MasterCard, Inc.'s (MA) CEO Ajaypal Singh Banga on Q1 2014 Earnings - Call Transcript

MasterCard, Inc. (MA) Q1 2014 Earnings Call Corrected Transcript: 01-May-2014


Corporate Participants

Barbara L. Gasper - Head-Investor Relations, MasterCard, Inc.

Ajaypal Singh Banga - President and Chief Executive Officer, MasterCard, Inc.

Martina Hund-Mejean - Chief Financial Officer, MasterCard, Inc.

Other Participants

David J. Koning - Analyst, Robert W. Baird & Co., Inc. (Broker)

Daniel R. Perlin - Analyst, RBC Capital Markets LLC

Tien-tsin Huang - Analyst, JPMorgan Securities LLC

Christopher R. Donat - Analyst, Sandler O'Neill & Partners LP

Jason A. Kupferberg - Analyst, Jefferies LLC

Smitti Srethapramote - Analyst, Morgan Stanley & Co. LLC

Craig J. Maurer - Analyst, CLSA Americas LLC

David S. Hochstim - Analyst, The Buckingham Research Group, Inc.

Kevin D. McVeigh - Analyst, Macquarie Capital (USA), Inc.

Sanjay Sakhrani - Analyst, Keefe, Bruyette & Woods, Inc.

James Friedman - Analyst, Susquehanna Financial Group LLLP

Bryan C. Keane - Analyst, Deutsche Bank Securities, Inc.

Bob P. Napoli - Analyst, William Blair & Co. LLC

Darrin D. Peller - Analyst, Barclays Capital, Inc.


Operator: Welcome to the MasterCard First Quarter 2014 Earnings Conference Call. My name is Adrianna and I'll 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 would now like to turn the call over to Barbara Gasper. Ms. Gasper, you may begin.

Barbara L. Gasper, Head-Investor Relations

Thank you, Adrianna. Good morning, everyone, and thank you for joining us for a discussion about our first quarter 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 for the queue.

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 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 week through May 8.

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 here today. Information about the factors that could affect future performance are summarized at the end of our press release as well as contained in our most recent SEC filings.

With that, I will now turn the call over to Ajay Banga. Ajay?

Ajaypal Singh Banga, President and Chief Executive Officer

Thanks, Barbara, and good morning, everybody. For the first quarter we are very pleased to deliver strong results with net revenue growth of 14%. That's driven by a healthy growth in gross dollar volume by process transactions and cross-border volume. And this combined with our operating expense growth of 12% is what's helped us drive EPS growth of 18%. So as usual, let's start by the global economic trend starting with the U.S.

Our first quarter SpendingPulse data showed U.S. retail sales ex-auto growing at 2.8%, down from the 3.9% growth in the fourth quarter of last year. And I guess that reflects the harsh winter weather conditions that affected parts of the U.S. as well as a later Easter. But on a positive note, consumers continue to spend more in some interesting sectors like airlines, lodging, restaurants, furniture and furnishings, and that reflected the increased consumer confidence we saw in the quarter. But we're going to continue to watch these indicators in the coming months. The good news is that despite the headwinds on consumer spending, our U.S. business in the first quarter saw process transactions and gross dollar volume growth higher than the fourth quarter 2013.

In Europe, the environment continues along a path of slow growth with positive PCE projection for the year, although those are slightly down from last quarter's forecast. Across the region, consumer sentiment and business sentiment have continued to improve, and are MasterCard's total European volume growth for the first quarter was in the mid-teens, and process transaction growth in the low 20%s, a bit higher than the fourth quarter, driven by growth in a number of countries including Russia, Sweden, and Turkey, as well as continued healthy growth in the UK.

In Latin America, the overall consumer confidence was mixed across the region. Brazil's consumer confidence starting to stabilize in March, and our SpendingPulse data showed a 5.9% growth in consumer spending there, up slightly from last year's fourth quarter. In Mexico, consumer confidence also showed some signs of stabilizing, and I think it's expected to improve. Our business in the region continues to do well with GDV and process transaction growth for the first quarter in the mid to high teens.

In Asia Pacific, consumer confidence like in Latin America remained mixed with some evidence of a slight slowdown in consumer spending during the first quarter. But in South Korea, China, and Southeast Asia, they actually saw improvement in confidence levels. Interestingly, business sentiment was up across the region. And our business in the Asia Pacific, Middle East/Africa continues to do well with process transaction growth about 30% and GDV growth in the high teens for this first quarter.

So overall, the U.S. and Western Europe seem to be continuing to move along a slow path to economic recovery. While there has been increasing optimism about Europe, I think the recent geopolitical tension could have an impact on consumer and business sentiment. And growth in Asia Pacific and Latin America, as you know, is affected by, among other things, the continued global economic instability but also by domestic concerns like labor market conditions and consumer sentiment and spending and elections and - all of which we'll continue to watch.

So before we move on to our recent business highlights, a couple of quick words about legal and regulatory matters. First, at the end of March, the U.S. District Court of Appeals reversed Judge Leon's July decision on the Federal Reserve's implementation of the Durbin Amendment, so absent further appeal, the regulation remains as it was originally implemented by the Fed. The appeals court decision is good for the industry for a couple of reasons, including because it clears away one of the uncertainties in the market related to EMV adoption.

Second, with regards to proposed European interchange legislation, you've heard us say before that this legislation offers us both opportunities and challenges. A vote by the full Parliament occurred in April, which added, among other things, commercial card interchange to the scope of the legislation. Separately, a panel review of the legislation was started in late Feb by the council of ministers, and the European Commission will also need to weigh in. We're actively engaged with all these parties. There is still opportunity for the proposed language to undergo changes, and we continue to expect that adoption is probably most likely in the first half of 2015.

