Welcome to the Visa Inc.’s Fiscal Quarter Four Earnings Conference Call. All participants are in a listen-only mode, until the question-and-answer session of today's call. Today’s conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the conference over to your host, Mr. Jack Carsky, Head of Global Investor Relations. Mr. Carsky, you may begin.

Thanks, Charles. Good afternoon, everyone, and welcome to Visa Inc.’s fiscal fourth quarter and full year 2014 earnings conference call. With us today are Charlie Scharf, Visa’s CEO; and Byron Pollitt, Visa’s Chief Financial Officer. This call is currently being webcast over the Internet. It can be accessed on the Investor Relations section of our Web site at www.investor.visa.com. A replay of the webcast will also be archived on our site for 30 days. A PowerPoint deck containing financial and statistical highlights of today’s commentary was posted to our Web site prior to this call as well. Let me also remind you that this presentation may include forward-looking statements. These statements aren’t guarantees of future performance and our actual results could materially differ as the result of a variety of factors. Additional information concerning those factors is available in our most recent reports on Forms 10-K and Q, which you can find on the SEC’s Web site in the Investor Relations section of our Web site. For historical non-GAAP or pro forma related financial information disclosed in this call, the related GAAP measures and other information required by Reg G of the SEC are available in the financial and statistical summary accompanying today’s press release. This release can also be accessed through the IR section of our Web site. With that, I'll turn the call over to Byron.

Thanks, Jack. Let me begin with my usual callouts and observations. First, as you can see from our earnings press release, we reported the quarter on an adjusted basis based on the litigation accrual we took in the wake of the $450 million escrow deposit we made in late September. As a reminder, this litigation provision is covered by our retrospective responsibility plan. The $450 million additional litigation accrual has been estimated off of recently completed settlements with selected opt-out merchants representing approximately 3% of the total opt-out merchants based on sales volume, as well as the status of negotiations and discussions with other opt-out merchants. Excluding this litigation accrual, we reported adjusted diluted earnings per share of $2.18. In addition, consistent with past practice, the company’s funding of the $450 million litigation escrow deposit had the same effect as a share repurchase, as it reduced the Class B share conversion ratio by an amount equivalent to buying back 2.1 million Class A equivalent shares at $215 per share. As a result, at the end of the fiscal year, we had 618 million shares of Class A common stock outstanding on an as converted basis. We continued to experience solid constant dollar payment volume growth in the low double-digit range both in the U.S. and internationally. U.S. credit continued to strongly perform, led in large part by Chase portfolio conversions. That said, looking ahead to fiscal 2015, our near-term outlook remains cautious given the modest pace of economic recovery, the geopolitical situation, Ebola, low currency volatility and continued FX headwinds from a very strong U.S. dollar. Turning to revenue. As expected and previewed on our call last quarter, revenue growth for the fiscal fourth quarter rebounded growing 10% year-over-year on a constant dollar basis or 9% nominally, which reflects about…

Thank you very much, Byron, and good afternoon, everyone. First, I thought I’d start with just a couple of brief thoughts on our fiscal fourth quarter. As Byron went through, our performance came in pretty much as we would have expected; adjusted earnings per share growth this quarter of 17% and 19% for the full year. As we think about it, it’s actually gratifying given the continued subdued economic environment globally and the volatile geopolitical environment which do affect our business. It says a great deal about the business itself and the company that we’re lucky to be able to be a part of here. Revenue growth continued to be constrained by the strong dollar, the low currency volatility compared with historical norms and cross-border growth below historical levels. As Byron mentioned, we believe that these items that have constrained our revenue growth are cyclical and can change very quickly. More importantly, we really spend most of our time looking at the underlying fundamentals of the business and they continue to perform very well. In constant dollars, our double-digit payment volume growth with particular strength in the U.S. in addition to double-digit cross-border payment growth. Processed transaction growth was strong as well. As Byron mentioned, these trends improved slightly in October through the 21st. Beyond our data through the 21st, our ability to see the future is the same as yours but we’re cautious about the global growth as we plan for next year. Just a couple of comments about capital now. We’ve been very consistent as a company in how we think about capital allocation. We continue to believe the highest and best use of our excess capital is to reinvest it both organically and through acquisitions to further our growth. After that, we believe in growing our dividend…

Okay. (Operator Instructions). Our first question comes from Jim Schneider from Goldman Sachs. Your line is now open.

