CBOE Holdings (NASDAQ: CBOE) reported Q3 EPS of $0.89, $0.01 better than the analyst estimate of $0.88. Revenue for the quarter came in at $269.7 million versus the consensus estimate of $270.3 million.

• Total revenues less cost of revenues (referred to as \"net revenue\"), were $269.7 million, up 98 percent from $136.2 million in the prior year period, driven primarily by a $112.6 million net revenue contribution from legacy Bats for the third quarter of 2017 and increases in net transaction fees.
• Excluding legacy Bats\' net revenue contribution, the company\'s organic net revenue2 was $157.1 million, up $20.9 million or 15 percent, compared to third quarter 2016. The increase is primarily attributable to stronger trading volume and revenue contributed from VIX® futures and proprietary index options.
• The mix of non-transaction net revenue as a percentage of total net revenue increased 9 percentage points to 42 percent in the third quarter of 2017 from 33 percent in the third quarter of 2016.
• Operating expenses were $150.4 million versus $70.4 million in the prior year quarter. The increase primarily resulted from $42.6 million in amortization of acquired intangible assets and incremental operating expenses of $36.1 million related to Bats for the third quarter of 2017.
• The effective tax rate for the third quarter was 43.1 percent compared with 39.9 percent in the third quarter of 2016. The rate increase primarily resulted from the increased Illinois tax rate effective July 1, 2017 and includes a one-time charge of $7.4 million the company recognized in the quarter to re-measure its deferred tax positions.
• Net revenue of $269.7 million was up $24.7 million or 10 percent compared with adjusted combined net revenue1 of $245.0 million in the prior-year period. The increase primarily reflects higher revenue from net transaction fees, market data fees and exchange services and other fees. Net transaction fees increased $22.0 million year-over-year primarily due to higher transaction fees in futures and index options, offset somewhat by lower net transaction fees from U.S. Equities.
• Adjusted operating expenses1 for the third quarter declined by 2 percent, to $101.9 million compared with adjusted combined operating expenses of $103.4 million for the third quarter of 2016. The decrease was primarily driven by lower expenses related to compensation and benefits and professional fees and outside services.
• The operating margin for the third quarter was 44.2 percent. The adjusted combined operating margin1 increased to 62.2 percent in the third quarter of 2017 from 57.8 percent in the third quarter a year ago, reflecting increased leverage gained from lower expenses and a higher revenue base.
• Diluted EPS for the third quarter of 2017 was $0.53. Adjusted combined diluted EPS1 was $0.89, up 24 percent compared to $0.72 for 2016\'s third quarter.

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