Good morning. My name is Blair, and I'll be your conference operator today. At this time, I would like to welcome everyone to the MasterCard Second Quarter 2016 Earnings Conference Call. After the speakers' remarks, there will be a question-and-answer session, and instructions will follow at that time. I'd now like to turn the call over to Barbara Gasper, Head of Investor Relations. You may begin. Barbara L. Gasper - Executive Vice President & Group Executive: Thank you, Blair. Good morning and thank you all for joining us this morning. We apologize for the delayed start. It appeared that we had a lot of people dialing in at the very last minute and we didn't want to start the call with a lot of people still not connected, so thanks for your patience. And thanks for joining us this morning for a discussion about our second quarter 2016 financial results. With me on the call today are Ajay Banga, our President and Chief Executive Officer, as well as 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 for the Q&A, 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 at mastercard.com. Both the release and the slide deck include reconciliations of non-GAAP measures to their GAAP equivalents. The release was attached to an 8-K that we filed with the SEC earlier this morning. A replay of this call will be posted of…

Thanks, Ajay, and good morning everyone. So let me begin by giving you some highlights on the second quarter, starting with page three, where you see the difference between non-GAAP reported and currency-neutral growth rates for this quarter. So these figures exclude the impact of the special items taken in both this quarter and the previous quarter related to the judgment issued on Sainsbury's and the settlement we made with Tesco, the two largest merchants involved in the UK merchant litigation. I'd like to point out a few items using the currency-neutral growth rates. As Ajay said, net revenue growth was 14% for the quarter, coming in a bit higher than our expectations. Operating expenses grew 13%, primarily due to continued investments to support our strategic initiatives, as well as higher legal costs, of which the majority are not likely to recur. We saw a higher tax rate than in the year-ago quarter due to the non-recurrence of a discrete US foreign tax credit from which we benefited in the second quarter of 2015. And with all of that, EPS was $0.96, up 14% year over year. Share repurchases contributed about $0.03 per share, and as of July 21, we have $2.7 billion remaining under our current authorization. And lastly, cash flow from operations was $1.1 billion, and we ended the quarter with cash, cash equivalents and other liquid investments of about $6.4 billion. So let's turn to page four, where you can see the operational metrics for the second quarter. When comparing these numbers to the last quarter, just remember, the first quarter saw about a 1 PPT benefit from leap day, which explains most of the differences. Our worldwide gross dollar volume, or GDV growth, was 11% on a local currency basis, down 2 PPT from last quarter.…

[Operation Instructions] And the first question comes from the line of Craig Maurer from Autonomous. Your line is open.

Yeah, hi. Thanks. Two questions. One, if you could provide us your thoughts for the industry regarding the deal Visa signed with PayPal. And secondly, if you can comment if there was any disruption in volume in Europe related to any of the geopolitical problems there, terrorism, so on and so forth. Thanks. Ajay Banga - President, Chief Executive Officer & Director: Yeah. Hi, Craig. So a little bit about both. The second one is a more transactional question and I can tell you that places like Turkey and other such locations, there's no doubt that the impact of some of this activity in terrorism does impact what's going on there. Our cross-border growth to Turkey is down significantly compared to last year. Cardholders from Germany, Russia, Sweden and the US are not traveling there with the same level of frequency as they were clearly. We're also closely watching travel to other markets, France and so on. Interestingly, in the UK, we're actually seeing an increase of inbound cross-border spend. So it's kind of bouncing around but specifically in a couple of countries that got impacted by terrorism, there's no doubt that it causes some angst in cross-border trends. Having said that, remember what Martina said, right now, our cross-border volumes for the first few weeks of this quarter, it's only a few weeks, are up compared to where we were last quarter. And in fact, Europe is one of the contributors to that being up. So the part about Visa and PayPal. I've said this a few times to a number of you when I've met you. Back in June of 2013, we had implemented a new approach to digital wallet operators that applied to all staged wallets, and by the way not just PayPal, so I want you…

The next question comes from the line of Tom McCrohan from CLSA. Your line is open.