So finally, something about Russia and the geopolitical events going on there. Over the past few years, we have made a lot of good progress in Russia, although it represents only a little over 2% of our total net revenue. The sanctions have had a significant impact in that market, not as much from an immediate financial standpoint for MasterCard, but rather on the ground, where the Russian government is working to implement legislation to change their domestic payments market structure. And we're still assessing all the elements of this new law. There are provisions there that I believe would create serious complications for the way that we can operate in that market.

One of those provisions deals with a requirement for on-soil switching capabilities. Now, with our distributed network structure as a foundation, we've actually moved further towards an environment that can be flexible in terms of on-soil requirements. In fact, earlier this year, we launched a 24-by-7 operations center in Russia. What we have in place today does not, I believe, meet all of the new Russian requirements, although we're still studying those, but we believe it may actually provide some of the ingredients that will be necessary. We're also very concerned about the new collateral requirements in the law, which we continue to look at.

At the end of the day, we're going to need to conform to this new Russian law, as well as international law, when we operate our business in the Russian market, just as it is in other markets. So, overall, we expect a small impact from this current Russian situation on our results for 2014. But the situation is fluid, and it's difficult for us to be certain numerically about the impact for 2015 and beyond, at least until the law is clearer and we can work our way through those details, which will take some months to happen. So let's move on to some of our recent business activity.

During the quarter, we signed a number of new agreements that support the expansion of our business around the world. And let me run through a few quick examples. SEB Baltics, which is a division of the SEB Group. SEB Group is a key MasterCard relationship in the Nordics, and SEB Baltics is in the process of converting their entire debit and credit card portfolio to MasterCard. So as a result, we expect to be the leading payment brand in the Baltics by the end of this year.

Additionally, Svenska Handelsbanken, the second largest retail bank in Sweden, will begin converting all of their consumer credit, debit, co-brand, and installment cards across all their markets including the Nordic, Baltics, UK, Netherlands, and Poland. This deal actually represents the largest conversion in Europe since we won the business with Swedbank and will make MasterCard both the exclusive partner of Handelsbanken but also the leading debit brand in Sweden, which as you know is one of the countries with the lowest use of cash in the world.

Kenya Commercial Bank, East Africa's largest bank, announced that it will issue 5 million debit prepaid and credit MasterCard products over the next five years. That builds on the partnerships we've announced over the last couple of years in Kenya with both Macro Mart supermarkets and Equity Bank, and more than doubles the number of our cards in that market. And as we've said before, over the last several years, we've been focused on investing and deepening our merchant relationships as well.

And you've read that Walmart and Sam's Club announced recently that they will start converting their co-brand credit cards to MasterCard starting this summer. And starting in early 2015, Target will be converting their Target branded credit cards to MasterCard. Additionally, their entire REDcard portfolio, which adds in their private label cards, will be enabled with our EMV solution and will support chip and PIN transactions in their stores. We're delighted to be chosen, obviously, as Target's EMV solutions partner and for their faith in MasterCard as quoted from their press release that they will, quote, "aggressively move forward to bring enhanced technology with the most secure payment product available," unquote.

In addition, we're also expanding our relationship with Walmart beyond the U.S. to work with some of their Latin American affiliates. So in Mexico, their Sam's and Suburbia co-brand cards are being converted to MasterCard, one from a competitor, the other from a private label store card. In Chile, they've recently started to migrate their private label cards to co-branded MasterCards. And that Walmart local supermarket brand - it's called Lider, one of the largest in that country. That's the one we are migrating.

One additional example of the progress we've made in expanding our merchant relationships is in Japan with who just recently launched a MasterCard co-brand card. And that card provides the cardholder an opportunity to earn rewards when shopping on Amazon's website or at any MasterCard-accepting merchant, as well as free shipping through Amazon Prime.

So moving on to the mobile front, the convergence of the physical and digital worlds is reflected in the continuing shift in payments to digital forms and more interestingly new payment flows. It represents one of the most significant changes in our space since I think the introduction of plastic payment cards many years ago. And over the last several years, we've been developing a foundation to support this shift by establishing products, services, and standards to address the needs of this new ecosystem.

So you've heard all of us talk about many of these in the past. MasterPass Digital Wallet is one example. Our efforts around tokenization another example. We'll be continuing to build on that, and for example, last quarter we announced our acquisition of C-SAM, a leading provider of mobile wallet software. The idea is that this would help us increase the pace of the deployment of our MasterPass wallet as well as the development of additional services, customer-specific offers, for example, loyalty and rewards, for example.

So when it comes to mobile, we are technology agnostic. We support implementations based on different market models around the world. One model puts payment credentials on the phone. So for example, we recently announced a collaboration between TREVICA, which is our European provider of processing services. It's a business we own and three mobile operators who represent about 80% of the mobile subscribers in Germany: Deutsche Telekom, Telefonica Deutschland and Vodafone. Any bank in Germany that connects to TREVICA will be able to provision their cards to the phones provided by any of these three mobile operators.

A different model is to put payment credentials in the cloud as compared to on the phone. And for that, we will soon publish technical specs supporting what we announced a little while ago which is Host Card Emulation which will make it easier to roll out contactless NFC-based model payments in markets that want alternatives to storing payment data on the phone.

So on a final note, MasterPass momentum continues. We are now in seven countries: the U.S., UK, Canada, Australia, New Zealand, Italy, and China, with more than 40,000 merchants accepting the wallet. In addition, what I think is really interesting, MasterPass will be available soon as an in-app option so that it can be selected within a mobile shopping app, eliminating the need for the consumer to have to enter payment card information of any type to make a purchase.

So with that, I'm going to run it over to Martina for a detailed update on our financial results and all our operational metrics. Martina?

Martina Hund-Mejean, Chief Financial Officer

Thanks, Ajay, and good morning, everyone. Let me begin on page three of our slide deck where you see the as-reported as well as the FX-adjusted growth rates. All of my comments pertain to the FX-adjusted figures, which are essentially the same as the as-reported numbers due to the strength of the euro offsetting the weakness of the Brazilian real. As Ajay said, we are very pleased with our strong performance this quarter, which we were able to deliver in spite of the mixed economic environment.

