GOODWILL |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intangible Asset, Goodwill and Other [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GOODWILL |
NOTE 10—GOODWILL
Goodwill
During the three months ended September 30, 2026, the Company identified indicators of potential impairment for a reporting unit within the playGAMES reportable segment. As a result, the Company performed an interim quantitative goodwill impairment test for the reporting unit as of September 30, 2026.
To determine the fair value of the reporting unit, the Company utilized a weighted combination of the income approach and the market approach. Under the income approach, the Company estimated fair value using a discounted cash flow analysis, which required significant judgment with respect to forecasted revenue growth rates, operating margins, and a discount rate of approximately 20.0%. Under the market approach, the Company estimated fair value using relevant market multiples derived from publicly traded companies considered comparable to the reporting unit. The fair value measurement is classified as Level 3 within the fair value hierarchy as it is based primarily on unobservable inputs reflecting the Company's own assumptions about the factors that market participants would use in pricing the reporting unit.
Based on the results of the quantitative impairment test, the Company determined that the carrying value of the reporting unit exceeded its estimated fair value, and accordingly, the Company recorded a goodwill impairment charge of $9.2 million during the three and nine months ended September 30, 2026, which is reflected in “Goodwill impairment” in the Condensed Consolidated Statements of Operations.
The goodwill was acquired in connection with an asset acquisition and a portion is amortized over 15 years for income tax purposes pursuant to Section 197 of the Internal Revenue Code. The impairment charge resulted in a reduction of the associated deferred tax liability, and accordingly a deferred tax benefit of approximately $0.6 million was recognized during the three months ended September 30, 2026.
The following table provides the changes in the carrying amount of goodwill for the playGAMES reportable segment for the nine months ended September 30, 2026 and December 31, 2025:
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