Good afternoon and thanks for taking my question. With regard to client incentives, you talked about those being first half weighted in fiscal '15. Can you talk about how many of your top 10 issuing clients are renewing this year? And do you expect all those renewals to happen in the first half of the year given the frontloading that you talked about earlier?

Byron here. So of the top 10, I would say one is scheduled to renew this year. And the frontend loading is really a function of two things and it’s not what you just described. It’s really a function of the deals that we most recently completed. We had a heavy deal flow that came to completion in Q4 and then will begin working their way through the fiscal year '15. But also as we have commented on many times before, incentives can be very lumpy in the way that they unfold. And so in the way that the deals were executed and we expect a frontend loading of incentives with regards to the P&L and then the guidance that we have given on a full year basis fully contemplates the lumpiness, so to speak, and we expect to deliver full year incentives somewhere in the 17.5% to 18.5% range.

Thank you.

The only thing – this is Charlie – that I would just add is that also keep in mind that client contracts sometimes renew off cycle and that’s contemplated in our guidance as well.

Next question.

Our next question comes from Craig Maurer from Autonomous. Your line is now open.

Hi. Thanks. Two questions. First, if you could comment on the apparent announcement out of the Chinese government this morning that they’re going to move to open up that market for additional settlement clearing networks for bank cards? Secondly, a technical question on Apple Pay. We’ve noticed that American Express is able to provide real time transaction alerts whether these are Apple Pay transactions or any other swipe, you’re always getting an alert. On Chase transactions, which you’ve provided a bespoke version of Visa, they don’t seem able to provide this service. It would seem that Chase is not fulfilling the promise of that transaction that you had entered into with them or am I missing something? Thanks.

Okay, let me do the second part first. So first of all, just to be clear, when you complete an Apple Pay transaction, there is immediate notification on the device itself that shows you that the transaction has taken place, the dollar amount and who the merchant is. You can then effectively flip the card over and see the running tally of all of your transactions. So, there is no – at least from our experience, my personal experience, there is no lack of clarity whether or not you’ve completed transactions and it is very real time. The question about whether people are then providing additional alerts on top of that, that you got to talk to your individual bank about. We offer a service, which we provide to a series of banks out there that do allow for real-time alerts. I can tell you I personally signed up for it and I get it on as real-time basis as you can expect. But different banks choose what they want their consumer experiences to be. But having said that, again, it exist in real time on the Apple device. As far as China goes, there’s really not a lot more to talk about than what you’ve read, which for those who haven’t read it, there was an announcement today that the Chinese government will open up the market to competition in our business. We don’t know anything specific other than that. We obviously welcome it and we look forward to seeing the specific details and working with people within China to figure out what we need to do to participate in that marketplace where we believe we can add a lot of value.

Next question.

The next question comes from Darrin Peller from Barclays. Your line is now open.

Thanks, guys. Look, following a year where revenue growth ended up being a little more challenged than expected given some of the cross-border trends being slower, it’s obviously nice to see the end of year pickup in those trends. But I guess following up on the guidance, if you can help us understand the assumptions you’re making around a couple of different attributes includes volume growth versus the way it’s trending in October as well as what part of this is from pricing, just because we’re getting a lot of questions on how much pricing can actually impact the overall top line guidance of low double digits? Thanks, guys.

So the headwinds that we had this past year, many of them still continue into this year. Our currency volatility we’ve guided – we didn’t actually expect to guide to two full percentage points of FX headwind a second year running, but particularly the strengthening of the U.S. dollar over the past two months has now made that much more likely. We were thrilled to see cross-border beginning to bounce back but it’s too early to call that a trend. With regards to volume, it’s based on low single digit constant dollar growth in volume gains, low double digit. And with regards to pricing, we don’t go in – it’s not our practice to go into the details of pricing but we have guided that it will take place in Q3 – beginning of Q3. So this is very much second half weighted and we also indicated in our guidance that we would expect to, with that pricing boost, be in double-digit revenue growth in the second half of the fiscal year.

