Welcome to Visa's fiscal second quarter 2016 earnings conference call. All participants are in a listen-only mode until the question-and-answer session. 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 Mr. Jack Carsky, Head of Global Investor Relations. Mr. Carsky, you may begin.

Thanks, Sam. Good afternoon, everyone, and welcome to Visa Inc.'s fiscal second quarter earnings conference call. With us today are Charlie Scharf, Visa's Chief Executive Officer; and Vasant Prabhu, Visa's Chief Financial Officer. This call is currently being webcast over the Internet and is accessible on the Investor Relations section of our website at www.investor.Visa.com. A replay of the webcast will be archived on our site for 90 days. A PowerPoint deck containing the financial and statistical highlights of today's call have been posted to our IR website. 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 a result of a variety of factors. Additional information concerning those factors is available in our most recent reports on Forms 10-K and 10-Q, which you can find on the SEC's website and the Investor Relations section of our website. For historical non-GAAP or pro forma related financial information disclosed in this call, the related GAAP measures and other information required by Regulation G of the SEC are available in the financial and statistical summary accompanying today's press release. And with that, I'll turn the call over to Vasant. Charles W. Scharf - Chief Executive Officer & Director: Actually, Jack, it's Charlie. I'm going to start on the call.

I'm sorry. Charles W. Scharf - Chief Executive Officer & Director: I appreciate it though. Good afternoon, everyone, thank you for joining us. There are a series of things that I'm going to cover before I do hand it over to Vasant. I'm going to talk a little bit about our second quarter results at a high level, make some comments about the press release we put out about Visa Europe [VE], some general business updates, and then some further comments on how we see the year playing out from here. So first let me start with our overall results. We reported earnings per share of $0.71, but this includes a one-time gain on currency forward contracts used to mitigate some of the foreign exchange risk associated with the cash portion of the VE purchase. Vasant will cover that in a little bit more detail in his remarks. If you exclude that gain, adjusted earnings per share of $0.68 grew 7% on a nominal basis and 12% on a constant dollar basis. If you remember, we raised $16 billion in long-term debt in December of last year in anticipation of the VE acquisition, and we absorbed $125 million in interest expense during this quarter, a $0.03 drag on our EPS growth for the quarter. This negatively impacted our EPS growth rate in the quarter by five points. After we close the VE transaction, we will obviously have VE operating income to offset this expense. As we talk about the quarter, you're going to hear some themes which will sound very much the same as those we discussed on our last earnings call, reasonable underlying domestic growth offset by some headwinds. Our results adjusting for the leap year were very consistent with the prior quarter. And our growth continues to be…

Thanks, Vasant. I got it right that time. Sam, at this point we are ready to start taking questions.

Thank you. And our first question is from Moshe Orenbuch with Credit Suisse. Your line is now open. Moshe Ari Orenbuch - Credit Suisse Securities (USA) LLC (Broker): Great. So it sounds, Vasant, like you're saying that the revenue weakness comes from the rebound that you were hoping for not really happening. I'm wondering. Can you talk a little bit? You mentioned the tax rate, but it seems like even including the interest expense that the impact on net income is actually fairly nominal. Are there other things going on, and can you talk a little bit about what you're doing to preserve or protect net income? Vasant M. Prabhu - Chief Financial Officer & Executive Vice President: As we've been doing most of this year, we are holding the line on expenses. I think when we talked to you last October, we had indicated that the expense growth would run I think in the high single digits in the first half and then moderate in the second half. It has, as you can see, run below that in the first half, and we said that the rate will be even lower in the second half. So clearly we are trying to mitigate some of the revenue softness with expense management. And then the tax rate is modestly lower than we might have expected last year. So those two things are mitigating the impact on EPS, but not completely. But other than that, really, those are the main pluses and minuses. I don't know, Charlie, if there's anything you would add. Charles W. Scharf - Chief Executive Officer & Director: No.

Next question.

Yes, our next question is from Jason Kupferberg with Jefferies. Your line is now open.

