Acquisitions, Goodwill and Intangible Assets | Acquisitions, Goodwill and Intangible Assets Metafor Software On June 23, 2015, we acquired 100% of the voting equity interest of Metafor Software Inc. ("Metafor Software"), a privately-held British Columbia corporation, which develops technology that provides anomaly detection and behavioral analytics for IT operations. This acquisition has been accounted for as a business combination. The purchase price of $16.4 million , paid in cash, was preliminarily allocated as follows: $2.7 million to identifiable intangible assets, $0.5 million to net assets acquired and $0.1 million to net deferred tax assets, with the excess $13.1 million of the purchase price over the fair value of net tangible and intangible assets acquired recorded as goodwill, allocated to our one operating segment. Goodwill is primarily attributable to the value expected from the synergies of the combination, including accelerating our anomaly detection capabilities for our core IT operations and security use cases. This goodwill is not deductible for income tax purposes. The results of operations of Metafor Software, which are not material, have been included in our condensed consolidated financial statements from the date of purchase. Pro forma results of operations of Metafor Software have not been presented as we do not consider the results to have a material effect on any of the periods presented in our condensed consolidated statements of operations. We are still finalizing the allocation of the purchase price, which may be subject to change as additional information becomes available to us. The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands, except useful life): Fair Value Useful Life (months) Developed technology $ 2,300 48 Other acquired intangible assets 370 36 Total intangible assets acquired $ 2,670 Caspida On July 9, 2015, we acquired 100% of the voting equity interest of Caspida, Inc. ("Caspida"), a privately-held Delaware corporation, which develops technology that provides behavioral analytics to help detect, respond to and mitigate advanced security threats and insider security threats. This acquisition has been accounted for as a business combination. The purchase price of $128.4 million , paid in cash, was preliminarily allocated as follows: $45.8 million to identifiable intangible assets, $11.4 million to net deferred tax liability and $1.2 million to net assets acquired, with the excess $92.8 million of the purchase price over the fair value of net tangible and intangible assets acquired recorded as goodwill, allocated to our one operating segment. Goodwill is primarily attributable to the value expected from the synergies of the combination, including combined selling opportunities with our products as well as our ability to sell into the security market. This goodwill is not deductible for income tax purposes. The results of operations of Caspida, which are not material, have been included in our condensed consolidated financial statements from the date of purchase. We are still finalizing the allocation of the purchase price, which may be subject to change as additional information becomes available to us. Additionally, we recognized $1.7 million of acquisition-related costs as general and administrative expense on our condensed consolidated statements of operations. Per the terms of the merger agreement with Caspida, certain unvested shares of stock and unvested stock options held by Caspida employees were cancelled and exchanged for unvested restricted stock units and replacement stock options to purchase shares of our common stock under our 2012 Equity Incentive Plan. Additionally, certain shares of stock held by key employees of Caspida were cancelled and exchanged for unregistered restricted shares of our common stock subject to vesting. The fair value of $61.6 million of these issued awards, which are subject to the recipient's continued service with us and thus excluded from the purchase price, will be recognized ratably as stock-based compensation expense over the required service period. The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands, except useful life): Fair Value Useful Life (months) Developed technology $ 44,300 72 In-process research and development 1,300 Indefinite* Customer relationships 190 36 Total intangible assets acquired $ 45,790 ______________________ *The in-process research and development is considered an indefinite-lived intangible asset until the completion or abandonment of the associated research and development efforts. Unaudited Pro Forma Financial Information The following unaudited pro forma information presents the combined results of operations as if the acquisition of Caspida had been completed on February 1, 2014, the beginning of the comparable prior annual reporting period. The unaudited pro forma results include: (i) amortization associated with preliminary estimates for the acquired intangible assets; (ii) recognition of post-acquisition stock-based compensation; and (iii) the associated tax impact on these unaudited pro forma adjustments. The unaudited pro forma results do not reflect any cost saving synergies from operating efficiencies or the effect of the incremental costs incurred in integrating the two companies. Accordingly, these unaudited pro forma results are presented for informational purpose only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations (in thousands, except per share amounts): Three Months Ended July 31, Six Months 2015 2014 2015 2014 Revenues $ 148,326 $ 101,547 $ 273,991 $ 187,454 Net loss $ (71,916 ) $ (66,458 ) $ (149,562 ) $ (111,288 ) Basic and diluted net loss per share $ (0.57 ) $ (0.56 ) $ (1.19 ) $ (0.94 ) Goodwill Goodwill balances are presented below (in thousands): Carrying amount Balance as of January 31, 2015 $ 19,070 Goodwill acquired 105,916 Foreign currency translation adjustments (665 ) Balance as of July 31, 2015 $ 124,321 Intangible Assets Intangible assets subject to amortization obtained from acquisitions as of July 31, 2015 are as follows (in thousands, except useful life): Gross Fair Value Accumulated Amortization Net Book Value Weighted Average Remaining Useful Life (months) Developed technology $ 59,370 $ (6,215 ) $ 53,155 64 Customer relationships 1,810 (986 ) 824 19 Other acquired intangible assets 1,180 (617 ) 563 28 Total intangible assets subject to amortization $ 62,360 $ (7,818 ) $ 54,542 Additionally, we obtained $1.3 million of in-process research and development upon the acquisition of Caspida, which has an indefinite useful life. We will assess the carrying value and useful life of the asset once the associated research and development efforts are completed. Amortization expense from acquired intangible assets during the three and six months ended July 31, 2015 was $ 1.8 million and $2.9 million , respectively. The expected future amortization expense for acquired intangible assets as of July 31, 2015 is as follows (in thousands): Fiscal Period: Remaining six months of fiscal 2016 $ 6,261 Fiscal 2017 11,921 Fiscal 2018 10,272 Fiscal 2019 8,014 Fiscal 2020 7,615 Fiscal 2021 7,383 Thereafter 3,076 Total amortization expense $ 54,542 |