Good morning and welcome to MasterCard's second quarter 2015 earnings conference call. My name is John, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Barbara Gasper, Executive Vice President of Investor Relations. Barbara L. Gasper - Executive Vice President & Group Executive: Thank you, John. Good morning and thank you all for joining us for a discussion about our second quarter 2015 financial results. With me on the call today are Ajay Banga, our President and Chief Executive Officer, and Martina Hund-Mejean, our Chief Financial Officer. Following comments from Ajay and Martina, the operator will announce your opportunity to get into the queue for the Q&A session. Up until then, no one is actually registered to ask a question. Even if you think you have already dialed into the queue, you will need to register again following our prepared comments. This morning's earnings release and the slide deck that will be referenced on this call can be found in the Investor Relations section of our website, MasterCard.com. Both the release and the slide deck include reconciliations of non-GAAP measures to their GAAP equivalents. These documents have also been attached to an 8-K that we filed with the SEC earlier this morning. A replay of this call will be posted on our website for one month. Finally, as set forth in more detail in today's earnings release, I need to remind everyone that today's call may include some forward-looking statements about MasterCard's future performance. Actual performance could differ materially from what is suggested by our comments today. Information about the factors that could affect future performance are…

Thanks, Ajay, and good morning, everyone. So let me begin on page three of our slide deck, where you see the difference between non-GAAP reported and FX-adjusted growth rates for this quarter. The differential continues to be primarily driven by the euro-U.S. dollar exchange rate. And these figures also exclude the impact of a special item taken this quarter related to a settlement we made with Tesco, the largest merchant involved in the UK merchant litigation case. So you can see EPS growth was 6% or 15% after adjusting for currency. Continued revenue momentum, good cost control and executing on our tax strategies and current share repurchase program all contributed to that performance. I'd like to point out a few items here and then I'll talk about the major P&L line items in subsequent slides. First, as expected, acquisitions that we made in 2014 and 2015 drove $0.03 of dilution. Second, the tax rate was favorable at 25.8% in the quarter, primarily due to our continued focus on better aligning our tax structure with our business footprint. Third, share repurchases contributed $0.02 per share to our second quarter results. As of July 22, we have $2 billion remaining under our current authorization. Lastly, cash flow from operations was $821 million. We ended the quarter with cash, cash equivalent and other liquid investments of about $5.1 billion. So let me turn to page four, where you can see the operational metrics for the second quarter. Our worldwide gross dollar volume, or GDV, was up 13% on a local currency basis, up from last quarter. Overall, our U.S. GDV grew 7%, made up of credit and debit growth of 7% and 8%, respectively. Total U.S. GDV was up 1 ppt versus last quarter, primarily due to our consumer credit programs and partially…

Thank you. We will now begin the question-and-answer session. Our first question comes from the line of Tien-Tsin Huang from JPMorgan.

Great. Good morning. I wanted to ask on the revenue, I guess. So year-to-date running 7% to 8%. I think you said 7% was right in line with your forecast. So I know a lot of moving pieces, but just curious, maybe you can remind us what's weighing on the revenue growth year-to-date from your longer-term objectives in the double-digits. I'm just trying to parse out what the headwinds are that should ease longer term. Thanks.

So, Tien-Tsin, good morning. There really are a couple of factors in that when you look at the FX-adjusted revenue, which is the 7% for the second quarter, and by the way the factors were the same in the first quarter. Two I want to call out. One is the incentives that we are now running through our P&L, which is really related to a couple of very large agreements that we had announced earlier. And the amortization that is running through our P&L is no different than we assumed. And, of course, this is the first year where you would be running that in, so you're not going to have a lapping effect in that respect for the next year. The second factor that is still with us in some fashion is the deconversion from the Chase portfolio. So that is also going to end at the end of this year. Ajay Banga - President & Chief Executive Officer: And, Tien-Tsin, remember that inside that 7% is the other 2 ppts of local currency impact of the currencies that are not what we call functional, meaning everything outside the euro and the real. Now, who knows where that will go longer term, but that's also something that we hadn't seen in the year or two earlier. So we've got these three things going on. We've got the front-ended loading of the incentives of some of these large deals. We've got the whole aspect of this 2 ppts of foreign exchange translation outside the euro and the real that are running through. The Chase portfolio is almost gone, but it runs through as a lapping effect to work until the end of this year. And that's three things we're dealing with. That's why you see the underlying gross volume is where you would think it would be, though the rebates and incentives combined with the 2 ppts in FX tend to pull things backwards. That's what's going on.