Net revenue growth of 14% combined with operating expenses growth of 11% resulted in net income growth of 14%. EPS growth was 18%, and share repurchases contributed $0.03 per share. During the first quarter, we repurchased just over 21.3 million shares at a cost of approximately $1.7 billion. Through April 24, we repurchased a little more than 6.2 million shares at a cost of approximately $450 million, and we now have $1.5 billion remaining under the current authorization. We will continue to look to repurchase shares on an opportunistic basis.

Turning to cash flow, cash flow from operations was $568 million. Additionally, at the end of the quarter, we completed an inaugural debt offering of $1.5 billion, and we ended up the quarter with cash, cash equivalent, and other liquid investments of about $6.6 billion.

So let me turn to page four, and here you can see the operational metrics for the first quarter. Our worldwide gross dollar volume, or GDV, was up 14% on a local currency basis, and that's essentially the same as last quarter. U.S. GDV grew 9% and our U.S. debit growth was also 9%, again same as last quarter. On the credit side, after some difficult quarters in consumer credit, we are turning the corner with growth of 6%, an increase from last quarter. Also commercial credit growth was in the mid-teens, up from the low teens last quarter. And outside of the U.S., volume growth was 16% on a local currency basis, and this continues to be driven by APMEA and Latin America with more than 15% growth and solid mid-teens growth in Europe.

Cross-border volume grew 17% on a local currency basis to slightly down from the 18% growth that we saw in the fourth quarter. APMEA grew more than 20%, with Europe and Latin America in the high teens. And countries contributing to this cross-border volume growth this quarter include Australia, China, Russia, Italy, and Sweden. And we also saw some deceleration in Latin America and in Canada.

Turning to page five, here you see process transactions. They grew almost 14% globally to more than 9.8 billion. We saw double-digit growth in most regions with particular strength in APMEA and Europe. And globally the number of cards grew 8% to just over 2 billion MasterCard and Maestro branded cards.

So let me turn to page six for some insights on a few of our revenue line items. Domestic assessments grew 8%, while worldwide GDV grew 14%. And the gap between those two growth rates is 6 PPT, which is driven primarily by the contribution of higher growth outside the U.S. with lower than average revenue yields. Also many of these non-U.S. markets fall into the category of emerging markets, where the growth of ATM transactions is often higher than POS transactions. Cross-border volume fees grew 17%, in line with cross-border volume growth. But when you drill down into the detail, 10 percentage points of pricing, the majority of which laps in this quarter was essentially offset by a higher mix of intra-European activity.

Transaction processing fee grew 14%, in line with the 14% growth in process transactions I just spoke about. And overall, as I said earlier, net revenue growth was 14% both on an as-reported and FX-adjusted basis as the impact of the euro and the real offset each other. Beyond those two currencies, we had a roughly 2 PPT headwind from the weakening of other local currencies such as the Russian ruble, the Canadian dollar, the Australian dollar, and the Turkish lira, mostly in the domestic assessment in the cross-border revenue categories.

And moving onto page seven, here you can see that total operating expenses were up 11% in the quarter as we continued investing back into the business. In addition, I'd like to point out two other items that contributed to this growth. First, there was a 2 PPT impact due to the rebalancing of our quarterly cadence of A&M away from Q4. And second, there was an almost 2 PPT impact due to acquisitions. Also D&A increased 19% as we begin to see the impact of our growing levels of capital expenditures. This primarily reflects investments in technology, supporting initiatives like Priceless Cities and MasterCard

Turning to slide eight, let's discuss what we have seen in April through this past Monday. Each of our business drivers was flat or higher compared to the first quarter. The numbers through April 28 are as follows. Globally, our cross-border volumes grew about 17%, the same as our first quarter growth rate. While U.S. cross-border was down slightly, rest of world was a bit better driven by Europe. In the U.S., our process volume grew 11%, up about 2% from what we saw last quarter, due to the continued improvement in both consumer and commercial credit.

Process volume growth outside the U.S. grew 16%. That's essentially the same as the first quarter. Our European process volume growth was in the mid-teens, again the same as what we saw in the first quarter despite some deceleration in Russia. And globally, process transaction growth was 14%, the same as what we saw in the first quarter.

Looking forward, let me start with our long-term performance objectives for the 2013 to 2015 period. We continue to believe that our business can deliver an 11% to 14% net revenue CAGR and at least 20% EPS CAGR over this period. These rates are on a constant currency basis and exclude new M&A activities. We also remain committed to our annual operating margin target of at least 50%. Since we first introduced these performance targets back in September of 2012, a number of things have happened in the payment space.

Three interesting and relatively recent developments are, one, while we learned about the loss of the Chase portfolio in late 2012, we are only now in the process of working through that de-conversion. However, you can already see our progress on winning new deals, particularly in the U.S. consumer credit space, which shows up very nicely in our U.S. consumer credit metrics. Two, the current geopolitical tensions around the Russia situation. And three, the continued evolution of the European payments industry regulation.

We expect minimal impact in 2014 from either the Russia situation or the European regulation. Looking ahead, Russia will be complicated to work through. While that market currently represents a little over 2% of our revenue, it's unclear today how developments there will impact us over the next two to three years. With respect to the European regulation, like all other regulatory actions that we faced over time, it will create challenges for the payment space. But as in other cases, it will also open up new opportunities for those who are innovative and competitive, and we will look for ways to take advantage of that.

We are monitoring each of these situations closely, but after weighing a number of factors, we are still confident about being able to deliver on our long-term commitments. That said, remember these objectives exclude M&A activities, and since we've done a number of deals, our as-reported results will include the impact of those. So let me now share with you some more specific thoughts about 2014.

Over the past several months, we have announced four acquisitions spanning the processing, mobile, and loyalty spaces. Therefore I am updating the EPS dilution in our expected as-reported results for full-year 2014 from the $0.01 to $0.02 that I mentioned on our last earnings call to $0.06 to $0.08. The quarterly impact will ramp up over the course of the year, and the timing of the deal closings could affect the total dilution as well as the quarterly impact. We will continue to update you as we go forward about the potential impact of any additional M&A activity.