Hey, thanks, guys, just two quick ones related to Europe. First, any other regulatory impediments that you anticipate now that you took care of the earnout? And how much would you expect Visa Europe to drive acceleration in the cross-border volume given all the intra-European travel? I think you had given some pro forma data on that couple years ago. So I don't know if the relative figures would have changed, but any thoughts there? Charles W. Scharf - Chief Executive Officer & Director: I guess I'll take the first one. So we have to obviously go back and get approval for this transaction. But as I had said in my remarks, we have gotten feedback. It's specifically related to the earnout. And so what we've crafted eliminates the earnout in its entirety. So as with all regulatory approvals, we need to go through the process, but we would not have struck a deal that we didn't think could be approved. Vasant M. Prabhu - Chief Financial Officer & Executive Vice President: On the cross-border question, if you go back three or four quarters and look at cross-border inbound/outbound, one of the strongest markets for inbound travel and inbound commerce has been Europe. So had we had Europe in our numbers, clearly our cross-border numbers would have looked better. What's it going to be like next year? Of course, that's a different issue, and we'll talk about it in the next few quarters as we discuss Europe. But yes, cross-border inbound into Europe has been a strong business.

Next question?

Thank you. Our next question is from Sanjay Sakhrani with KBW. Your line is now open. Sanjay Sakhrani - Keefe, Bruyette & Woods, Inc.: Thank you. I just want to make sure there's no other contingencies outside of the EC approvals, is there, to close this deal. And then just secondly, understanding it's a competitive market today, is there any concern that the removal of the earnout loosens the ties that the banks might have in the future with Visa Inc.? Thanks. Charles W. Scharf - Chief Executive Officer & Director: Sure. So listen, on the second one, I think as I said in my remarks, we've had a fair amount of time to work with the Visa Europe team to understand their relationships with their clients. And I would just say that we would not have agreed to a deal that we didn't think was an appropriate price to pay relative to the value that we were getting. Our view is when you actually look at what the earnout was versus where we are today, we're confident in the value that we'll be getting and we will get the appropriate returns. And on the first question of regulatory approval, there were three that we initially needed to approve, Turkey, Jersey, and the European Commission. And we will revisit the first two to ensure, and we will go through the process with the European Commission.

Next question, please?

Thank you. Our next question is from James Schneider with Goldman Sachs. Your line is now open. James Schneider - Goldman Sachs & Co.: Good afternoon, thanks for taking my question. As you think about the Visa Europe integration process, can you maybe give us an update on the process you're going to go through in terms of identifying synergies? And can you maybe talk about any synergies that you might look for in Visa Inc. in addition to those in Visa Europe? Charles W. Scharf - Chief Executive Officer & Director: Yeah, let me start and then Vasant can chime in. The work that we've had underway, and keep in mind, just to be perfectly clear, as we have done our work since the announcement of the initial transaction, all the work that we've been doing is just pure planning. They continue to run their business. We continue to run our business. But we've been working very closely together to understand what the best way to organize and run the company is on a going-forward basis. So we've gotten to the point where we have pretty clear plans area by area across the company of what the expense base of an integrated company would look like, what timeframes would look like to get there. We have some more process to go through and we've got some specific processes we've got to go through within Europe to ensure that we do this properly. But when we first announced the transaction, we had done the work with some information but not the kind of information that we have had access to since the transaction was announced. So as I said, we feel very comfortable that we have a better understanding of what those expense synergies will look like and over what…

Thank you; next question, please?

Our next question is from Bryan Keane with Deutsche Bank. Your line is now open.

