Crexendo, Inc. Goodwill & Intangibles Disclosure
8. Intangible Assets and Goodwill
Acquired intangible assets subject to amortization consist of the following (in thousands):
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||||||||||||||||||
|
| Gross Carrying Amount |
|
| Accumulated Amortization |
|
| Net Carrying Amount |
|
| Gross Carrying Amount |
|
| Accumulated Amortization |
|
| Net Carrying Amount |
| ||||||
Customer relationships |
| $ | 26,073 |
|
| $ | (7,403 | ) |
| $ | 18,670 |
|
| $ | 26,073 |
|
| $ | (5,260 | ) |
| $ | 20,813 |
|
Developed technologies |
|
| 4,900 |
|
|
| (3,081 | ) |
|
| 1,819 |
|
|
| 4,900 |
|
|
| (2,269 | ) |
|
| 2,631 |
|
Trademark and trade names |
|
| 400 |
|
|
| (361 | ) |
|
| 39 |
|
|
| 400 |
|
|
| (288 | ) |
|
| 112 |
|
Total acquired intangible assets |
| $ | 31,373 |
|
| $ | (10,845 | ) |
| $ | 20,528 |
|
| $ | 31,373 |
|
| $ | (7,817 | ) |
| $ | 23,556 |
|
As of December 31, 2024, the weighted average remaining useful life for customer relationships was 12.4 years, developed technologies was 2.4 years, and trademarks and trade names was 0.4 years.
Amortization expense for customer relationships intangible assets is included in selling and marketing expenses and totaled $2,105 and $2,182 for the years ended December 31, 2024 and 2023, respectively. Amortization expense for developed technologies intangible assets is included in cost of software solutions revenue and totaled $812 and $860 for the years ended December 31, 2024 and 2023, respectively. Amortization expense for trademark and trade name intangible assets is included in general and administrative expenses and totaled $111 and $127 for the years ended December 31, 2024 and 2023, respectively.
As of December 31, 2024, annual amortization of definite lived intangible assets, based on existing intangible assets and current useful lives, is estimated to be the following (in thousands):
Year ending December 31, |
|
|
| |
2025 |
| $ | 2,770 |
|
2026 |
|
| 2,457 |
|
2027 |
|
| 2,202 |
|
2028 |
|
| 1,637 |
|
2029 and thereafter |
|
| 11,462 |
|
Total |
| $ | 20,528 |
|
The following table provides a summary of changes in the carrying amounts of goodwill (in thousands):
|
| Goodwill |
| |
Balance at January 1, 2023 |
| $ | 9,454 |
|
Additions |
|
| - |
|
Balance at December 31, 2023 |
|
| 9,454 |
|
Additions |
|
| - |
|
Balance at December 31, 2024 |
| $ | 9,454 |
|
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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.