Let me just pick up on that. As you’ve heard from both of us, we know what we know. We don’t know what we don’t know. But we look at what’s going on in the world and as we plan the company for next year, we have a cautious point of view of that. And so our cautious point of view suggest that we don’t plan for very big increases in things driven by what’s going on in the outside world. Albeit we know that they will improve at some point. We don’t know when, but we think it’s prudent to plan otherwise.

Next question please.

Our next question comes from Dan Perlin from RBC Capital. Your line is now open.

Thanks. Good afternoon. I wanted to follow back up, Charlie, on your 19% online. I guess it’s volume or revenue, I need to get clarification of that, but the question really is that sounds like that piece of business is growing somewhere around three times faster than what you referred to as the face-to-face business and I’m just wondering if you could give some sort of characteristics around how should we be thinking about revenue yields or all the products that you’re going to be able to put around that type of volume, it sounds like there’s more pricing opportunities in the future with those types of transactions and maybe what we’ve seen on a legacy basis? And then just for level setting, Byron, is it 907 plus the mid teens that’s the guided number or are we adjusting for the second quarter last year benefit? Thanks.

So on the first piece, what I referenced in my remarks was really to talk about two different things. Number one is we have a big business in the online world today and the way we think about it is we’ve been remarkably successful in a world where we haven’t had great products to compete. We also stand back and we look at the growth and the growth rates of transactions done online, on tablets and on mobile are multiples of what’s done face-to-face. So we both have a defensive reason to do it, but more importantly an offensive reason to help that migration and to participate in it. So the things that we’re doing from Visa Checkout to Apple Pay to the things that are going to be – using our Token Services and our Digital Solutions are all about having the best products in the marketplace to capture where the growth is, which is in the digital channels. Relative to what it means for us from a pricing perspective, again we’ve been very, very consistent on this which is we’re not sitting here today thinking about this as an opportunity to capture more price. We’re looking at this as an opportunity, one, to both be where the natural growth is but two, to help migrate all those cash transactions whether they’re big value transactions or small value transactions into the electronic space where we’ll hopefully capture more than our fair share. We do have a pricing schedule for our tokenization services. We said we’re waving those fees for a year and we’re going to see how this all plays itself out. But again, we look at this as this is the future of commerce, we want to be there. We see that there will be more volume in that world than there is for us sitting in the world that we are today, and if we make this up on volume as opposed to price that’s just fine with us. If there are pricing opportunities in the future, we won’t look the other way but that’s not our reason to do this.

To you second question, Dan, the short answer is 907 and the perspective is you were with us at the very beginning when we did our IPO. From the very beginning part of our investment thesis was that we would manage down the tax rate every single year to the best that we could. We started out at 41%. We said we’d manage it down to below 34%, 35% over about five years. We didn’t stop at five. We have continued to manage our tax rate. We have never adjusted or provided any EPS guidance that adjusted for a full year tax rate, because that’s just one of the levers we have to manage the business and we will continue to do so. So it’s mid teens off of 907.

Excellent. Thank you.

Next question please.

The next question comes from Don Fandetti from Citigroup. Your line is now open.

Yes. Charlie, I was just curious your thoughts on the U.S. market. I mean we’re seeing some of your large bank issuers put up some loan growth. Consumer confidence has picked up, but we’re not really seeing it in the spend. I was just curious on your outlook and just want to confirm that there’s no real improvement baked into guidance in the U.S.?

Byron walked through some of the recent trends. Our performance in the U.S. credit market is strong but we don’t look at it as – or let me say it differently. Certainly, in a really good performing economy should look much better than it looks today and we’ve not factored that into our thinking for next year.

Okay. Thanks.

Next question please.

Our next question comes from Sanjay Sakhrani from KBW. Your line is now open. Sanjay Sakhrani - Keefe, Bruyette & Woods: Thank you. I got a question on client incentives. Understanding that you guys had a big renewal in 2015, but how should we think about its trajectory looking ahead to 2016 and 2017? Are there large renewals coming up? And then just one clarification on the assumptions embedded in the guidance. Currency volatility as it stands right now, is that a tailwind in 2015 and are you assuming no tailwind? Thank you.