Yeah, hi, guys. Just wanted to make sure. Last quarter you guys warned that if there wasn't a pickup on the economy front, we're likely to see potentially changing guidance, so not a real surprise here. But what I want to make sure is, is this all cyclical, or is there any share loss that you're seeing that's causing the change in guidance? And then secondly, we picked up some news that you guys could be increasing your U.S. acquirer fee on Signature Debit on July 1, 2016. Just want to see if that has any impact on the model and if that's correct. Thanks. Charles W. Scharf - Chief Executive Officer & Director: So let me do the first one first. So to answer the question, everything that we're seeing and everything that we've talked about we absolutely believe is cyclical. It doesn't relate to share in any way, shape, or form and we feel very good about the maintenance of the share that we have across the world. And you're right, I'm glad you pointed it out because we tried to be as transparent as we could on last quarter's earnings call, where we said listen, it's the first quarter. It's very early. We don't know what volumes will be two, three quarters out from now. But our assumptions are that in order to make those guidance numbers, there needs to be an improvement. And things haven't deteriorated, but things haven't improved, so that's playing out exactly – not the way we would want, but given what's happened, the way we would expect. And so obviously, if things got better, then that would change as well. But we just don't see that. And so it's not something at this point, given that we're already in the third quarter, we think is prudent to think about. Vasant M. Prabhu - Chief Financial Officer & Executive Vice President: And in terms of the U.S. acquired debit price increase of two basis points, yes, we have informed people about it. They will begin to see the increase in July. But as you know, we record these things on a quarter lag, so there's no benefit from the price increase in this year's revenues. Also, just so that you're clear on it, this is not in any order of magnitude terms anywhere close to the price increase we took last fiscal year, so the impacts are more modest. It's clearly helpful, and of course we provide some level of remediation in the early months. So you should make sure that some of that is factored in as you think about all this.

Thanks, Bryan; next question?

Our next question is from Darrin Peller with Barclays. Your line is now open.

Thanks. So I just want to clarify. It sounds like despite the run rate for the first half of about 8.5% constant currency, the low growth in the third quarter is the timing of incentives, and it sounds like a little bit of a delay in timing on Costco/USAA. Can you just – any reason for the slower implementation of those, and is the timing for those deals now around the fiscal fourth quarter or early next year? And then just a quick follow-up on the incentive size. I guess when we go forward, had those been in line with the timing of incentives in the third quarter, would your incentive run rate still be in the midpoint of the range? Is that really what we should expect going forward? Thanks, guys. Charles W. Scharf - Chief Executive Officer & Director: On the first one, it's hard to pinpoint it. And the implementation of the Costco arrangement is in a lot of respects out of our hands. Remember, they had an agreement that they had to unwind. There's a lot of work that Citi, the issuer, and Costco are working as well as us. And so given the complexity of unwinding an old agreement and moving forward on a new agreement is just complex. And in USAA's business, there's nothing specific other than I think it's them just wanting to do it in a timeframe which brings about the least amount of potential issues for their members, which we respect. Vasant M. Prabhu - Chief Financial Officer & Executive Vice President: And on the level of incentives then, we are in the range we told you coming into the year. We are at the high end of the range. And the reason for that is we've had a significant number of renewals around the world and in the U.S. And of course, we've had a couple of big conversions. That's all in our view good news in that we are renewing important contracts and we have some significant new business. As I mentioned in the comments, the benefits from the conversions for sure are not showing up this year and will show up next year. But some of these, as we've told you before, there are timing moves from one quarter to another. And there's no question that the incentives are running at the higher end of the range because these renewals have mostly all now fallen into place.

Thanks, Darrin; next question, please? Charles W. Scharf - Chief Executive Officer & Director: I would just say listen, I think to that point, and the reality is these are important renewals. These are very big clients and the new wins we've talked extensively about. And so when we talk about it in terms of how it impacts the numbers, if you just step back for a second and to the question earlier about share, we feel really, really good about what our client franchise looks like for sure across the globe.

Next question, please?

The next question is from Andrew Jeffrey with SunTrust. Your line is now open.