Got it. Thank you.

Our next question comes from the line of Bob Napoli from William Blair. Robert P. Napoli - William Blair & Co. LLC: Thank you and good morning. I was wondering, Ajay, if you could comment on the Visa – potential acquisition of Visa Europe and what that would mean, what that could mean for your European business. The revenue yield at Visa Europe is very low-high single digits. I'm just wondering if you could maybe give some thoughts on how your revenue yields compare and what you think having Visa Europe as a for-profit company would mean. Ajay Banga - President & Chief Executive Officer: There are a lot of implications of what happens if and when Visa actually completes that activity. And if they do, there are implications on pricing and yield. So the question you're getting at and there are implications of how long it will take for them to put the companies together. We've done the Europay acquisition quite some years ago and integrating that into MasterCard did pose some amount of challenges in terms of the cultures of the two companies. You've also got the technology to be brought together. Remember that simple things like V.me and Visa Checkout are two different things and that goes into their credit and debit technologies and there's going to be a lot of stuff to be done. But let's get past all that and assume all that gets done over a period of time. Back to your yield question, MasterCard Europe's yield is higher than the Visa Europe yield, but it is lower than our MasterCard Global yield. Now, there are two or three caveats I'd like to put into your mind around that before you conclude that means our yields will go up if Visa were to be…

Our next question comes from the line of Moshe Orenbuch from Credit Suisse. Moshe A. Orenbuch - Credit Suisse Securities (USA) LLC (Broker): Great, thanks. Ajay, you talked a little bit about some of the co-brand renewals that you secured. Can you talk a little bit about the outlook over the next several quarters, both from the standpoint of what you've got in terms of the size of what is out there to renew and then also maybe what you see at your competitors that might be a chance to get some new business? Ajay Banga - President & Chief Executive Officer: Sure. Look, the co-brand business is becoming where everybody suddenly got focused on. And it's always been a relatively competitive space. And some parts of it have gotten more competitive, others less so. My general opinion has been most co-brands are decided relatively rationally. There is a great discussion on pricing that's normally the starting point, as you would expect. But I do find that there is an intelligent conversation about the value you bring to the merchant and the issuer and the consumer of that co-brand in the process of being the network on that co-brand. So if the merchant issuer feels or the bank issuer feels that this is going to be an opportunity for them to build a stronger, closer relationship with some aspect of their consumer book, you tend to benefit from that, whether it be through analytics, through things like our Advisors book, or it be through safety and security or it be through loyalty and rewards. All those tend to patch together. And in fact, just the pricing of clearing, authorizing and settlement is literally just an entry point. And a lot of what you're seeing us do in our acquisitions is…

Your next question comes from the line of Tom McCrohan from Sterne Agee (sic) [CLSA] (38:21).

Yes, following up on the co-brand question – and I'm with CLSA, not Sterne Agee. When does a co-brand deal not make sense? If you can, give us some thoughts around how you think about that. Ajay Banga - President & Chief Executive Officer: When it no longer makes sense? I don't how to give you a specific item or a number or thinking. But honestly, I look at it from many different ways. I look at the pricing and the yield for sure, but I look at it in every aspect of the ecosystem, issuer pricing, acquirer pricing, what you would get out of incremental volumes, what you'd get out of selling other value-added services, put the whole thing together. That, by the way, is true not just of co-brands. It's true of every deal we do. And we don't approach co-brands very differently from any other deal we do. We approach it with the same pricing discipline that we approach for any deal. And that's been our rules now at least since I've been here. I'm pretty certain that's how my predecessor used to look at them too. Barbara L. Gasper - Executive Vice President & Group Executive: Next question, please?

