INNODATA INC Goodwill & Intangibles Disclosure
4. Goodwill and Intangible Assets
The changes in the carrying amount of goodwill for the year ended December 31, 2025 were as follows (in thousands):
Amount | |||
Balance - January 1, 2025 | | $ | 1,998 |
Foreign currency translation adjustment |
| 81 | |
Balance - December 31, 2025 | $ | 2,079 | |
As of September 30, 2025, the Company performed its annual goodwill impairment analysis for the Agility segment. It involved a quantitative goodwill impairment test and estimated the fair value based on a combination of the income approach (estimates of future discounted cash flows) and the market approach (market multiples for similar companies) using unobservable inputs (Level 3). The income approach uses a discounted cash flow (“DCF”) method that utilizes the present value of cash flows to estimate the segment’s fair value. The future cash flows of the segment were projected based on the Company’s estimates of future revenues, operating income, and other factors such as working capital and capital expenditures. As part of the DCF analysis, the Company projected revenue and operating profits and assumed long-term revenue growth rates in the terminal year. The market approach utilizes multiples of revenues and earnings before interest expense, taxes, depreciation, and amortization (“EBITDA”) to estimate the segment’s fair value. The market multiples used for the segment were based on a group of comparable companies’ market multiples applied to the Company’s revenue. The Company concluded that there is no impairment of goodwill.
The fair value measurement of goodwill for the Agility segment was classified within Level 3 of the fair value hierarchy because the Company used the income approach, which utilizes significant inputs that are unobservable in the market and the market multiple approach using comparable entities to further validate the carrying values. The Company believes it made reasonable estimates and assumptions to calculate the fair value of the reporting unit as of the impairment test measurement date. The carrying value of goodwill was $2.1 million and $2.0 million as of December 31, 2025, and 2024, respectively.
Intangibles
Information regarding the Company acquired intangible assets and capitalized developed software was as follows (in thousands):
December 31, 2025 | ||||||||||||
| | Foreign Currency | | |||||||||
Gross | Accumulated | Translation | Net | |||||||||
| Carrying Value | | Amortization | | Adjustment | | Carrying Value | |||||
Acquired Intangible Assets | | | | | ||||||||
Developed technology | $ | 2,881 | $ | (2,834) | $ | 3 | $ | 50 | ||||
Customer relationships |
| 1,965 |
| (1,874) |
| 9 |
| 100 | ||||
Trademarks and tradenames |
| 840 |
| (835) |
| 1 |
| 6 | ||||
Patents |
| 40 |
| (40) |
| - |
| - | ||||
Media Contact Database |
| 3,528 |
| (3,359) |
| 15 |
| 184 | ||||
Total Acquired Intangible Assets | $ | 9,254 | $ | (8,942) | $ | 28 | $ | 340 | ||||
Capitalized Developed Software |
|
|
|
| ||||||||
Capitalized Developed Software | $ | 23,137 | $ | (13,933) | $ | 254 | $ | 9,458 | ||||
Capitalized Developed Software - in Progress |
| 4,180 |
| - |
| 5 |
| 4,185 | ||||
Total Capitalized Developed Software | $ | 27,317 | $ | (13,933) | $ | 259 | $ | 13,643 | ||||
Total | $ | 36,571 | $ | (22,875) | $ | 287 | $ | 13,983 | ||||
December 31, 2024 | ||||||||||||
Foreign Currency | ||||||||||||
Gross | Accumulated | Translation | Net | |||||||||
| Carrying Value | | Amortization | | Adjustment | | Carrying Value | |||||
Acquired Intangible Assets | | | | | ||||||||
Developed technology | $ | 3,060 | $ | (2,911) | $ | (3) | $ | 146 | ||||
Customer relationships |
| 2,144 |
| (1,856) |
| (29) |
| 259 | ||||
Trademarks and tradenames |
| 862 |
| (826) |
| - |
| 36 | ||||
Patents |
| 44 |
| (44) |
| - |
| - | ||||
Media Contact Database |
| 3,546 |
| (3,016) |
| (1) |
| 529 | ||||
Total Acquired Intangible Assets | $ | 9,656 | $ | (8,653) | $ | (33) | $ | 970 | ||||
Capitalized Developed Software |
| |
| |
| |
| | ||||
Capitalized Developed Software | $ | 19,811 | $ | (10,507) | $ | (463) | $ | 8,841 | ||||
Capitalized Developed Software - in Progress |
| 3,552 |
| - |
| (10) |
| 3,542 | ||||
Total Capitalized Developed Software | $ | 23,363 | $ | (10,507) | $ | (473) | $ | 12,383 | ||||
Total | $ | 33,019 | $ | (19,160) | $ | (506) | $ | 13,353 | ||||
Amortization expense relating to acquired intangible assets was approximately $0.7 million and $0.8 million for the years ended December 31, 2025 and 2024, respectively.
Amortization expense relating to capitalized developed software was approximately $4.0 million and $3.5 million for the years ended December 31, 2025 and 2024, respectively.
Estimated annual amortization expense for intangible assets subsequent to December 31, 2025 is as follows (in thousands):
Year | | Amortization | |
2026 | $ | 5,821 | |
2027 |
| 4,323 | |
2028 | 2,994 | ||
2029 |
| 516 | |
2030 |
| 327 | |
Thereafter |
| 2 | |
$ | 13,983 | ||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 24, 2025 | |
| 2023 | Mar 4, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Mar 24, 2022 | |
| 2020 | Mar 15, 2021 | |
| 2019 | Mar 16, 2020 | |
| 2018 | Mar 26, 2019 | |
| 2017 | Mar 22, 2018 | |
| 2016 | Mar 15, 2017 | |
| 2015 | Mar 14, 2016 | |
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.