Turning specifically to net revenue, let me highlight three points. First, Q1 growth came in a bit higher than expected; however, we are still forecasting to come in at the low end of our three-year range for full-year 2014, excluding M&A and at a constant currency. That includes some small impact from the Russian situation as well as the attrition that we expect from Chase.

Second, we still have no definitive schedule from Chase, and while the de-conversions have started a bit slower than we originally expected, we continue to believe most of the attrition will occur in the latter half of this year with some continuation into 2015. And third, our new acquisitions are expected to contribute up to an additional 1 PPT to our as-reported net revenue growth.

On the operating expense front, similar to net revenue, we haven't changed our view at all about expense growth from what we said in January. However, when you now add in the impact of acquisitions, the as-reported growth rate will be in the low double digits. Growth in D&A will continue to accelerate beyond what we have seen in the past, likely in the 25% range, due to our higher level of capital expenditures as well as the impact of amortizing intangible assets related to acquisition.

As a reminder, you will need to add into your models roughly $30 million over the balance of the year to account for the interest expense associated with the inaugural debt offering that we did in late March. And again for modeling purposes, you should continue to assume a full-year tax rate of about 32%, which does not recognize the impact of discrete items. And finally, with respect to FX in 2014, you need to think about it in two pieces. First, remember that when we talk about constant currency, we're talking about the impact from our functional currencies besides the U.S. dollar.

If those rates remain similar to where they are today, so that's the euro trading at the 1.38 level and the Brazilian real at the 2.24 level. For the rest of the year the net impact for the euro and the real would be a slight tailwind for the year. As I mentioned earlier, the FX impact of these two currencies was minimal in the first quarter due to the strength of the euro, offset by the weakness of the real.

Further, beyond the functional currency impact of the euro and the real, we have already seen a 2 PPT headwind to net revenue growth in the first quarter from other currencies depreciating against the U.S. dollar and the euro primarily. While we are carefully managing those exposures, we have assumed some impact for the rest of the year.

Now let me turn the call back to Barbara to begin the Q&A session.

Barbara L. Gasper, Head-Investor Relations

Thank you, Martina. We're now ready to begin the question and answer period. In order to get to as many people as possible, we ask that you limit yourself to a single question and then queue back in for additional questions.


Operator: [Operator Instructions] And our first question comes from Dave Koning from Baird. Go right ahead.

<Q - Dave Koning - Robert W. Baird & Co., Inc. (Broker)>: Yeah, good morning, and great job. I guess my question is just cross border, you mentioned the price increase that lapped. Should we expect now if we have high-teens cross-border growth to generate high single digit revenue growth, so about a 10% disconnect between the two for the rest of the year?

<A - Martina Hund-Mejean - MasterCard, Inc.>: Yeah, I mean, I said that the pricing that we had put in last April in 2013, is pretty much lapping. Almost all of it is lapping at this point in time. So you should expect that what's happening between the cross-border volume fees as well as the cross-border volume growth itself should be much closer in range. The impact is continued to be impacted of course by two things. One, the mix of the intra-European travel, and two, by local currency as we're still seeing a weakening in foreign exchange rates versus the euro and the U.S. dollar.

<Q - Dave Koning - Robert W. Baird & Co., Inc. (Broker)>: Great. Thank you.

Operator: And our next question comes from Dan Perlin from RBC Capital Markets. Go right ahead, sir.

<Q - Dan Perlin - RBC Capital Markets LLC>: Thanks. So the question I have I guess is the success that you guys are starting to have and the kind of the pace of some of the co-branded card portfolios in the United States for credit. I'm just wondering, how is it that you're differentiating yourself here in that environment? I know that your competitor recently announced that they're going to drop I think 50% of their operating rules. And I'm just wondering are you guys less cumbersome in that respect? Are you closer to these retailers? And just generally I guess what is allowing you to differentiate yourself right now? Thanks.

<A - Ajay Banga - MasterCard, Inc.>: So I guess I'm not quite sure what the competitors are doing in that space. We have already worked our operating rules down, actually quite some time ago, couple of months back, three, four months back, toward the end of last year. I'm actually not aware of what exactly the others are planning to do. So I'm not going to comment on a comparison. But I'm pretty confident that we aren't winning our business based on operating rules only. We win our business based on analytics and capabilities around those. We build our business based on what we do in terms of acceptance. We build our business based on the kind of marketing and co-programs we do. We build it based on relationships, and of course we build it based on pricing. And that's always the thing that everybody looks at.

So it's a mix of all those things. And to me, the last few periods of months when this entire issue with Target happened actually has opened a whole new set of discussions around EMV and chip and signature and PIN and tokenization, and we think that we represent a good thought process in that space. And so all these things put together I think are helping us win business. Now, we don't win every deal we bid for, don't get me wrong. These are still going to be singles and doubles. But I said that a year or two ago. But we're doing them consistently and steadily, and we'll win some, we won't win the others. But that's one of the ways for us to rebuild our position in the consumer credit business in the U.S. In addition to what we're doing with our bank partners, where we are little by little winning deals in that growth areas of their credit book too. So it's kind of a mixed bag of what we're doing. I wouldn't put it all down on any one silver bullet. I wish life was that simple, but it ain't.

<Q - Dan Perlin - RBC Capital Markets LLC>: Thank you.

Operator: And our next question comes from Tien-tsin Huang from JPMorgan. Go right ahead, sir.

<Q - Tien-tsin Huang - JPMorgan Securities LLC>: Okay, great. Thanks. Just a follow-on to that last question. On the Target front, I'm curious did your EMV solution cause you to win that, or were there other factors behind it? And then as a follow on or bigger picture question, do you think this EMV push could actually drive some brand flips? Thanks.