Hi. Ajay, when you talk about China and some of the security standards, are you referring to the EMV standard that China adopted and it being different from what's been embraced around the rest of the world? Ajay Banga - President, Chief Executive Officer & Director: No, actually that's a tactical problem that actually at the end of the day creates costs and implications for solving for the way chip cards work in China and Chinese chip cards work outside of China. It's solvable. It's not the best thing to do but it's solvable. What I'm referring to is that they recently, in their policy regarding the opening up of the market for people like us to come in, they put in a couple of clauses around complying with their new national security and cyber security policy. The little challenges of the new national security and cyber security policy has not yet actually been passed into a form that is visible to us in a document that we can say, okay, got it, got it, got it, do this, do that, we're okay. It's not in that form. So we're a little bit of in-between territory, between understanding that they want to have a thoughtful national security and cyber security policy, which they're entitled to, but we don't understand the implications for us in terms of operating a network on the ground. So whether we operate with our own license or we operate in a JV with somebody else or we do some other creative thinking around this will all depend on clarity of these kinds of elements that they've put into the policy they've recently announced. That's what we're trying to sort out. Meanwhile, there's a lot of stuff to do for us in China. We are continuing work on issuance, continuing work on building out acceptance, where we've been continuing some work on basic technology development so that when we get clarity on this, and Martina and I are confident we understand what we're signing up for, then we can move forward relatively quickly from that space. So it's kind of one of those in-between spaces. Barbara L. Gasper - Executive Vice President & Group Executive: Next question, please.

The next question comes from the line of Moshe Orenbuch from Credit Suisse. Your line is open. Moshe Ari Orenbuch - Credit Suisse Securities (USA) LLC (Broker): Great. Thanks. I was wondering if you could kind of address the comments you made about US debit accelerating in July. I think Visa had made some comments about seeing the mirror image of that, some deceleration. Are there actions that you're taking that are causing that or is it decisions of individual acquirers or merchants? Anything you can kind of add to that discussion? Ajay Banga - President, Chief Executive Officer & Director: Well, if you heard us saying we're going up and the other ones are reducing, that's just the differential impact for both of us. So I don't know how to comment on that one. I'm not saying that you're getting a great change in underlying consumer secular spending towards debit. Don't conclude that. In fact, that's not at all what we are talking about. This is all to do with PIN routing and working on PIN transactions. And as I think I've told you a couple of calls ago, maybe a few before that, this stuff will move around a little bit and bounce around as merchants move the different routing in their routing tables depending on what's working for them. And it's not just about pricing. It's also about speed of approval. It's about many different things that they look at. Most of the bigger merchants have a very sophisticated and quite thoughtful way of deciding their routing tables, and we keep working with them. And so some quarters are better, some quarters are a little less good. What you're seeing currently is a better period.

Yeah and having said that, when you look at our three weeks July numbers, where I said that the US transactions are actually up by 6 PPT, actually what is happening is that we have more of an opportunity to actually get routing for merchants because we happen to be now on more cards. Ajay Banga - President, Chief Executive Officer & Director: Back of the cards.

On the back of the cards. Ajay Banga - President, Chief Executive Officer & Director: Yeah. Moshe Ari Orenbuch - Credit Suisse Securities (USA) LLC (Broker): Great. Thanks very much.

Your next question comes from the line of Darrin Peller from Barclays. Your line is open.

Thanks guys. Nice job. Just want to touch on specifically the pricing changes that went into effect to allow the transaction fees to increase, or I think you said it was around 7 points faster than the actual transactions, similar with cross-border outpacing volume growth. Was it yield, all yield improvement on price, or was there also a mix element to it? And then just maybe on pricing trends going forward. Thanks guys.

Yeah so, Darrin, I mean we said in the cross-border line as well as in the processed transaction line and those fee lines that we had some pricing actions. And it really was what I would call moving around the deck chairs in a number of countries, which allowed us net-net to take some price. In terms of actually anniversarying those kind of prices, about 50% of those actions have anniversaried now with the second quarter, and the other 50% of those actions will be anniversarying by next year. And by the way, this is nothing different than what we had called out in the last quarter. So this is just the normal run rate that happens from time to time.

All right. Just as my follow-up, any early sense on impacts from Europe with regard to Visa Europe deal?

Look, it's very, very early, okay. They just about closed the transaction, and having said that, we obviously have prepared our group and our sales teams to make absolutely sure that we are with our clients and that we do all of the actions that we need necessary. But it's extremely early. You see that Europe is actually growing still very nicely in the mid teens from a volume point of view. So I don't think we have anything to add at this point. Ajay Banga - President, Chief Executive Officer & Director: Just one extra comment on pricing, and I know your question was about two specific line items in the thing, but overall for us in the second quarter, pricing contributed a little less than 1 percentage point to our net revenue growth. And that's kind of just so you know the whole picture.

All right. Makes sense. Thanks, guys.

Your next question comes from the line of Chris Brendler from Stifel. Your line is open. Christopher Brendler - Stifel, Nicolaus & Co., Inc.: Hi. Thanks. Good morning. Another question on Europe, if I could. I think, Martina, you just said that the volume growth in Europe, excluding the change in France, was mid-teens. Make sure that's right.

