CBOE’s operating expenses spiked 312% due to underperformance of acquired crypto firm

A goodwill impairment from ErisX significantly hurt the company’s GAAP earnings, but otherwise, business results improved from last year.

On Friday, Chicago Board Options Exchange (CBOE), the largest options exchange in the United States, announced its second-quarter earnings results. Of particular interest was its total operating expenses, which soared 685% year-over-year from $160.6 million. CBOE explained:

“This was primarily due to the $460 million impairment of goodwill recognized in the Digital reporting unit, driven by negative events and trends in the broader digital asset environment. The said environment has changed dramatically since we closed the ErisX transaction on May 2, which resulted in the accounting adjustment.”

ErisX enables self-directed individual retirement accounts, or IRAs, for U.S. residents to invest in crypto assets. This was CBOE’s first venture into the digital assets sector; the company expects ErisX to be a long-term leader in the industry. The terms of the deal were not disclosed in the original acquisition.

However, it appears that ErisX’s fortunes worsened due to the cryptocurrency bear market. CBOE says that ErisX currently has a book value of $220 million. But, during Q2, CBOE took a goodwill impairment charge of $460.1 million linked directly to ErisX. Goodwill represents the difference between a firm’s acquisition value and the value of its net assets. Companies can be forced to take substantial goodwill write-offs if they overpaid for acquisitions.

Related: SEC extends window to decide on ARK 21Shares spot Bitcoin ETF to August

Nevertheless, the woes of CBOE’s digital segment were counterbalanced by core operations. On an overall basis, the derivatives exchange’s sales grew by 21% year-over-year to $424 million. Simultaneously, after removing the one-time, non-cash, goodwill impairment, its adjusted earnings increased by 21% year-over-year to $1.67 per share.


Share on facebook
Share on twitter
Share on pinterest
Share on linkedin

Follow Us

Most Popular

Get The Latest Updates

Subscribe To Our Weekly Newsletter

No spam, notifications only about new products, updates.
On Key

Related Posts

Bitcoin Poised For Recovery, Relief Summer still In Play?

Bitcoin has been able to make a resurgence in recent weeks. The 25,000 USD barrier was recaptured by Bitcoin prices just two days ago, marking the first time since June 13th. Bitcoin Poised For New Rally In June, Bitcoin had its largest monthly decline since 2011, falling over 37.3% to a final value of $19,925.

Expert Reveals How “Fake Supply” Is Killing Your Bitcoin Gains

Caitlin Long, the founder and CEO of Custodia Bank, reveals that the BTC price should have hit somewhere close to six figures in the previous cycle. In an interview with Robert Breedlove’s “What Is Money” podcast, Long reveals that “paper bitcoin” has created a fake supply of BTC. The 21 Million Trap Bitcoin’s limited supply

Selling Bitcoin In Fear Of Mt. Gox dump? Here’s What Expert Suggests

Mt. Gox, a Japan based cryptocurrency exchange lost around 850,000 Bitcoins in an alleged hack back in 2014. It has been reported that the creditors will begin to receive some of the stolen assets. However, this event has raised vital concerns regarding the price stability of Bitcoin. Creditor to choose Bitcoin’s fate? As per reports,

Soneva’s Luxury Resorts Now Accept Crypto Payments

Luxury resort chain Soneva has reportedly begun accepting cryptocurrency payments at its resorts in the Maldives and Thailand. “Accepting cryptocurrencies as a payment method is another example of enabling our international guests to easily make payments from anywhere in the world.” Soneva Accepts Cryptocurrency Payments Luxury resort chain Soneva has reportedly begun accepting payments in