With regards to client incentives, from the beginning we – in fact going all the way back to the IPO, we have always viewed client incentives on an upward trajectory recognizing that the typical client contract is five years and that when a client contract comes up for renewal and if they have been successful, as most are, nearly all are in growing their portfolios, then the level of incentive adjust to a higher level recognizing the growth over the previous five years or whatever the term was and that’s the way the businesses worked forever. In addition, client incentives were – back at the IPO we’re much more a developed market phenomena and as the rest of the international group of countries have grown, we have applied client incentives more regularly to those multiyear contracts. And so there’s a natural and healthy and expected upward trajectory in client incentives. And so that’s what you’re seeing and it’s to the extent that we have one big renewal next year or this fiscal year, that’s not driving it. What’s driving it is what I’ve just described. Sanjay Sakhrani - Keefe, Bruyette & Woods: It drives the lumpiness, but not that trajectory.

That’s very fair. It drives the lumpiness but not the upward trajectory. And then your – I’m sorry, your second question was…? Sanjay Sakhrani - Keefe, Bruyette & Woods: Currency volatility.

Yes, so on currency volatility – boy, this one’s tough. No one saw last year coming. It was at historically low levels. We’re quite sobered about how to think about that and it would be very consistent for us to say that we have approached currency volatility with a high degree of caution and as Charlie said earlier, we absolutely know what we don’t know about how currency volatility will behave in the future. So, as I said before, we were very pleased to see the September and October bounce. We didn’t see it coming but we’re pleased to see it happened, but we remain very cautious in our guidance with regards to the roll of volatility in the coming year.

Next question please.

The next question comes from Chris Brendler from Stiefel. Your line is now open. Christopher Brendler - Stiefel Nicolaus & Company Inc.: Hi. Thanks. Good evening. I wanted to get a little more color, if I could, Charlie, on the pricing you mentioned in April. I think Byron also was saying about cross-border. Is this a similar pricing action to what one of your major competitors did on inbound cross-border? And if it is, does that change your thinking at all on how you wanted to view pricing? And I think we had talked about in the past that this is a situation where you are drawing a line in the sand and saying we’re going to be independent in our pricing decisions and price for value. Just give me a little more color on that. And then a follow-up, if I could on union pay. It seemed like the articles are focused more on clearing rather than the entire food chain in the payments business of authorization and settlement. Can you give us a rough idea how much clearing is of total Visa revenues? Thanks.

Why don’t we start with the second one?

The union pay and clearing.

Yes.

I don’t have the answer. I’m not sure – so the way we charge for our services, we charge service fees in data processing. And if we process the transaction then we reap data processing fees and that number is on our income statement and service fees if our brand is on the card. We can’t sit here today and know what China is contemplating when they talk about opening up the marketplace quite frankly. But we really have to wait and see what they say and then understand what it means for us. Beyond that, we really don’t know any more than you know at this time. Then the second one on pricing, why don’t you start on pricing.

So on pricing, I can say absolutely this was an independent decision. And as I said in my remarks, it has been four years since we have done something in this arena. Meanwhile, we have continued to invest in the transaction environment related to cross-border and in our domestic markets. And at some point we cross the line and say the value created for both our issuers and our merchants warrant a modest change in pricing which is what we’ve taken.

And we’ve said very consistently and I’ve said it consistently and Byron said it consistently, there is no line in the sand any which way that the decisions are going to stand on their own and we have to look people in the eye and explain why they make sense for us in the environment that we live in and we booked this one for a long time and feel it’s the right thing to do. Christopher Brendler - Stiefel Nicolaus & Company Inc.: Great. Thanks so much for the color.

Next question please.

Our next question comes from Jason Kupferberg from Jefferies & Co. Your line is now open. Jason Kupferberg - Jefferies & Co.: Thanks, guys. From what you see in your data, are lower gas prices in the U.S. sparking consumers to spend more actively in other verticals or are the lower gas prices just a drag on volume without any real offset? Because I guess we might have thought that the U.S. volume growth in the September quarter may have accelerated versus June, just given the Chase conversion, but it looks like it was pretty steady. So I’m just wondering if there was a dampening effect from lower gas prices or what you guys are seeing there?