Our next question comes from the line of Andrew Jeffrey from SunTrust.

Hi, good morning. Thanks for taking the question. Ajay, I wonder if you can comment strategically on MasterCard's acquisition approach. It sounds like you've gotten a lot more aggressive in areas that you called out in your comments in terms of trying to build out MasterCard's capabilities. Should we anticipate this as ongoing? I'm thinking from the perspective not only of competitive differentiation but also the impact on any given period's financials as you look out into the future. Is this from a capital allocation perspective a shift in MasterCard's overall strategy, or is what we're seeing more opportunistic in nature right now?

So, Andrew, from a strategic point of view, I think what you're seeing us doing is that we got a lot more clarity over the last four or five years in terms of where we want to strategically play, and these are the areas that Ajay has actually called out. And then what we did is we went to work and actually looked at the areas. We looked at them organically and what can we actually build. We looked at whether we can partner with people, and then we also looked at what kind of companies and skill sets are out there that we could potentially purchase. And I think you see the culmination over the last 18 months of all of that work, putting it together. We're looking at these acquisitions always first strategically. Do they fit with MasterCard? Will they expand our business? Will they be catering to the multiplier effect that Ajay was mentioning? That means not only putting their skill sets into our business but combining it with what we have and actually getting more out of it, so we looked at all of this. And then of course, we looked at does it culturally make sense? Can the companies work together, as well as does it make financially sense? All of those three criteria we really have not changed. And when you look at our comments about capital deployment, again, we haven't changed those at all. We said first, we would be investing organically in the business. Second, we would be looking in these particular areas that are of strategic importance to us for acquisitions. And lastly, we are giving cash back to the shareholders. So you should not attribute any change in terms of what we're doing. Ajay Banga - President & Chief Executive…

Great, thank you very much.

Our next question comes from the line of Smitti from Morgan Stanley.

Yes, hi. Good morning, Ajay. Good morning, Martina. My question for you guys, I just was wondering if you guys could give us an update on your views on the legal and regulatory risks in Europe and in the U.S. Earlier this month there was some news out from the EU. And then over the past week there was some news out that the merchant litigation agreement in the U.S. could be facing some issues, too. Ajay Banga - President & Chief Executive Officer: Look, the news item on the merchant litigation in the U.S., we've been aware of the article, we are aware of the underlying issues. If those allegations are true, clearly these lawyers have displayed conduct that's pretty disappointing. But to be clear, they were not the principals only involved in that whole settlement. There were lots of regulatory people involved. There was great close involvement by the judge at that time. I don't think that the behavior of two lawyers disrupts all that. But you know what, the court is going to decide that. We're pretty confident the settlement will stand. We'll see how it goes. But we've been aware of this for a little while now. The European part of it, there are two or three things, too. One of is the actual announcement of the rules that are going into place, and you know that those are happening. The 20/30 will happen. The functional versus legal separation of scheme and processing will happen. The co-badging will happen, and we're working with all that and we feel that we've got a good handle on all of those. The statement of objections, this covers two issues, and we were aware of this for a while. We've been engaged in a dialogue with the commission, and we…

You've seen maybe numbers out there because in the SO you are seeing that the EC could be assessing fines associated with the SO, and it's far too early for us to be able to speculate on any numbers because there are many different ways that you can actually calculate them. And quite frankly, if we were to reach a settlement with the EC, we would not be expecting any fine to be imposed. But there's really a third leg to the litigation in Europe, which I mentioned just in my prepared remarks, which is related to the UK merchant litigation. And as you can see, we have been settling with Tesco, which is the largest merchant claimant in this litigation. We have been settling with them. We are pleased that that is behind us and so I think we are on our way addressing those issues there, too. Ajay Banga - President & Chief Executive Officer: Europe is an interesting marketplace for us, but it's got really interesting complications in the way it's constructed. You know that. That's how we've been navigating there for years. And as a company, we have a degree of experience and expertise on the ground in Europe.

