Acquisitions, Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Acquisitions, Goodwill and Intangible Assets

Acquisitions, Goodwill and Intangible Assets

Business Combinations

In June 2024, we acquired Eureka Security, Inc. ("Eureka"), a provider of data security posture management ("DSPM") for cloud environments. Adding Eureka's DSPM capabilities to our solutions provides customers a view into their organization's cloud data security footprint, fight policy drift and misconfigurations that put data at risk, and enables customers to continuously improve their security posture over time. We acquired 100% of Eureka's equity through a share purchase agreement for total cash consideration of $29.2 million, net of $0.4 million cash acquired.

Cash consideration, net of cash acquired, was preliminarily allocated as follows:

(in thousands)	Eureka
Intangible assets	$	6,900
Goodwill	22,753
Other current liabilities, net	(449)
Total purchase price	$	29,204

We allocated $6.9 million to Eureka's proprietary technology with an estimated useful life of 5 years.

We are still finalizing the allocation of the purchase price for Eureka, which may change as additional information becomes available around working capital and income taxes.

The results of operations of Eureka are included in our consolidated statements of operations from the acquisition date and were not material. Pro forma results of operations are not presented as they are not material to the consolidated statement of operations.

In general and administrative expense, we recognized $0.4 million, $4.6 million, $1.3 million and $4.7 million of acquisition-related transaction costs in the three months ended September 30, 2024 and 2023, and the nine months ended September 30, 2024 and 2023, respectively.

Goodwill and Acquired Intangible Assets

The changes in the carrying amount of goodwill are as follows:

(in thousands)
Balance at December 31, 2023	$	518,539
Acquired goodwill	22,753
Balance at September 30, 2024	$	541,292

The excess purchase consideration over the fair value of acquired assets and liabilities is recorded as goodwill. The acquired goodwill reflects the synergies we expect from marketing and selling new capabilities from Eureka to our customers. Acquired goodwill is generally not tax deductible.

Acquired intangible assets subject to amortization are as follows:

	September 30, 2024						December 31, 2023
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Acquired technology	$	149,437	$	(49,963)	$	99,474	$	142,537	$	(35,520)	$	107,017
Trade name	490		(490)		—		490		(490)		—
	$	149,927	$	(50,453)	$	99,474	$	143,027	$	(36,010)	$	107,017

Amortization of acquired intangible assets was $5.0 million, $3.0 million, $14.4 million and $9.2 million in the three months ended September 30, 2024 and 2023, and the nine months ended September 30, 2024 and 2023, respectively. At September 30, 2024, our acquired intangible assets are expected to be amortized over an estimated remaining weighted average period of 5.5 years.

At September 30, 2024, estimated future amortization of acquired intangible assets is as follows:

(in thousands)
Year ending December 31,
2024(1)	$	5,014
2025	20,055
2026	19,870
2027	17,840
2028	14,797
Thereafter	21,898
Total	$	99,474

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(1)    Represents the three months ending December 31, 2024.