Hi, thanks for taking the question. I appreciate it. Charlie, I wonder if you could maybe opine a little bit on mobile payments adoption, mobile wallet adoption in particular. It seems like some of the big banks indicated recently that it remains quite low and maybe a little disappointing. Are there any implications longer term for Visa's volume around mobile one way or the other? And how do you think about initiatives that Visa might undertake to accelerate mobile adoption which might benefit the secular shift? Charles W. Scharf - Chief Executive Officer & Director: Sure. I think it's interesting. I think we are doing as much as we can as an entity to insert ourselves in a way which benefits all of our clients and their clients into helping digitize payments in all forms of commerce, and that's how we think about it. We don't necessarily think about that we want to drive business from cards to e-com, to m-com, or anything like that. Anyone who tries to drive something towards what they think is good for them generally hasn't been particularly successful. And so what we want to ensure is that we continue to have the best solutions to pay in the physical world, that we've got the best solutions to pay in the e-com world, and the best solutions to pay in the m-commerce world. And so if you look at the things that we've done all across that spectrum, whether it's the things that you see, such as Visa Checkout, some of the things that we've done with third-party players, whether it's Google, Samsung, or Apple, or whether it's things that you don't necessarily see, like tokenization, these are all aimed at ensuring that we are a preferred payment option in all of those different mediums. And quite frankly, the consumers and the merchants are going to be the ones to drive the adoption of these different forms of payment. And so we're there to support them. We're there to be their partner. We're there to provide options. So the work we did on tokenization enables a lot of the things that you're seeing out there, but we don't prefer one versus the other. We just have to ensure that we're doing everything we can to be inserted into all forms of commerce in a way which is friendly for our issuers and acquirers.

Thanks, Andrew; next question, Sam.

Our next question is from Matthew Howlett with UBS. Your line is now open.

Thanks, guys. Just as a follow-up on the cross-border, what is a normalized run rate? Maybe first start off with what you're seeing in terms of what corridor is it. It looks like the Asian region is coming in a little bit slower. Then, what do we expect is a normalized run rate and what should we expect long term? Vasant M. Prabhu - Chief Financial Officer & Executive Vice President: If you go back in time, as you know, double-digit run rates were very common. And then starting about eight quarters ago, you started to see some slowdown, mostly with the strong dollar. And that dropped the run rate down to the single digits, and it ran at about 8% – 9% in constant dollar terms for a while. And then in October or so last year, we saw that sharp decline to 4%, and it stayed there. The biggest drivers are significant declines coming out of China, and that has not changed. In other words, the second derivative on that is still negative. It is continuing to decelerate, though still positive. Canada, a major source of business for us in the U.S., has been declining for several years now. It has gone from a growth rate to meaningful negative levels. Then we saw a significant change in trend in the past few months coming out of all of the commodity economies, whether those are the African economies or the Middle East, big declines in those areas. And then layered on top of that are specific large economies like Brazil, which for a while which was a major source of outbound business to the U.S. and elsewhere; and other economies, like Russia, which you saw really slow – go down significantly last year. So you've got three things going…

Next question, Sam.

Yes, our next question is from Jamie Friedman with Susquehanna Financial. Your line is now open.

Hi, thanks. It's Jamie at Susquehanna. I was just wondering, Charlie. Do you have any update on your conversations, negotiations with the aggregators that you had shared some perspective on last quarter? Thank you. Charles W. Scharf - Chief Executive Officer & Director: I don't, I don't. I think what I said is what I and we continue to feel. And if there's anything more to talk about, we'll let you know.

Next question, Sam.

