On Friday, The Chicago Board Options Exchange (CBOE), the largest options exchange in the United States, announced its second quarter results. In particular, total operating expenses soared 685% from a year earlier, from $160.6 million. He explained:
“This was primarily due to the $460 million impairment of recognized goodwill in the digital information unit, driven by negative developments and trends in the broader digital asset environment. That environment has changed dramatically since we closed the transaction.” of ErisX on May 2, which gave rise to the accounting adjustment”.
ErisX allows self-directed individual retirement accounts, or IRAs, of United States residents to invest in crypto assets. This was the CBOE’s first foray into the digital asset sector; the company expects ErisX to be a long-term leader in the industry. Terms of the deal were not disclosed in the original acquisition.
However, it appears that ErisX’s fortunes took a turn for the worse due to the cryptocurrency bear market. The CBOE says that ErisX currently has a book value of $220 million. However, during the second quarter, the CBOE made a $460.1 million goodwill impairment charge linked directly to ErisX. Goodwill represents the difference between the acquisition value of a company and the value of its net assets. Companies may be forced to make significant write-downs of goodwill if they overpay for acquisitions.
However, the problems in the digital segment of the CBOE were offset by the main operations. Overall, the derivatives exchange’s sales grew 21% year-on-year to $424 million. At the same time, after removing non-cash goodwill impairment, its adjusted earnings rose 21% year-on-year to $1.67 per share.
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