Business Combinations

Acquisition of The Email Laundry

On October 20, 2017, we acquired all outstanding shares of The Email Laundry, a privately held email security company, whose technology is expected to enhance our current email offerings. In connection with this acquisition, we paid cash consideration of $4.3 million and issued 259,425 shares of our common stock with an estimated fair value of $4.4 million, resulting in total purchase consideration of $8.7 million. The purchase price is subject to customary working capital and related adjustments. The purchase price was allocated to intangible assets of $2.7 million, goodwill of $6.4 million and tangible net liabilities of $0.4 million. The intangible assets are composed of technology and customer relationships, each with an estimated weighted average useful life of 3 years. The goodwill is primarily attributable to the know-how of the workforce and is not expected to be deductible for U.S. federal income tax purposes. The results of operations of The Email Laundry have been included in our consolidated statements of operations from the acquisition date. Pro forma financial information has not been presented for this acquisition as the impact to our consolidated financial statements was not material.

Acquisition of X15

On January 11, 2018, we acquired all outstanding shares of privately held X15, a data management company. We expect that the X15 technology will be incorporated into our platform and analytics capabilities going forward. In connection with this acquisition, we paid cash consideration of $5.3 million and issued 1,016,334 shares of our common stock with an estimated fair value of $15.4 million, resulting in total purchase consideration of $20.7 million. The purchase price was allocated to intangible assets of $6.1 million, goodwill of $15.2 million and tangible net liabilities of $0.6 million. The intangible asset relates to developed technology with an estimated weighted average useful life of 3 years. The goodwill is primarily attributable to the know-how of the workforce and is not expected to be deductible for U.S. federal income tax purposes. The results of operations of X15 have been included in our consolidated statements of operations from the acquisition date. Pro forma financial information has not been presented for this acquisition as the impact to our consolidated financial statements was not material.

Goodwill and Purchased Intangible Assets

Goodwill increased approximately $15.2 million for the nine months ended September 30, 2018 due to the acquisition of X15. There were no other changes in the carrying amount of goodwill.

Purchased intangible assets consisted of the following (in thousands):



	As of September 30, 2018			As of December 31, 2017
Developed technology	$	110,003		$	103,903
Content	158,700			158,700
Customer relationships	111,090			111,090
Contract backlog	12,500			12,500
Trade names	15,560			15,560
Non-competition agreements	1,400			1,400
Total intangible assets	409,253			403,153
Less: accumulated amortization	(253,670		)	(215,765		)
Total net intangible assets	$	155,583		$	187,388

Amortization expense of intangible assets during the three months ended September 30, 2018 and 2017 was $12.6 million and $14.8 million, respectively. Amortization expense of intangible assets during the nine months ended September 30, 2018 and 2017 was $37.9 million and $44.4 million, respectively.

The expected future annual amortization expense of intangible assets as of September 30, 2018 is presented below (in thousands):



Years Ending December 31,	Amount
2018 (remaining three months)	$	12,421
2019	48,441
2020	33,903
2021	29,337
2022	18,209
and thereafter	13,272
Total	$	155,583