It's including, Chris, including. When you look all of the volume, the GDV volume in Europe, it's still in the mid teens range. Christopher Brendler - Stifel, Nicolaus & Co., Inc.: Right. Okay. But you reported 8.8% because of the change to the co-batch transactions in countries like France?

Exactly. Christopher Brendler - Stifel, Nicolaus & Co., Inc.: Okay, great. So that's more than double what Visa Europe has now disclosed, or Visa has now disclosed their European segment is growing. And the question I keep getting from investors that I'm hoping you could try to shed some light on is, there's been some discussions about yields and the difference in yields between MasterCard and Visa and that Visa will be potentially raising some of their yields. And I just want to talk about, if you maybe could just refresh our memories, like how are you driving these market share gains, growing more than double the rate of Visa Europe at this point despite the higher perceived pricing levels? What I've been telling folks is it's actually not that different if you get down to the bank level. You're actually closer to apples-to-apples on a pricing basis. Maybe just give us some of your thoughts on that current dynamic and how it might change with Visa Europe now being part of Visa. And also, does VocaLink play into your strategy of competing against Visa Europe? Thank you.

So first of all, when you look at our overall pricing in Europe versus Visa Europe, you are absolutely right that our pricing is higher when you look at it all accumulated together. It's not quite at the level where our global pricing is. It's lower because, as you know, in every geography and in the country, it depends in terms of whether we just were to be able to license our brand so that we get the volume assessment and whether or not we actually get to see the transaction from a processing point of view. All of you guys know in Europe we process about 40% of our transactions only. And lastly, in terms of what kind of services we are actually delivering to the client, when you look at the largest client, I have to believe that we have very similar pricing to Visa. It might be different in terms of when you look at the medium and then the smaller clients. Now having said that, what Javier [Perez] and his team have done in a really great way is using the global capability of MasterCard with all the products and services that we have around the globe, to be bringing that in a seamless fashion to our European clients. And that's what they really like to see, right. And this is what did not happen with our competitor, given that there were two different companies and given that we are generally the smaller company. I always have to say that we have to put more points on the board. That means we have to rise higher in order to make sure that the customer gets that differentiated product and service that they're seeking in order to basically address their pain points and have fantastic products for…

The next question comes from the line of Jason Kupferberg from Jefferies. Your line is open.

Hey guys. Just a question about the full year 2016 top line outlook. I know you said that you're reiterating to be at the low end of the three year target, which is low double digit. So I'm going to call it 10% to 11% for argument's sake. You're running at 14% through that first half of the year. So can you just remind us what might lead to the decel? Or are you just being conservative on macro? I guess you've got USAA will be deconverting at a faster rate, and maybe some lapping of acquisitions. Just wanted to have the pieces there.

So, Jason, excellent question.

Thank you, Martina.

Well listen, there are kind of three factors that are contributing to the deceleration on the growth rates for the second half, which would land us pretty much in the same place, as I've said at the beginning of the year, which is the low double digit number. The first one is we have anniversaried the acquisition of APT. Right, and we said all along that was about 1 percentage point. So that is going to come out. Secondly yes, we do have on the USAA credit portfolio, it's rolling off very fast, okay. So we will have a more significant impact in the third as well as in the fourth quarter. And then thirdly, you just heard us that we actually renewed American Airlines and starting with the third quarter, we will have more rebates and incentives coming into that line item.

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

The next question comes from the line of Sanjay Sakhrani from KBW. Your line is open. Sanjay Sakhrani - Keefe, Bruyette & Woods, Inc.: Thank you. Good morning. Ajay, can you talk about where you are with the future pipeline of M&A? You guys have been decently acquisitive, and I guess going forward, should we expect you guys to digest some of these acquisitions? Ajay Banga - President, Chief Executive Officer & Director: So I don't have any indigestion right now, just to be clear. We've been digesting the other ones in the past, and it's actually helped us build out a lot of capabilities. You know, it's not a coincidence that our other revenue line is growing at the rate it's been growing for quite a few quarters. It's not a coincidence. And remember, after a year when you anniversary an acquisition, it comes into the base. After two years, the entire P&L comes into our base. So we're quite disciplined about tracking ourselves against it. Some of the acquisitions do better than what we thought we could do with them. Some of them don't do as well. That's just the reality of what we're trying to go through. But in the process, we've built out a decent capability in data analytics and information services. We've added to our capability in loyalty and rewards. We've added to our capability in technology and connectivity for e-commerce and gateways, as well as to connect to bank accounts around the world, even before the VocaLink acquisition. So that's kind of what we're trying to do. I honestly, at any point of time in any quarter, I think Martina and her team are working on a number of possible acquisitions. What tends to happen is 2%, 5%, 6% of them show up at…

Your next question comes from the line of James Schneider from Goldman Sachs. Your line is open. James Schneider - Goldman Sachs & Co.: Good morning. Thanks for taking my question. I was wondering if you could give us a little bit of an update on the European acceptance landscape. I think you talked last quarter about how you've been given an update on what you've seen due to the European interchange cuts in terms of merchant acceptance. Obviously we're seeing some increased volume growth there. So any way you can parse out how much of that might be due to the interchange reg changes, and how much of that is just better economic activity or other factors?