<A - Ajay Banga - MasterCard, Inc.>: Tien-tsin, you're going to have to ask Target why they gave us all the business, but at the end of the day, again I believe it is a mix of things. And I wouldn't rely overly on any one thing, because I don't think any merchant or any bank goes based on any one item. It's a mix of things we bring to the party that allows us to win. And then other times we will lose because we don't bring the right mix to that party. So I've kind of got my feet firmly on the ground about this issue.

We've got two of the largest retailers in the U.S., between Walmart and Sam's on the one end and Target now, but it's a win one by one at a time. So I wouldn't conclude too much either one way or the other unless you ask Target and they give you a different answer.

We're just excited very be their partner because I've seen them, having gone through what they've gone through, their desire to really make a big difference, and that's useful for somebody like us who also is trying to grow in that space. So that's kind of what's going on in these wins. Will you get a chance to get more flips? I don't know yet. I honestly don't know. I'm still focused on the singles and doubles and just keeping my head down and trying to win deals.

<A - Barbara Gasper - MasterCard, Inc.>: Next question please, operator.

Operator: Thank you. Our next question comes from Chris Donat from Sandler O'Neill. Go right ahead, sir.

<Q - Chris Donat - Sandler O'Neill & Partners LP>: Good morning. Thanks for taking the question. Wanted to ask a follow-up on the Target and the chip and PIN enablement. Is that something that in the United States chip and PIN isn't - entering PINs is not something I think U.S. consumers are comfortable doing. So is this more giving Target the optionally that if consumers do want that level of security, they have it, or is it blanket for everything? Can you just help us understand where that fits in?

<A - Ajay Banga - MasterCard, Inc.>: Sure. Sure. The whole EMV migration is going to depend a little bit on the manner in which this rolls out. The chip cards will definitely be coming in. I mean, look, a number of issuers are already issuing chip cards for their overseas travel. And my number may be wrong in the head, it's a month or two old, but I do recollect somewhere between 6 million and 8 million cards, and I might be a little off the number, already issued that are chip-enabled by banks to individuals who travel. I personally use those as well. Our entire corporate card portfolio in MasterCard for our employees is chip-enabled. In some cases, it's chip and PIN like our corporate card, and in others like my personal card, it's chip and signature.

You'll find that different models of this will emerge over a period of time, depending on the adoption of PIN terminals at the point of sale, depending on the banks' concerns about different kinds of losses in their loss book and the advantages and disadvantages of those. And then finally and most importantly, it will depend on consumer behavior. And so it's a mix of those three. And in all these cases, while we are going to enable chip and PIN, as you know we've even incented for people to have chip and PIN, but at the end of the day, we will work with what works in that environment. And that's what we're trying to do.

<A - Barbara Gasper - MasterCard, Inc.>: Next question, operator.

Operator: And our next question comes from Jason Kupferberg from Jefferies. Go right ahead.

<Q - Jason Kupferberg - Jefferies LLC>: Thank you, guys. Ajay, just hoping you could just drill a little bit more into the Russia legislative process to the extent you guys have some insight into some of the milestones or next steps. I think you said it'll probably be a multi-month process until it fully plays out. So if you can help us understand that a little bit. And in conjunction with that, just how are you guys just sort of probability weighting some of these I guess worst-case scenarios if some of these more onerous provisions actually become law. I mean does it feel more like that's just kind of some saber rattling, or is it felt to be a very serious threat of passage into law?

<A - Ajay Banga - MasterCard, Inc.>: Jason, I think that the whole Russia situation is all very serious, both at a geopolitical level and in our own small way. I don't think this is a saber rattling situation any longer. I think this is going to be tough to work for almost everybody, governments and companies, over the next few months or periods of time. It might last longer than that in one way or the other. That's just me and my personal opinion. As far as we're concerned as a company, what we've seen in the recent legislation that got approved by the Duma and then by the upper house, but hasn't at least until this morning received the signature of the president. But I'm assuming that's a matter of time. And somewhere over the next few days, that will probably happen. For all I know, it could be happening now. And therefore I assume that that legislation will get enacted.

Two of its provisions that are really interesting and complicated are the ones that I picked on when speaking, and Martina picked on a little too. One of those has to do with the on-soil requirement, and the definition of on-soil obviously will depend - the devil is in details of what constitutes on-soil versus what constitutes not being there. Is it just a question of data moving, is it a question of clearing, is it a question of authorizing, is it a question of settlement, is it clearing, authorizing, and settlement? There's a gazillion different - and gazillion's a technical term, but there's a heck of a lot of these different permutations and combinations that we are working our way through. I actually don't have clarity on that yet, because a lot will depend on the dialogue with the Central Bank of Russia, which will establish the rules and the processes by which the legislation actually gets implemented on the ground.

My sense is that could take anywhere between, if done rapidly, 60 days to longer than that. Given that Russia clearly feels that they need to get something done quickly, I would expect they will make some energetic efforts to get it done quickly rather than later. It was in that context, we came around to the belief that the limitation or the impact in 2014 will be small, which Martina has factored into our estimate of our revenue growth for the year, which is why one of the reasons why even though our first quarter did a little better than we thought we're still sticking around with the guidance we gave you earlier for the year as a whole.

Now if Russia doesn't become as onerous on that or something else changes, then life will change. But right now we're dealing with these imponderables and we didn't want to not acknowledge the imponderables, but at the same time tell you that in our head there is some check and balance on that system bringing us back to the guidance we already gave you earlier in the year. That's kind of how we are thinking about it.

There is another very onerous element in the legislation which has to do with the provision of collateral that will be required if somebody is considered to be a foreign payments player. Now, what's foreign, what's domestic, how do you become more domestic, does on-soil with clearing authorization and settlement make you more domestic? Is it something else that makes you more domestic? Not clear. So I don't know all that yet. I worry about all this because I consider myself to be a worrier and a paranoid guy about some of these things, but I don't know the answer yet. So, however, I don't think that will impact us directly in a financial sense as hard as could some other elements of this.

