Blend Labs, Inc.BLND
Blend Labs, Inc. Goodwill & Intangibles Disclosure
Goodwill and Intangible Assets
In connection with the interim impairment reviews performed during the year ended December 31, 2022, the Company determined that the reporting unit for purposes of the impairment assessments for goodwill is the Title365 business, and the asset group is the reporting unit for the purposes of the impairment assessment for long-lived assets under ASC 360-10. At the time of the assessments, the Company’s reporting units were the same as its operating and reportable segments, Blend Platform and Title365. The Company performed the impairment assessment for Title365 in the following order: (1) indefinite-lived intangible assets, (2) long-lived assets held and used, and (3) goodwill.
Title365 indefinite-lived intangible assets are comprised of licenses. The Company determined that the fair value of licenses has not declined below the carrying amount and recognized no impairment on the indefinite-lived intangible assets.
Title365 long-lived assets in the asset group are primarily comprised of property and equipment, operating lease right-of-use assets, and customer relationship intangible assets. The Company compared the carrying value of the asset group to separately identifiable estimated undiscounted cash flows over the remaining useful life of the asset group, and concluded that the asset group was impaired due to the carrying value exceeding the estimated undiscounted cash flows.
The Company then determined the fair value of the asset group as of each impairment testing date utilizing an income approach derived from a discounted cash flow methodology. Under the accounting guidance in ASC 360, the excess of the carrying value over the fair value is recognized as an impairment loss and allocated to assets for which the carrying value exceeds the respective asset’s fair value. Certain assets, such as property and equipment and operating lease right-of-use assets, were not allocated any impairment as the values of such assets approximated their respective carrying amounts. For customer relationships intangible asset, the fair value was determined using the discounted cash flow method. The significant assumptions used in the valuation of both the asset group and the customer relationship intangible asset included the estimated annual net cash flows expected to be generated from the Title365 customer portfolio, respectively, including revenue, long-term growth rates, EBITDA margins, and the discount rate.
Based on the results of the impairment analyses, the Company recorded an impairment charge of $162.5 million for the year ended December 31, 2022 to write down the value of the customer relationships to its estimated fair value, which represented a full write off of the carrying amount. These charges are presented within impairment of intangible assets and goodwill in the consolidated statements of operations and comprehensive income (loss).
In evaluating goodwill for impairment, the Company compared the fair value of the Title365 reporting unit to its associated carrying value after the write down of the customer relationship intangible asset to its estimated fair value. The Company also estimated the fair value of the Blend Platform reporting unit and reconciled the aggregate fair values of its reporting units to the Company’s market capitalization adjusted for an estimated control premium.
Based on the results of the impairment analyses, in 2022 the Company recorded an impairment charge of $287.2 million for the year ended December 31, 2022 against the carrying value of goodwill, which represented a full write off of the carrying
amount. These charges are presented within impairment of intangible assets and goodwill in the consolidated statements of operations and comprehensive income (loss) and are not deductible for tax purposes.
There was no impairment of intangible assets for the year ended December 31, 2023.
Intangible Assets
Intangible assets consisted of the following:
| December 31, 2023 | |||||||||||||||||||||||
| Weighted Average Remaining Amortization | Gross Amount | Accumulated Amortization | Net Book Value | ||||||||||||||||||||
| (In years) | (In thousands) | ||||||||||||||||||||||
| Intangible assets subject to amortization: | |||||||||||||||||||||||
| Domain name | 7.7 | $ | 210 | $ | (102) | $ | 108 | ||||||||||||||||
| Indefinite-lived intangible assets: | |||||||||||||||||||||||
| Acquired licenses | 2,000 | — | 2,000 | ||||||||||||||||||||
| Total intangible assets, net | $ | 2,210 | $ | (102) | $ | 2,108 | |||||||||||||||||
| December 31, 2022 | |||||||||||||||||||||||||||||
| Weighted Average Remaining Amortization | Gross Amount | Accumulated Amortization | Net Book Value | ||||||||||||||||||||||||||
| (In years) | (In thousands) | ||||||||||||||||||||||||||||
| Intangible assets subject to amortization: | |||||||||||||||||||||||||||||
| Acquired customer relationships | — | $ | 179,000 | $ | (16,548) | $ | (162,452) | $ | — | ||||||||||||||||||||
| Internally developed software | — | 11,391 | (11,391) | — | — | ||||||||||||||||||||||||
| Domain name | 8.6 | 210 | (83) | — | 127 | ||||||||||||||||||||||||
| Total finite-lived intangible assets, net | 8.6 | 190,601 | (28,022) | (162,452) | 127 | ||||||||||||||||||||||||
| Indefinite-lived intangible assets: | |||||||||||||||||||||||||||||
| Acquired licenses | 2,000 | — | — | 2,000 | |||||||||||||||||||||||||
| Total intangible assets, net | $ | 192,601 | $ | (28,022) | $ | (162,452) | $ | 2,127 | |||||||||||||||||||||
Amortization of intangible assets for the year ended December 31, 2023 was immaterial. Amortization of intangible assets for the years ended December 31, 2022 and 2021 was $8.4 million and $9.2 million respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2023 | Mar 14, 2024 | Showing above |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 31, 2022 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.