So, Jim, I do have to say, and I just came back from another trip in Europe, there have been quite a bit of changes on the merchant acceptance landscape because of the lower interchange fees. And as you might remember all during the last couple of years leading up to the changes that came in last December of 2015, we were hoping that that would actually change the view of some of the merchants to be able, or be wanting to accept card payments, because quite frankly, no card payments are a heck of a lot cheaper than what you have to do with cash, right. And so we're seeing fairly large-scale changes coming through with some very large merchants, so that's what we're seeing first. So for instance, a grocery store like ALDI, which is a very a gruffy discount store – they don't even have shelves in their store – you grab actually goods out of the boxes that they just rip open. They finally are actually opening or have opened card payments. And there are a number of those large retailers who are now willing to do it. And we see it pretty much in every European country. What we haven't seen yet as much as movement is on the smaller merchants, and that's obviously where there's a lot of work that we still have to do. And we're hoping that that will continue to allow us to change the secular trend in Europe which, outside of the UK, right, in the UK a lot is already electronic side, but in the rest of the Europe, in the Continent, I always call it that this is still an emerging country for us. That will help us on the secular trend from cash and check to electronic forms of payments and will help our numbers over time. James Schneider - Goldman Sachs & Co.: Thank you.

Your next question comes from the line of David Toget from Evercore. Your line is open.

Thanks. Good morning. Martina, you called out the impact of the separation of scheme from processing in Europe effective June 9. I'm wondering about another major provision that went into effect June 9, particularly the new merchant routing provisions. Could you comment on the opportunity to gain processing share, particularly in large markets like France and Germany as routing opens up outside of these local payment monopolies?

Yeah. So I think that all of these changes in the regulation actually do help us over time to be doing more processing in Europe. As I just said to a prior question, is we do about 40% of MasterCard's transactions in Europe being processed by our own network. Now, with the separation of the scheme and the switching unit, our processing unit, that processing unit is actually free to go in a differentiated way to the market and to be hopefully getting even more switching opportunity from all of the local players, be it the banks or be it the merchants, and I think the merchant routing rules just play into that. Just remember, when you go back to SEPA, that was implemented back in January 1, 2008. It opened the kimono a little bit, and we were able to move our processed transactions from I think, Barbara, it was in the mid teens or low, mid, no mid 20s, I think low 20s. Barbara L. Gasper - Executive Vice President & Group Executive: Low 20s.

Something like that, going up to the 40% range. I think this is just the next click from a regulatory point of view, which allows us to work with those kind of companies to move up more from a transaction basis. Ajay Banga - President, Chief Executive Officer & Director: And just to add to what I said to Sanjay a little while ago on services, why does this all matter to us. Of course there's a revenue impact in the beginning of new process, more transactions, but the most important thing is all our services are built off our core payments capability. We're not building services that don't connect back to our core payments. Those core payments require us to be able to see transactions, whether it be debit, credit, prepaid or commercial transactions. That's why VocaLink is also important. The more we see transactions, the more we can do with them, and the more we can help build yet another strong revenue stream for this company for the next decade. That's kind of what we're trying to do.

Thank you very much. Barbara L. Gasper - Executive Vice President & Group Executive: Operator, next question.

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

Thank you, good morning. Ajay I wanted to follow up on your comments about the constructive dialogue taking place with PayPal. First, is it reasonable to expect you that guys will, you've mentioned the staged digital wallet fee and the rationale behind it previously, but is it reasonable to expect that you guys would eliminate that now? And then secondly, does the tone of the discussions that are taking place around you lead you to think that it's not just you guys and Visa but perhaps your issuing bank partners that may get on board with promoting PayPal? And finally along those lines, can you help us think through what the exclusivity element of the Visa agreement with PayPal would mean for MasterCard's issuing banks? Ajay Banga - President, Chief Executive Officer & Director: So the last one first. I can tell you that I'm not clear that I understand enough about what exclusivity Visa signed with PayPal, because we're not encountering any difficulty while talking to PayPal in that space. So I don't know exactly what the nature of that exclusivity is. You got to ask PayPal or Visa, because I'm pretty clear that we've got enough good conversations going on, not just now but for a little while. Obviously there's stress between these conversations, right. I mean, our digital wallet operator rules, when they went into place in 2013 were not replicated by others. Ours were. We made our position clear at that time that we wanted to have a clear, transparent, fair methodology in this digital wallet development. It's been sometimes good, sometimes stressful, but constructive. And my view always has been that it if PayPal wants to, or anybody else like that, a digital wallet operator wants to use to our rails of credit and debit…

