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CBOE reports 5% organic net revenue growth in Q2 YOY

CBOE Holdings Inc. reported second-quarter net income allocated to common shareholders of $67.3 million, or 60 cents per share, compared to $50.7 million, or 62 cents per share, in the year-ago period.

On an adjusted basis, net income allocated to common shareholders was $98.0 million, or 87 cents per share, up from $48.7 million, or 60 cents per common share, in the prior-year quarter.

The S&P Capital IQ consensus normalized EPS estimate for the quarter was 86 cents.

Consolidated results for the second quarter represented the first full quarter to include Bats Global Markets Holdings Inc., which CBOE acquired in February.

Total revenues for the most recent quarter increased year over year to $640.8 million from $173.1 million. Excluding Bats' net revenue contribution, the company's organic net revenue was $152.0 million, up 5%, compared to second-quarter 2016.

Total cost of revenue jumped to $373.9 million from $29.0 million.

Operating expenses totaled $149.1 million in the second quarter, up 126% from $66.1 million in the year-ago quarter.

The company reaffirmed its guidance for adjusted operating expenses of $415 million to $423 million and said that it expects adjusted operating expenses for the year to be at the low end of that range. The guidance excludes acquisition-related expenses of $69.9 million, accelerated stock-based compensation of $9.1 million and amortization of acquired intangible assets of $169 million.

Depreciation and amortization expense, which is included in operating expenses, is expected to be in the range of $52 million to $54 million, excluding the amortization of acquired intangibles of $169 million.

Capital expenditures are projected to be in the range of $55 million to $60 million.

The effective tax rate on GAAP earnings for 2017 is expected to be in the range of 37% to 39%. The company revised its expectations for the effective tax rate on adjusted combined earnings to be in the range of 35.5% to 37.5% from prior guidance of 35% to 37%, as a result of corporate income tax law changes enacted in Illinois in early July.