Thank you.

Our next question comes from the line of Craig Maurer from Autonomous.

Hi. Good morning. You spent a lot of time in your opening remarks talking about your Gateway globally. Visa made some very strong comments about the sustainability of PayPal's data disintermediation model and then backed it up with an investment in Stripe yesterday. So I was wondering if you could comment similarly on how you view the long-term longevity of data disintermediation. Ajay Banga - President & Chief Executive Officer: Craig, there's a bunch of people that are playing in this space. Gateways are just one way to get some access to the transaction. PayPal is much more than a gateway. And Stripe is a different – they're different. People use gateway very loosely. So in that whole space of digital transactions, whether they be through m-commerce or e-commerce channel or in-app or browser-based or whether they be through physical contactless, there are going to be a lot of players playing in this space to connect to the merchant, to connect to the acquirer and to connect to the issuer and the digital vehicle that they use. We're just keen to be a regular player playing with all of them. We've had a view through many earnings calls and investor meetings. But we're not going to pick winners and losers in this because this thing is evolving at a rate that's very fast and people who looked like winners three years, four years ago are no longer relevant players there. So rather than placing bets, we're being relatively agnostic in all these spaces, whether it be – you remember a little while back the conversation was secure element versus HCE. And we said we're not going to pick, we're going to do both, and that's what we're doing. It's the same with all of these things. So my view generally…

Is the two-stage wallet fee still in place? Ajay Banga - President & Chief Executive Officer: I'm sorry, is the...

The two-stage wallet. Yes, it is.

Okay. Barbara L. Gasper - Executive Vice President & Group Executive: Okay. Next question, please?

Our next question comes from the line of David Togut from Evercore.

Thank you. Good morning. Ajay, could you update us on the SEPA debit processing pipeline? Ajay Banga - President & Chief Executive Officer: It's the same as usual, meaning it moves at the glacial pace that I'm used to in Europe. We're growing our SEPA transactions in the mid-teens. It's been like that, I would say, for a few quarters now. We are seeing SEPA transactions – SEPA-based transactions, I don't want to call it SEPA transactions, we are seeing domestic transactions in a number of the European countries, actually in almost all of them. Growing in Germany, growing in Belgium. The ramp up in Netherlands was announced some time ago. We're seeing some more transactions in France and Spain and in Portugal and Italy. All that's going on. Nothing new on that phase.

And in fact, David, when you really read the European legislation, that actually provides an opportunity for us to be expanding in SEPA processing more. Given what the merchants are looking at at this point in time, they will probably be accepting electronic payments more than they did. Remember in Europe, many, many merchants, especially the small merchants, are not accepting that. They have a way of telling the industry in terms of where they want to route the transactions. And we believe that our processing business in Europe is very strong to be able to continue to take advantage of it. But as Ajay said, this is not a revolutionary change ever. It's an evolutionary change and will help us over a long term to be increasing our business in Europe. Ajay Banga - President & Chief Executive Officer: I think we've gone from what used to be high 20% of processed transactions several years ago to just under 40%. So that gives you a sense of how much time it took us to get from point A to point B.

This was from the beginning of 2008 until now. So about a six-year period. Ajay Banga - President & Chief Executive Officer: Okay? Barbara L. Gasper - Executive Vice President & Group Executive: Next question, please?

Thank you very much.

Our next question comes from the line of Chris Brendler from Stifel. Christopher C. Brendler - Stifel, Nicolaus & Co., Inc.: Hi. Thanks and good morning. Can we talk a little bit about pricing? I think you mentioned a benefit in the prepared remarks. I didn't know if you could quantify it. It sounds like it's less than 100 basis points since it wasn't quantified. And just going forward, we're seeing some degradation in the processed transactions, fees per transaction processed and domestic assessments. Is there a currency impact there, or do you continue to expect some degradation there? Any plans for any pricing would be helpful. Thanks.