Now the third element of this is how our consumers and the market economy in Russia are behaving. In truth, the Russian economy was already slowing over the last couple of years. That's public knowledge. And we could see it in our data where we went down from very high growth rates in transactions and revenue a couple of years ago. Even though we've been growing share in Russia over the last few years, our growth rate was reducing, you know reducing but still very attractive in that sense. What we have seen in the first quarter as Martina told you was really no direct impact. People were doing what they had to do. I guess that's how it would be.

Remember that the sanctions of all the banks, including the more recent ones, impact less than 1% of the cards we've issued. So in a day-to-day sense, people are still buying their stuff, and what we are seeing changed, however, which is about to happen, is some cross-border activity, people going in, people coming out. That I expect would happen when tensions increase in an area, and I expect that to be the first impact even going out further as the Russian economy continues to get impacted by whatever goes on in the geopolitics and the reactions of the United States and Europe and other countries.

That's kind of where I am. It's a long answer. It's a complicated issue. We tried to drill into it and come out with the part that some impact will happen in 2014. It's probably 2015 and 2016 that will have more of the impact. We tried to give you guidance, but at the end of the day, this is a little over 2% of our revenue, but it's a good growth market, so I don't like it but it's what's happening. It's what we've got to deal with.

<A - Martina Hund-Mejean - MasterCard, Inc.>: As Ajay said, when you look at the domestic volume, that has been going down from a growth rate point of view from very high growth rates last year, as they are already trending down given what is going on from a pure economic point of view in Russia. And on cross-border volume, we really haven't seen a lot of change, a little bit of trending down, but not a lot of change, certainly not in the first quarter. Only very recently over the last couple of weeks we've seen a little bit less as I said in my remarks for the April 28 numbers. We've seen a little bit more of the growth coming down from a cross-border perspective.

<A - Barbara Gasper - MasterCard, Inc.>: Next question, please.

Operator: Our next question comes from Smitti Srethapramote from Morgan Stanley. Go right ahead, sir.

<Q - Smitti Srethapramote - Morgan Stanley & Co. LLC>: Yes. Thank you. My question is on debit. Your competitor recently spoke about weakness in debit payment volumes. While your numbers seem quite robust, do you think you're gaining share or are there any notable differences in debit exposure to call out that drove the divergence in trends?

<A - Ajay Banga - MasterCard, Inc.>: I guess the math will tell you we're gaining share. But I don't know what is causing the issue for the others in truth. I know that our PIN debit volumes continue to remain, as I said, above that 400 million transactions a month, which is up from the 100 that we used to have pre-Durbin. You know, it goes up and down by 10 million, 20 million transactions depending on where we are in the routing table of the larger retailers who have a very sophisticated way of comprehending where they want to parse that transaction. But that's kind of where are.

<A - Barbara Gasper - MasterCard, Inc.>: Next question, please.

Operator: And our next question comes from Craig Maurer from CLSA. Go right ahead, sir.

<Q - Craig Maurer - CLSA Americas LLC>: Hey. Good morning. Thanks. Regarding how we're progressing toward a mobile payments infrastructure in the U.S., I was wondering how discussions with banks are proceeding in terms of MasterCard perhaps filling the role of a central token provider that can aggregate all the banks into a single token source and make it easier for mobile rollout from someone, say, like Apple?

<A - Ajay Banga - MasterCard, Inc.>: So as you know, Craig, we put out this whole announcement not just as MasterCard by the way, but as an industry, Visa, AmEx, we were all in that announcement about providing tokenization as a way to help protect the increasing percentage of transactions that are digital, because that's where this impacts the most. While at the same time, allowing the right amount of information about which card is being used, which category, which type, which institution, who issued the card to flow back and forth between the merchant and the issuer. That's the whole purpose of what we're trying to do with tokenization, the way that Visa, AmEx and us are trying to do it. It's really not specific to us only.

The discussions are proceeding. We're talking to every institution. We're talking to merchants. We're talking to banks. We've had discussions with legislators who want to understand tokenization, although that's at very early stages. As you know, there's always interest in the legislative community around the whole mobile payment space, more as a way of getting aware of what's going on in the space than any other comprehension. So that's going on even as we speak.

So kind of dialogue as usual. We're making progress and being ready to do all these things. Our technological development is continuing the pace, and in fact it's going to keep adding to our CapEx. That's one of the things we've got to do. We've got to invest money in tokenization and MasterPass and we're doing it. So that's what's going on.

But at the same time as I said in my remarks, we're also working on different ways in which the investor mobile payments industry will develop. It could be through secure elements, it could be through Host Card Emulation, and there's different levels of interest of interest from banks, merchants, and hardware and MNO providers on those two elements. And then there's of course the more old fashioned way of mobile payments, which is really more for transfers, which the SMS or simple wallet based transfer of money. We're playing around in all of those from Telefonica which is more in the simple transfer of money to the conversation that you know we'd been having with more sophisticated players who are trying out different ways of doing mobile payments. So it's the whole range.

And as I've said in the past, I don't want to pick winners and losers in this. I believe that one of the things we need to do as a company is to be a strong participant in these alternative ways in which digital payments will evolve. And I actually don't know that mobile payments is the only way digital payments will evolve. It may be through variables, and mobility as a whole will probably be an asset. It may not be only the phone. And so we're trying to play around with all of those, and between Ed McLaughlin in our emerging payments area and Garry Lyons in MasterCard Labs, we have a very strong team that is working with our core products team to try and work with as many of these different methodologies as possible

<Q - Craig Maurer - CLSA Americas LLC>: Thank you.

Operator: And our next question comes from David Hochstim from Buckingham Research. Go right ahead, sir.

<Q - David Hochstim - The Buckingham Research Group, Inc.>: Hi, thanks. I wonder if you can just clarify two things. In the 2% of revenues from Russia, does that include cross-border volume? And then could you give us...