Yes, our next question is from Lisa Ellis with Bernstein. Your line is now open. Lisa D. Ellis - Sanford C. Bernstein & Co. LLC: Hi, Charlie. Can you give an update, a little more color on Visa Checkout? How many of your large issuers do you have now auto-enrolling in Visa Checkout, and are you seeing a notable uptick in adoption as a result of that? And then similarly on the acquirer side, do you have any acquirer partners that are actively now helping you promote Visa Checkout with the merchants? Like at some point here, should we be seeing more of a steep acceleration in adoption? Charles W. Scharf - Chief Executive Officer & Director: Listen, I think to the last question first, I think it's – we don't – when we think about what the adoption curves look like, we're not looking for anything that looks exponential necessarily at this point. In fact, what we want to see is we want to ensure that there is continued growth on both sides of the equation, so not just the increase in the user base, but the increase in the merchant locations as well. And anytime those – if those growth rates get way out of line, then we live somewhat in fear of one side of the network getting ahead of the other. So we have Bank of America who is very actively promoting Visa Checkout. That has just begun. So it's hard to draw any conclusions to what it means, but we love what they're doing. It is very simple. It's very creative, and we're excited about it. Beyond that, we're very focused on growing the merchant side. And the reality of the merchant side, Lisa, is it really is – it's merchant by merchant. And so we can certainly – we've done everything that we can to make it a simple integration for merchants. But the conversation really is, it's not even necessarily – it's not the typical conversation that either we or an acquirer have with a merchant where we're talking about acceptance or we're talking about an assistant treasurer. The conversations with Visa Checkout are much more about the marketing areas. And so that is where we are focused on is getting the conversation to a different level with merchants, and we're focused on the top merchants, not necessarily the number of merchants or the size of merchants.

Thanks, Lisa; next question, please?

Yes, our next question is from Tien-tsin Huang with JPMorgan. Your line is now open.

Great, thanks. Good afternoon, just a couple questions. The Costco card has pretty attractive rewards. I'm curious. Does that change the incentive equation for Visa in any way, meaning your role in funding those rewards? And I want to ask a Visa Europe question just as part of the new deal giving up the earnouts. Do you get to then extend contracts with the major issuers from Visa Europe? I was just curious what the give-and-take is beyond what you discussed. Thanks. Charles W. Scharf - Chief Executive Officer & Director: Sure. The first question was... Vasant M. Prabhu - Chief Financial Officer & Executive Vice President: Are we doing anything different with Costco because the rewards are better? Charles W. Scharf - Chief Executive Officer & Director: No, no. Our deal with Costco is our deal with Costco, and their deal with Citi is their deal with Citi. And so we love the product that's out there. And even more broadly, we love Visa acceptance at Costco for all of our issuers. And on the second item, the answer is no, there's nothing special that goes along with contract renewals or anything like that relative to the additional amount that we're paying. But I think – I guess the way I would think about this is we certainly when we entered into the earnout, wind up with a point of view of what we think we could pay based upon the results could pan out. And as I said earlier, we've had the opportunity to be able to have a deeper level of understanding of what that could actually be, as well as to have an understanding of what the relationships between Visa Europe and its client base are. And so I just don't know how to say it…

Thanks, Tien-tsin; next question, Sam?

Our next question is from Bob Napoli with William Blair. Your line is now open. Robert Napoli - William Blair & Co. LLC: Thank you. Vasant, you had mentioned I think just on the Costco incentives and the high end of the range for client incentives for the back half of this year. As we think about 2017, I think you said that we would expect Visa to deliver earnings like investors are accustomed to. And I was wanting for some color on that. And then is the Costco and USAA, are there portions of the fees that are one-time very large fees such that we shouldn't expect the high end of the range longer, that type of a range longer term, or should we think of the higher incentive range longer-term? Vasant M. Prabhu - Chief Financial Officer & Executive Vice President: There were several questions there. Hopefully, I remember them all. In terms of the Costco business, all I was saying was that it wouldn't have an impact on 2017. I'm forgetting all the questions. There were several questions there. Jack, can you help me?

The first piece was what are the returns or earnings you would expect. Vasant M. Prabhu - Chief Financial Officer & Executive Vice President: Oh, right, you made some reference to earnings. I just want to make sure that we were just making sure people understood that this year we had two big things going on that hopefully we won't have to deal with next year. One is we have this interest expense, which clearly did not have offsetting operating income in the timeframe that we expected, and that was a meaningful drag on our earnings this year. And clearly, once the Visa Europe deal closes, we will have the offset. That was the intent of the debt issuance. So that was clearly almost a full point of drag on growth, and we just want to make sure people were aware of that. Second, we have seen the headwinds that we talked about coming into the year. We are hopeful that they will moderate as we go into next year. And then third, the conversions that we believe will add some additional ballast, so to speak, to revenues really aren't helping us, in fact, are a drag this year because of this lag issue. So all I was doing was pointing to those things. We'll talk about it next year at the appropriate time and give you our best sense for next year. I think we were just highlighting some of the elements of this year that were fairly unique.

