TUCOWS INC /PA/ Goodwill & Intangibles Disclosure

4. Goodwill and Other Intangible Assets:

 

Goodwill

 

Goodwill represents the excess of the purchase price over the fair value of tangible and identifiable intangible assets acquired and liabilities assumed in our acquisitions.

 

Goodwill consists of the following (Dollar amounts in thousands of U.S. dollars):

 

		Ting				Wavelo				Tucows Domains				Total
Balances, December 31, 2023		$	22,724			$	-			$	107,686			$	130,410
Balances, December 31, 2024		$	22,724			$	-			$	107,686			$	130,410

 

The Company's Goodwill balance is $130.4 million as of  December 31, 2024 and  December 31, 2023. The Company's goodwill relates 83% ($107.7 million) to its Tucows Domains operating segment and 17% ($22.7 million) to its Ting operating segment.

 

Goodwill is not amortized, but is subject to an annual impairment test. The Company performed a qualitative impairment analysis as outlined in “Note 2(h) – Significant Accounting Policies” and determined it was not more likely than not that Goodwill was impaired for Fiscal 2024 and Fiscal 2023.

 

Other Intangible Assets

 

Intangible assets consist of acquired brand, technology, customer relationships, surname domain names, direct navigation domain names and network rights. The Company considers its intangible assets consisting of surname domain names and direct navigation domain names as indefinite life intangible assets. The Company has the exclusive right to these domain names as long as the annual renewal fees are paid to the applicable registry. Renewals occur routinely and at a nominal cost. The indefinite life intangible assets are not amortized, but are subject to an annual impairment assessment, during which the Company evaluates whether changes in circumstances indicate potential impairment. Additionally, throughout the year, management assessed specific domain names acquired through the acquisition of Mailbank.com Inc. in June 2006, that were due for renewal, and decided to renew. During the years ended December 31, 2024,  December 31, 2023, and  December 31, 2022, no impairment of indefinite life intangible assets was recorded. 

 

Finite-life intangible assets, comprising brand, technology, customer relationships and network rights are being amortized on a straight-line basis over periods of two to fifteen years. The weighted average amortization period for all finite-life intangible assets is 5.4 years.

 

Throughout 2024, the Company purchased $0.6 million in customer relationship assets through hosting agreements whereby customer assets and domain names were obtained. These customer assets are being amortized over seven years.

 

Acquired intangible assets consist of the following (Dollar amounts in thousands of U.S. dollars):

 

		December 31, 2024												December 31, 2023
		Gross Carrying Value				Accumulated Amortization				Total Net Book Value				Gross Carrying Value				Accumulated Amortization				Total Net Book Value
Brand		$	15,764				15,340			$	424			$	15,764				14,894			$	870
Customer relationships			66,467				56,719				9,748				65,892				52,589				13,303
Technology			10,157				8,631				1,526				10,157				8,009				2,148
Network Rights			1,515				730				785				1,515				631				884
Surname domain names			11,145				-				11,145				11,151				-				11,151
Direct navigation domain names			1,127				-				1,127				1,128				-				1,128
		$	106,175			$	81,420			$	24,755			$	105,607			$	76,123			$	29,484

 

		Surname domain names				Direct navigation domain names				Brand				Customer relationships				Technology				Network rights				Total
Amortization period		indefinite life				indefinite life				7 years				3 - 7 years				2 -7 years				15 years
Balances, December 31, 2022		$	11,155			$	1,129			$	2,940			$	20,813			$	2,770			$	983			$	39,790
Acquisition of customer relationship			-				-				-				528				-				-				528
Additions to/(disposals from) domain portfolio, net			(4	)			(1	)			-				-				-				-				(5	)
Amortization expense			-				-				(2,070	)			(8,038	)			(622	)			(99	)			(10,829	)
Balances December 31, 2023		$	11,151			$	1,128			$	870			$	13,303			$	2,148			$	884			$	29,484
Acquisition of customer relationship			-				-				-				575				-				-				575
Additions to/(disposals from) domain portfolio, net			(6	)			(1	)			-				-				-				-				(7	)
Amortization expense			-				-				(446	)			(4,130	)			(622	)			(99	)			(5,297	)
Balances December 31, 2024		$	11,145			$	1,127			$	424			$	9,748			$	1,526			$	785			$	24,755

 

 

The following table shows the estimated amortization expense for each of the next 5 years and thereafter, assuming no further additions to acquired intangible assets are made (Dollar amounts in thousands of U.S. dollars): 

 

		Year ending
		December 31,
2025		$	5,691
2026			2,682
2027			1,634
2028			1,435
2028			232
Thereafter			809
Total		$	12,483