<A - Martina Hund-Mejean - MasterCard, Inc.>: Yes.

<Q - David Hochstim - The Buckingham Research Group, Inc.>: Okay. And so that could be a high percentage of that that might not disappear?

<A - Ajay Banga - MasterCard, Inc.>: Actually, it's not. It's not a high percentage.

<A - Martina Hund-Mejean - MasterCard, Inc.>: It's actually a relatively low percentage. So first of all, we said a little bit more than 2% of our revenues, but it does include all of cross border, and it's not a very significant - it's some portion, but it's not the majority. It's much less than that.

<Q - David Hochstim - The Buckingham Research Group, Inc.>: Okay. And could you just clarify what the...

<A - Ajay Banga - MasterCard, Inc.>: Let me give you a hint. An overwhelming majority of the Russian revenue is domestic.

<Q - David Hochstim - The Buckingham Research Group, Inc.>: Thank you.

<A - Ajay Banga - MasterCard, Inc.>: How is that?

<Q - David Hochstim - The Buckingham Research Group, Inc.>: That's helpful. Thank you. And could you just remind us what the revenue impact could be once the Chase portfolio is fully de-converted?

<A - Martina Hund-Mejean - MasterCard, Inc.>: No. So, David, while we are doing it is all of my remarks that I have done for 2014 as well as for the longer period, 2013 to 2015, obviously bakes in the de-conversion. But we are not calling out a specific number to a specific customer.

<Q - David Hochstim - The Buckingham Research Group, Inc.>: Okay. Thank you.

Operator: And our next question comes from Kevin McVeigh from Macquarie. Go right ahead, sir.

<Q - Kevin McVeigh - Macquarie Capital (USA), Inc.>: Great. Thank you. Just given what seemed like a little bit a higher level of rebates incentives in Q1 and obviously Q4, should we expect that to tail off over the balance of the year or just pretty consistent with historical trends as well? Should we see a bit of a step down given that the investments in Q1 and Q4 or still at relatively historical levels?

<A - Martina Hund-Mejean - MasterCard, Inc.>: So, Kevin, let me just set this a little bit correctly. What happened in Q4 was basically a catch up from the prior quarters. When you look at our Q2 and Q3, in 2013 rebates and incentives the numbers were relatively low. And then you had a catch up in Q4 for that. What you're now seeing in Q1 of 2014 is very similar to what you have seen in prior years. So you can actually say that 2013 was an anomaly from a quarter-over-quarter performance, not from a whole year, and now in 2014 you're going to see something very similar to 2012 - in 2014 to 2012.

<Q - Kevin McVeigh - Macquarie Capital (USA), Inc.>: Thank you.

Operator: And your next question comes from Sanjay Sakhrani from KBW. Go right ahead, sir.

<Q - Sanjay Sakhrani - Keefe, Bruyette & Woods, Inc.>: Thank you. I guess the accelerating GDV and process transaction growth in the United States is pretty encouraging given the backdrop. Could you just talk about what's driving that? Is it your customer engagement or is it consumer spending more? And maybe you can just talk about kind of a broader read across to the economy. Thank you.

<A - Ajay Banga - MasterCard, Inc.>: Hi, Sanjay. So, yes, as I said, SpendingPulse showed a 2 point-something - 2.8% or 2.9% growth in the first quarter ex auto. Actually that was down from the growth rate of the fourth quarter over the same quarter of the prior year. All these numbers, by the way, are not sequential quarter. They are quarter-over-quarter, the same quarter prior year. And that was down - by the way, the fourth quarter was down over the third quarter, so in a sense it feels like the growth rate of consumer spending, ex auto in the U.S., felt like it was slowing over these three quarters.

But interestingly, when you unpeel the first quarter, I actually see two things that make me feel that we shouldn't jump to that conclusion too quickly. And the first one has to do with the regional spending trends in the United States and the consumer spending trends. Aside from the Northeast which actually - our SpendingPulse data declined for the total consumer spending ex auto in the Northeast, actually the growth rate was minus. So a little decline in the first quarter of 2014 over the first quarter of 2013. And similarly in the Midwest where there was very bad weather, we had a small decline. Now, a larger proportion of the U.S. consumer spending comes from the Northeast than the Midwest.

On the other hand, the Western part of the country, from Seattle down to California, grew very, very handsomely, almost in the double digits. And the Southwest of the country, Texas through Florida, did something similar. So when you put the whole of the United States together, the weather truly, truly did seem to have some kind of an impact because it just matches too closely to this pattern.

The second thing that's of interest, and I don't yet know how to calculate the impact of it, is Easter. You know, Easter is coming at a different time, and therefore April's numbers by and large look a little better for most of us and for the consumer spending early data that I'm seeing. I haven't yet seen our new SpendingPulse data. It will come out within a few days of the 1st of May, which is now. So in a few days, it will emerge. That's kind of what I know so far. So overall I'd say that the U.S., even though the numbers at a [ph] bald (54:16) level looked like the growth rate was reducing, I wouldn't jump to that conclusion too quickly.

Operator: And our next question comes from James Friedman from Susquehanna. Go right ahead, sir.

<Q - James Friedman - Susquehanna Financial Group LLLP>: Hi. Ajay, I wanted to follow up on the Svenska Handelsbanken win. Congratulations, I know that's a very prestigious issuer. I think you had, in your comments, suggested it was your largest conversion in Europe since Swedbank. So I don't have to spend $10,000 for the Nielsen report, could you give us some context on it Svenska? How big are they relative to Swedbank? That would be helpful. Thank you.

<A - Ajay Banga - MasterCard, Inc.>: I think you should spend the 10 grand. You've got to pay for other people too. I'll send you my copy. How's that? I'll tell you this: I don't want to talk about a particular institution - it's not what I would do - in terms of their size. But I'll give you this idea. In the Nordics, there are three or four very large institutions, and you're counting - the two names you mentioned are among those three or four, right on the top. The Handelsbanken is actually the second largest retail bank in Sweden. Its presence outside of Sweden and the rest of the Nordics is lower than its presence in Sweden, so it may not be - in fact, I don't think it is the second largest for the whole of the Nordics, but it is a very - one of the large three or four big ones there.