So this is a story that is undoubtedly going to unfold a bit. There is no question that there is a modest drag that we see in the numbers with the drop in gas prices. It’s less than 100 basis points but it’s clear there is a drag. You saw debit growth, which carries a lot of the gasoline transactions. You saw debit growth drop to 7% in the September quarter, you saw it bounce back to 8% through the first 21 days of October. But the data is still a little unclear whether that is spend that’s being redistributed or in the prior year, if you may recall from October 1 through October 16, the government went into a partial shutdown and arguably depressed some spending during that period. And so this particular comp period is not clean. But the thesis that we punch way above our weight when it comes to gasoline prices, use of cards at the pump works on the upside. It also can be a drag on the downside. Then the big question is how is that money redistributed as it frees up, and at this point too early to call.

Next question please.

The next question comes from Bryan Keane from Deutsche Bank. Your line is now open.

Hi. It’s Brian from Deutsche Bank. Just looking at the data processing revenues growth at 14% and I think volume at 9%, one of the things that you talked about Byron was the higher U.S. debit fees, some pricing that kicked in. I just want to make sure I understand what that was. It sounded like there was a pricing kick that finally is having an impact in 2012 with three quarters of it still going to have an impact. I just want to make sure I understand what that is. And then finally on the pricing in April 2015, you guys expect – can you quantify that impact and where it will show up in the P&L? Thanks so much.

With regards to the data processing fees, to be absolutely clear there were no pricing actions in this area. This is about the pricing structure that we implemented back in 2012 and it was a – as you recall, it was a very different pricing structure than the one that we had previous to that point. And whenever you do that, it’s going to take a couple of years to stabilize as you work your way through the full and complete implementation of that structure. That’s what it is. It involves no price increase or no pricing action. And what I referred to earlier in my script has nothing to do with what you’re seeing. And further this kind of stabilizing should have a positive effect in the next couple of quarters but diminishing and by the end of the fiscal year should be in our view pretty much stabilized. With regards to the other since we’re not yet public on the details of the pricing, we will wait for another day to consider addressing that.

Next question please.

Our next question comes from David Togut from Evercore Partners. Your line is now open.

Thanks for taking my question. Could you address your pricing strategy more broadly over the next two to three years, perhaps gauge your pricing power and to what extent you intend to use it?

Sure. I would say there’s nothing new in our thinking which is first of all when we think about our ability to grow the company for the long term, given what the opportunities are for us to grow volume, using pricing to get to numbers that we hope to be able to show over a period of time is not something that we rely on. Having said that, we do think we should be paid fairly for what we do. And to the extent that we look at the services that we provide and feel that there is growing value in what we do, that’s an opportunity for us to consider raising price. We know that people have options and so there has to be reasons to be able to do it whether it’s on the issuer side or on the merchant side. And as I’ve talked about before, we’re spending a lot of time working with the merchant community on providing value for them. And as we do that, some of those things will result in things that will help us from a pricing standpoint. Other things support our existing price. So everything we do will be dealt on an individual basis. There is no line in the sand in any way we look at it. But again, as we come into the year and we think about what the opportunities are, pricing is something that we think is tactical for us and not particularly strategic at this point.

We have time for one last question.

Okay. Our final question comes from David Hochstim from Buckingham Research. Your line is now open, sir.

Thank you. I wonder – could you give us an update on what’s happening with CyberSource? Still pretty good growth in transactions, but the growth rate continues to slow?

Yes. So as we’ve said – I’d be happy to give you an update. We’re not happy with the update. As you’ve noted, the transaction growth has been slowing and as we’ve said on an earlier occasion, we missed an investment cycle. We are now investing significantly to catch up both in our capabilities and our staff. You should expect the anemic growth, so to speak, to continue for at least another couple of quarters. We expect that that will begin to turn around by the end of this fiscal year. And then just one callout. The measure we give you is transaction growth. The transaction growth that we have lost has been among the least revenue generating of our transaction. So the revenue growth side of the equation has held up much better than the deterioration in transaction. But that said, we’re not happy with the results but we have a very important role for CyberSource to play in our strategies going forward and we are investing aggressively to bring that back to a much stronger growth rate.

With that, we want to thank everybody for joining us today. And if anybody has follow-up questions, feel free to give Victoria or myself a call. Thank you.

That concludes today’s conference. Thank you all for participation. You may disconnect at this time. Thank you.