Thanks, Bob; next question, please?

Our next question is from Chris Donat with Sandler O'Neill. Your line is now open. Christopher R. Donat - Sandler O'Neill & Partners LP: Hi, good afternoon. Thanks for taking my question. I'm curious. With the software solution you've announced for EMV chips in the United States, do you have an opportunity to roll out the same software solution across the other markets that already have EMV? And would you do this for free or would you charge for it? Is there some potential revenue upside associated with it? Charles W. Scharf - Chief Executive Officer & Director: No. First of all, on the second one, this isn't about revenue at all. This is about just improving the customer experience. And remember, around the rest of the world, I'd say two things. EMV is working; it's well accepted. And so we're addressing a very specific concern here as we go through this transition. And then the second thing is, in some of the major markets across the world, there's a very high degree of contactless – that's a card with a chip in it that can be used on a contactless basis, which are very, very fast transactions. And so we continue to promote that as well, and we don't have the issue outside the U.S. that we have in the U.S. as we go through this transition.

Next question, Sam?

Our next question is from Don Fandetti with Citigroup. Your line is now open.

Yes, Charlie, so you've won two sizable deals with USAA and Costco. I was just curious if there are any other large portfolios or conversions out there that you're looking at. And then secondarily, it sounds like you're a little upbeat on the U.S. consumer, but the volumes did slow a little bit. Wanted to get your sense there. Charles W. Scharf - Chief Executive Officer & Director: Yeah, so let me on the first one, and I talked about this a little bit. I think when it comes to our position, especially in the U.S., where certainly a lot of these big co-brands are, we love the position that we have. We aren't looking to gain share by being very, very active at targeting or anything like that. Costco is very unique. That was Costco looking, initially thinking about whether or not they wanted to change their issuer and their network. And I've spoken about USAA about how that actually came about. So what we're most focused on in the U.S. is continuing to do a great job and retain the great business that we have on the issuing program side. Vasant M. Prabhu - Chief Financial Officer & Executive Vice President: And on the second part of your question around the U.S. consumer, I think it's important to point out that, I think to perhaps to everybody's surprise, gas prices today are actually lower than the lows reached last year. And in the second quarter, the gas drag was almost as bad as it was last year. It was at least a point on growth in the second quarter. And if it stays at these levels, gas is still a drag on U.S. payment volumes, almost not as bad as last year but quite high. So that's another…

Sam, with that, we have time for one last question.

And our last question is from George Mihalos with Cowen. Your line is now open. George Mihalos - Cowen & Co. LLC: Great, thanks for squeezing me in, guys. I guess I'll ask a mobile payments question. And that would be, Charlie, any updated thoughts on the potential longer term to monetize tokenization and maybe bring us up to speed with conversations you're having with issuers about them running their own token vaults? We would appreciate any color there. Charles W. Scharf - Chief Executive Officer & Director: No, we've been very, very consistent that we're not looking to monetize tokenization. Tokenization is a great enabler of different experiences that are out there. We think we're a logical place for the tokenization to take place, but we don't have to be the only place that tokenization is done. So there are some that would like to do more work themselves, create the infrastructure to do that. And we're working with people to ensure that people have that ability. But like most things, we have to compete because we are the right place with the right set of capabilities in a way that they trust more so than other places. And so for us, it's a service, it's an enabler, but not something that we're looking to charge for.

And with that, we want to thank everybody for joining today. If you have any follow-up calls, feel free to give Victoria [Hyde-Dunn] or myself a call. Charles W. Scharf - Chief Executive Officer & Director: Thank you.

Thank you, speakers, and this does conclude today's conference. Thank you for joining. All parties make disconnect at this time.