a vendor of content delivery network ("CDN") and web security services and, collectively, the Company's largest channel partner in Latin America, for $32.7 million in cash. The acquisition is expected to enable the Company to expand its Latin America business more quickly, better enable existing and new partners and improve experiences for more customers. The Company allocated $14.7 million of the cost of the acquisition to goodwill and $16.5 million to identifiable intangible assets, primarily customer-related. The total weighted average useful life of the intangible assets acquired from Exceda is 8.1 years. The value of the goodwill is primarily attributable to synergies related to the scale of the combined teams as well as Exceda's trained technical workforce. The total amount of goodwill related to the acquisition of Exceda expected to be deductible for tax purposes is $14.7 million.

The Company acquired various obligations as part of the acquisition for which it is indemnified. The total obligations recorded, with corresponding indemnification asset, totaled $20.0 million.

Janrain

In January 2019, the Company acquired Janrain, Inc. ("Janrain"), a provider of customer identity and access management solutions, for $123.6 million in cash. The Company is incorporating the Janrain technology into its Intelligent Edge Platform. The Company finalized its allocation of purchase price in the fourth quarter of 2019. Included in the final allocation are measurement period adjustments, primarily related deferred tax assets. The adjustment increased the deferred tax asset and reduced goodwill by $7.5 million. The following table presents the final allocation of the purchase price for Janrain (in thousands):



Total purchase consideration	$	123,632

Allocation of the purchase consideration:
Cash	$	2,223
Accounts receivable	7,318
Prepaid expenses and other current assets	838
Identifiable intangible assets	26,930
Goodwill	92,188
Deferred tax asset	12,622
Other assets	87
Total assets acquired	142,206
Accounts payable	(1,642		)
Accrued liabilities	(2,596		)
Deferred revenue	(14,336		)
Total liabilities assumed	(18,574		)
Net assets acquired	$	123,632

The value of the goodwill can be attributed to a number of business factors, including a trained technical and sales workforce and cost synergies expected to be realized. The total amount of goodwill related to the acquisition of Janrain expected to be deductible for tax purposes is $46.8 million.

The following were the identified intangible assets acquired and their respective weighted average useful lives (in thousands, except years):



	Gross Carrying Amount		Weighted Average Useful Life
Completed technologies	$	9,000	7.9
Customer-related intangible assets	17,700		13.9
Trademarks	200		1.9
Non-compete agreements	30		1.9
Total	$	26,930

The total weighted average amortization period for the intangible assets acquired from Janrain is 11.8 years. The intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized.

2017 Acquisitions

Nominum

On November 27, 2017, the Company acquired Nominum, Inc. ("Nominum"), a provider of domain name system ("DNS") and enterprise security solutions, for $180.3 million in cash. The acquisition added complementary capabilities to the Company's portfolio of security offerings while expanding the Company’s distribution to carriers that serve enterprise customers. The following table presents the final allocation of the purchase price for Nominum (in thousands):



Total purchase consideration	$	180,327

Allocation of the purchase consideration:
Cash	$	8,455
Accounts receivable	9,845
Prepaid expenses and other current assets	1,082
Identifiable intangible assets	33,200
Goodwill	129,876
Fixed assets	1,570
Deferred tax assets	16,080
Other assets	19
Total assets acquired	200,127
Accounts payable	(1,501		)
Accrued liabilities	(3,471		)
Deferred revenue	(14,828		)
Total liabilities assumed	(19,800		)
Net assets acquired	$	180,327

The value of the goodwill can be attributed to a number of business factors, including a trained technical and sales workforce and cost synergies expected to be realized. The total amount of goodwill related to the acquisition of Nominum expected to be deductible for tax purposes is $54.1 million.

The following were the identified intangible assets acquired and their respective weighted average useful lives (in thousands, except years):



	Gross Carrying Amount		Weighted Average Useful Life
Completed technologies	$	7,200	2.2
Customer-related intangible assets	24,700		6.5
Trademarks	1,100		3.7
Non-compete agreements	200		1.5
Total	$	33,200

The total weighted average amortization period for the intangible assets acquired from Nominum is 5.4 years. The intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized.

Soasta

On April 6, 2017, the Company acquired Soasta, Inc. ("Soasta"), a leader in digital performance management, for $199.3 million in cash. The acquisition has allowed the Company to offer solutions designed to provide greater visibility into the business impact of customers' website and application optimization strategies. The following table presents the final allocation of the purchase price for Soasta (in thousands):



Total purchase consideration	$	199,280

Allocation of the purchase consideration:
Cash	$	1,935
Accounts receivable	4,109
Prepaid expenses and other current assets	4,384
Identifiable intangible assets	49,900
Goodwill	122,794
Deferred tax assets	31,206
Total assets acquired	214,328
Accounts payable	(1,119		)
Accrued liabilities	(4,366		)
Deferred revenue	(9,563		)
Total liabilities assumed	(15,048		)
Net assets acquired	$	199,280

The value of the goodwill can be attributed to a number of business factors, including a trained technical and sales workforce and cost synergies expected to be realized. The total amount of goodwill related to the acquisition of Soasta expected to be deductible for tax purposes is $36.4 million.

The following were the identified intangible assets acquired and their respective weighted average useful lives (in thousands, except years):



	Gross Carrying Amount		Weighted Average Useful Life
Completed technologies	$	18,800	4.1
Customer-related intangible assets	28,200		4.6
Trademarks	2,400		4.9
Non-compete agreements	500		1.9
Total	$	49,900

The total weighted average amortization period for the intangible assets acquired from Soasta is 4.4 years. The intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized.