Quarterly report pursuant to Section 13 or 15(d)

Business Combinations

v3.22.2
Business Combinations
6 Months Ended
Jun. 30, 2022
Business Combination and Asset Acquisition [Abstract]  
Business Combinations Business Combinations
On April 1, 2022, we acquired, for $139,671 in cash, all of the equity interests of Bay Equity LLC (“Bay Equity”), and Bay Equity became one of our wholly owned subsidiaries. We acquired Bay Equity to expand our mortgage business.

The results of operations and the fair values of the assets acquired and liabilities assumed have been included in our consolidated financial statements since the date of acquisition. The revenue from Bay Equity is reported in our mortgage segment in Note 3. The goodwill recognized in connection with our acquisition of Bay Equity is primarily attributable to the anticipated synergies from future growth of the combined business and is not expected to be deductible for tax purposes. We assigned the recognized goodwill of $51,967 to the mortgage segment.

The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as a result of the Bay Equity acquisition and is subject to revision as more detailed analyses are completed and additional information about the fair value of assets acquired and liabilities assumed becomes available:

Cash and cash equivalents $ 39,963 
Restricted cash 2,367 
Accounts receivable 9,697 
Prepaid expenses 1,222 
Other current assets 19,262 
Property and equipment, net 897 
Operating lease right-of-use assets 4,995 
Loans held for sale 213,891 
Mortgage servicing rights, at fair value 33,982 
Other assets, noncurrent 294 
Intangible assets 14,510 
Goodwill 51,967 
Total assets acquired 393,047 
Accounts payable 1,747 
Accrued and other liabilities 38,026 
Lease liabilities 2,848 
Lease liabilities and deposits, noncurrent 2,147 
Warehouse credit facilities 208,608 
Total liabilities assumed 253,376 
Total purchase consideration $ 139,671 
Acquisition-related costs consisted of external fees for advisory, legal, and other professional services and totaled approximately $1,507 and $2,424 for the three and six months ended June 30, 2022, respectively. These costs were expensed as incurred and recorded in general and administrative costs in our consolidated statements of comprehensive loss.

Identifiable Intangible Assets—The following table provides the preliminary fair values of the Bay Equity intangible assets, along with their estimated useful lives:

Estimated Fair Value Estimated Useful Life (in years)
Trade names $ 11,650  5
Developed technology 2,860  3
Total $ 14,510 

The identifiable intangible assets include trade names and developed technology. Trade names primarily relate to the Bay Equity brand. Developed technology primarily relates to website functionality around data consolidation and optimization which helps drive efficiencies in loan origination and processing. The fair values of trade names and developed technology are derived by applying the relief from royalty method and replacement cost method, respectively. Critical estimates in valuing the intangible assets include revenue growth rate, royalty rate, discount rate, and number of months to recreate the underlying application.

Unaudited Pro Forma Financial Information—The following table presents unaudited pro forma financial information for the three and six months ended June 30, 2022 and 2021. The pro forma financial information combines our results of operations with that of Bay Equity as though the companies had been combined as of January 1, 2021. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the Bay Equity acquisition had taken place at such time. The pro forma financial information presented below includes adjustments for depreciation and amortization, restructuring costs, and transaction costs:

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Revenue $ 606,915  $ 560,241  $ 1,260,129  $ 941,990 
Net loss (78,967) (14,538) (165,561) (32,785)

There were no material non-recurring adjustments made in the pro forma financial information disclosed above.