Okay. So first of all, Chris, on pricing, this quarter we had really a very, very small impact on pricing, similar to last quarter. Very, very small. And you should not expect for this year a lot of pricing to be coming through on a net basis. In terms of what's going on transaction processing fee, there are two factors in there. One is mix in terms of where it comes from and in which region the fees are actually generated. And, yes, you're right, local currency is impacting that, too. Christopher C. Brendler - Stifel, Nicolaus & Co., Inc.: Great. Thanks so much.

Your next question comes from the line of Bill Carcache from Nomura.

Thank you. Good morning. Can you talk about whether you anticipate any kind of impact from the changes to AmEx's anti-steering provisions? Ajay Banga - President & Chief Executive Officer: I haven't seen anything yet. It's very early days. And clearly there's got to be some impact in terms of how merchants perceive it, but very early. I don't know yet.

Thank you.

Our next question comes from the line of comes from the line of James Schneider from Goldman Sachs. James Schneider - Goldman Sachs & Co.: Good morning. Thanks for taking my question. Understanding it's still very early in the process with China, can you give us any sense at this point about the restrictions you might expect to be placed upon you in terms of limitations on regional operating or other market share restrictions that might prevent you from getting to full unencumbered market share potential in China over time? And if you don't have any sense on that, when do you think you might get more clarity? Ajay Banga - President & Chief Executive Officer: So to tell you to expect that you will not have restrictions and encumbrances would be to expect the wrong thing out of the way China tends to open up its businesses. Based on many years of working with China, including my years in my previous job in Asia, they have always done this in a very measured, thoughtful way that allows local industry to both benefit from the influx of foreign money and technology, but also to actually protect itself in a way from that influx. And it's been done very carefully over the years. I see no reason why they wouldn't be as thoughtful in this, which is a very important industry to them. So we will have restrictions. We will have encumbrances. Already in the preliminary guidelines they've issued, which I referred to when I was speaking in (56:45) more by the end of the year, they've got ideas around what qualifies for domestic processing and what kind of data can and cannot leave their shores and how you would operate for clearing, authorizing and settlement. And they've got ideas, but…

Certainly. Your last question comes from the line of Bryan Keane from Deutsche Bank.

Hi, guys. Thanks for fitting me in. Martina, maybe you could just talk a little bit about expenses and operating margin. I think non-GAAP operating margin was 54.9%. I guess I'm curious to know if that was in line with your expectations. I know the Street was look for something higher, and I know before you've talked a little bit about some of the mis-modeling by the Street. So maybe can just address that. Thanks.

Actually, operating margins were completely in line with expectations that we had internally, in fact, a little bit better because we were able to reap more savings from our restructuring that we had started earlier this year than anticipated. And also, the M&A activity that is on the OpEx line was actually right on with our expectations. Barbara L. Gasper - Executive Vice President & Group Executive: Okay, I think that's it for Q&A. Ajay, do you have some closing comments? Ajay Banga - President & Chief Executive Officer: Sure. So thank you all for those questions, and I'm going to leave you with a couple of quick closing thoughts. I guess the business continues to perform well in what we find to be a challenging global economy. The U.S. and Europe, as I said, seem to be improving. Asia and Latin America have a few market issues. We are going ahead and executing on strategy. We are investing in new technology. We're investing in other services both organically and through acquisitions, and we did have a couple of questions around that in the last half an hour. We are clearly seeing the benefits of these acquisitions in our business engagements. We continue to expect to have increasing opportunities to bundle that capability with our existing products and services. And as Martina mentioned, we're managing our organic expense growth to fund those integrations. I hope many of you will come along to attend our Investor Day in September in New York, if nothing else, to get a selfie and check that your transaction goes through. But you will also have the chance to hear more about strategic focus areas and hopefully experience some of these innovative products and services, a couple of which got mentioned on today's call. Mostly, we appreciate your continued support of our company and all of us and thank you so much for joining us today.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.