Calcbench

Here at Calcbench we love talking about intangible assets and all the footnote disclosures that exist to help an analyst understand why those assets have the values they do. Today let’s explore those disclosures specifically as they relate to the software sector, since intangibles can often be a huge part of a software company’s total worth. Inspiration for this post came from payments processor Bill.com ($BILL), which filed its latest annual report last week. We were snooping around the company’s business acquisition footnote , and found a discussion of Bill.com’s acquisition of Invoice2Go back in 2021. The deal was valued at $674.3 million, and that purchase price was allocated as follows in Figure 1, below. As you can see, intangible assets were valued at $91.22 million, or 13.5 percent of the total $674.3 million price. (Goodwill was a whopping 86.8 percent of the total price, but we’ve written about goodwill in acquisitions plenty of times before.)  So exactly what went into...

Not long ago the Financial Times had a prominent report that more companies are disclosing artificial intelligence as a potential risk to their business . More than half of Fortune 500 companies cited AI as a potential risk in their annual reports this year, the article said, compared to only 9 percent that did so just two years earlier. Well, OK… but exactly what are those companies disclosing about AI risks? After all, it’s easy to see why more companies are talking about AI as a risk: because ChatGPT exploded onto the scene in late 2022. It’s cool and disturbing and everywhere and has potentially huge disruptive effects, so companies can’t really not say at least something about AI’s significance to their operations. Still, that’s not the same as saying how AI might be a risk to your company. Some firms might see their business models eviscerated; others might see their businesses soar if they’re nimble enough to take advantage of AI in a timely manner.  To explore this questi...

Earlier this week we took a deep dive into the $9.1 billion goodwill impairment charge declared by Warner Bros. Discovery ($WBD) in its latest earnings report. Today we want to expand our analysis of that issue, because it turns out that another entertainment giant just declared a huge goodwill impairment charge too! That’s right: Warner Bros. disclosed its impairment charge on Aug. 7, and then rival entertainment behemoth Paramount Global ($PARA) followed suit with a $6 billion impairment charge declared on Aug. 8.  Both companies offer some fascinating — and eerily similar —  details about why they decided to take a goodwill impairment charge. Financial analysts following the sector should pay close attention, since understanding the how and why of these charges might help you anticipate goodwill impairment charges that other entertainment companies might report in the future. First, a quick recap of the Warner Bros. impairment. As we discussed in our prior post about the...

Calcbench always loves to dig into a big goodwill impairment, so when Warner Bros. Discovery ($WBD) last week coughed up one of the biggest impairments we’ve seen in years, our crack research team fired up the Footnotes and Disclosures tool and got to work. We can start with the impairment itself, announced as part of Warner Bros.’ second-quarter earnings release filed on Aug. 7. The company declared an impairment of $9.1 billion for its Networks division, which includes operations such as cable TV and other broadcast television operations, both in the United States and abroad. OK, it’s not news that traditional television has been taking it in the teeth lately, as consumers cut the cable in favor of streaming services. But what exactly caused Warner Bros. to declare a goodwill impairment now, barely two years after the company came into being with the merger of Discovery Inc. and the Warner Media business of AT&T ($T) back in April 2022?  This is a question worth consider...

The Calcbench Earnings Tracker is now going like gangbusters for Q2 2024, with nearly 3,600 earnings releases digested and a richly detailed look at what types of companies are experiencing growth from the year-ago period. In last week’s update , smaller companies (those outside the S&P 500) were finally reporting more revenue than Q2 2023, but were still suffering through lower net income levels.  Well, that dynamic has not changed.  As of noon ET on Aug. 9, our Earnings Tracker had crunched the Q2 earnings data of more than 3,100 smaller firms, and net income stood at $76.76 billion — down 10.3 percent from the $85.63 billion in net income that those companies had reported for Q2 2023.  S&P 500 firms (449 of them so far) were in much better shape, with net income up 12.1 percent. That figure includes large banks and other financial firms, too. When you exclude them and only look at non-financial S&P 500 firms, net income was up even higher, to 14.5 percent. ...