Thank you. Ajay Banga - President, Chief Executive Officer & Director: I'm not saying there aren't – and by the way, I'm not saying there aren't hurdles along the way, there aren't roadblocks along the way. Remember, we've been talking with them for two, three years. We don't yet have an announcement to tell you of the kind of transaction that Visa has. So everybody has their own ways of approaching transactions and has their own competitive dynamic and their own way of thinking about where the strategy is going. That's actually okay in an open, competitive market. It's a good thing.

That's very helpful, Ajay. Thank you.

The next question comes from the line of James Faucette from Morgan Stanley. Your line is open. James E. Faucette - Morgan Stanley & Co. LLC: Thanks. I just wanted to ask a couple of quick follow-up relationship questions. And so I think you've made it pretty clear that you want to work more closely with PayPal, et cetera. But from just a process perspective and as it relates to the staged wallet fee, do you have to reach some sort of agreement with PayPal or others that would be subject to that or can they just start passing through the transaction data and hence avoid the staged wallet fee? And then I guess more importantly, as we look at the case with the merchants and the like, your prepared comments seem to indicate that you wanted to pursue an adjusted settlement, et cetera. I'm just wondering if there would be perhaps any benefit to MasterCard to open up the discussions with those groups more widely so perhaps we could address some of the issues that may be evolving out of EMV, et cetera or if you would prefer to keep those two cases separate, if you will. Ajay Banga - President, Chief Executive Officer & Director: So yeah. Let me take the second question first, that way I remember it better. So the second question, honestly, litigation is complicated enough without trying to broaden things. When you already have an agreement between tens of banks, Visa, MasterCard, tons of people at the other end, it doesn't pay to start broadening things. Who knows how this will go? I can't predict because there's other players who all have to come to an agreement. But we'll see. I think we made real progress and we had actually a good deal on…

And that question comes from the line of Glenn Greene of from Oppenheimer. Your line is open. Glenn Greene - Oppenheimer & Co., Inc. (Broker): Thanks for squeezing me in. Most of the questions have been asked. I'll just ask Martina an easy one. The other revenue growth, the 25% revenue growth, maybe a little bit of granularity. What's sort of driving that? And is there any acquisition benefit in there, or is that at this point, you would consider that all organic?

What did you say, 25%? Ajay Banga - President, Chief Executive Officer & Director: The other services. Glenn Greene - Oppenheimer & Co., Inc. (Broker): Other revenue. Barbara L. Gasper - Executive Vice President & Group Executive: Other revenue.

Okay. So from an other revenue point of view, you do have the APT acquisition in there. Most of the revenues for the APT acquisition is actually in that particular line item. But I did call out actually not only APT, I called out Advisors. So we actually had a really nice increase in revenue from an Advisors, and this is in our consulting business. And then secondly, I also called out our safety and security products, which are our fraud products and also that had a really nice increase. Glenn Greene - Oppenheimer & Co., Inc. (Broker): But I guess the question is the expectations going forward. How should we think about this as we normalize and get past the APT?

First of all, I'm not going to give you individual line items, but I have said over the last few quarters that these services businesses are starting to produce the kind of growth as our core business. And actually, when you look at these line items, they're producing a little bit higher than our core businesses. So you should be seeing that continuing in some fashion. Glenn Greene - Oppenheimer & Co., Inc. (Broker): Okay, great. Thanks. Ajay Banga - President, Chief Executive Officer & Director: Okay, guys. Thank you for all your questions and I'll leave with you just a couple of closing thoughts where I started. Our business continues to perform well. You see that reflected in our strong transaction and revenue growth. We're executing well against that digital strategy. Our services are continuing to help us differentiate and win new deals. We hope that many of you can join us at our upcoming Investor Day in New York. I think we'll be able to show you the opportunity to hear about our strategic focus areas, but also most importantly, give you a chance to experience the various spheres we're working to create a better consumer experience and shift the future of payments, give you a chance to touch and feel what we are up to. Thank you for your continued support of the company. Thank you for joining us today.

This concludes today's conference call. You may now disconnect.