But it's pretty significant for us because we've been trying to build our share in the Nordics now for a little while partly because that's one of those markets where cash is truly not king; where electronic payments are king. And so much so that I think the estimate of cash in terms of percentage of transactions in the Nordics is between 5% and 10% or even lower in some cases, which makes it quite the opposite of the world, which is 85% cash and check. And so we've been doing well there. We were not in a great position four or five years ago. We've actually grown ourselves nicely, and that's the flavor I was trying to provide you in terms of becoming among the largest players in the Baltics and now the largest debit card in Sweden. And we've grown our share in credit and commercial and installment cards and co-brand cards, and I feel generally good about where we are there.

<Q - James Friedman - Susquehanna Financial Group LLLP>: Thank you.

Operator: And our next question comes from Bryan Keane from Deutsche Bank. Go right ahead, sir.

<Q - Bryan Keane - Deutsche Bank Securities, Inc.>: Yeah, hi, guys. Good morning. Just more details have come out on the European regulation front. So I just want to get an update from you guys on any details on the potential challenges to MasterCard. I know you guys mentioned that as something you're highlighting. So what are kind of the things that you guys are looking at that could be a challenge?

<A - Ajay Banga - MasterCard, Inc.>: Well, there's multiple things in that legislation the way it is currently worded, although it has changed also from the original wording and in some ways the current wording is less onerous, and in others it is more onerous. The one that came through the last round added commercial card interchange to be controlled and dictated just as consumer interchange in the credit space was going to be controlled and dictated. I clearly don't like that because - remember, we are inside this legislation, the aspect of other four-party schemes as well as schemes that look like four-party but may not be called four-party are also included.

But at the end of the day, I think what really happened here, and this is information gleaned more from hearsay than reality, is that my sense is that the recent vote was a confused vote. The legislators actually did not believe that commercial cards should be dictated in the same way as consumer credit cards, but in a mix-up in the voting pattern, it got voted the wrong way. I don't know whether that will get corrected over this coming process, but that's kind of what we're discussing openly and transparently with the legislative community and the regulatory community in Europe. I would like that to not be in the rules clearly.

But beyond that, there's a bunch of other rules that have started. Remember the one about separation of management between scheme and processing, and there was this whole thing of what's constituted in separation and what's not. We're getting a little more clarity. It feels like the way it looks today that management would have to be separated, you would have to have some legal entities separated, but the holding company could be the same.

Now, that's complicated but not impossible. It's a pain in the neck, but it's not impossible. And so those are the kind of things we're working our way through. Some of them have more implications for other players in the ecosystem, for merchants, for banks, for us. It kind of varies each time. And we're trying to take a balanced view of it. I know for sure that when regulation comes in, it causes some amount of uncertainty and movement.

But, on the whole, what we're trying to do here is work our way through the details of it, talk to the regulators and the community there about the whole aspect of the regulation. I think they have tried to bring in more elements around the level playing field that we had asked for. I don't know that all the elements are there yet in reference to the commercial card, for example, but they are in the others. And so kind of a mixed bag. And I'm not going to go much further on this call, but I'm going to work my way through it over the next, you know, six months. Remember, we're talking about first half of 2014 when this will probably get bedded down, and we've got as you can imagine a number of very smart people working on it in some detail.

<A - Barbara Gasper - MasterCard, Inc.>: First half of 2015.

<A - Ajay Banga - MasterCard, Inc.>: 2015, sorry, not 2014. Error. 2014 is what we're in. 2015. As you can see, I'm losing track of time. That's my advancing age.

<A - Barbara Gasper - MasterCard, Inc.>: Looking ahead.

<Q - Bryan Keane - Deutsche Bank Securities, Inc.>: Okay. Thanks for the color.

<A - Barbara Gasper - MasterCard, Inc.>: Operator, next question?

Operator: Our next question comes from Bob Napoli from William Blair. Go right ahead.

<Q - Bob Napoli - William Blair & Co. LLC>: Thank you. Ajay, I wouldn't send that Nielsen report because I don't think Nielsen likes that. It's very sharp wording. I was wondering if you can give with the Russia noise, if you can give an update on China and if you've seen any movement there for opening up local processing or in country and if you feel you're in a position if you think other countries are going to follow what Russia is doing when you see the effects that sanctions can have on a payments industry and on the banking industry. So if you just talk a little bit about Russia, if you're seeing any movement there? And then at what point do you just - I mean, on Russia I think one of the terms that I saw on one of the - I'm not sure what exactly what got passed, but they wanted Visa and MasterCard to put up $4 billion, $3.8 billion, two days' processing, or something like that. At what point do you just throw in the towel on Russia?

<A - Ajay Banga - MasterCard, Inc.>: So you got two different kinds of parts in there. The one about the level of collateral and as I mentioned that's one of the issues, I actually don't think the number is what you just said. I think it's a lower number than that. But having said that, it's not a number I'm interested in. So to be clear, either which way I'm not a happy boy on that one. But, you know, I don't know. We'll see. We're going to have the discussions with the Central Bank. We are very transparently in conversation with them. It's kind of interesting on the ground in Russia, banks and clients and merchants are still doing a lot of new things with us. And it's almost like that's continuing. We've actually launched new things in the last three weeks with them.

And then on the other hand - and we're having a very open, by the way, transparent discussion with the Central Bank, which as you expect with a good regulator, you would expect that transparency of discussion. Clearly there is a political circumstance in Russia that is driving in a different direction. This whole thing of having domestic payment schemes is not new to us, Bob. We're dealing with this in Europe for a long time before SEPA which of course changed it, and as you know, that's opened the doors for us there, but recently in Mexico, which has always been dominated domestically by two domestic payment switches that were owned by the banks. The Mexican government has just literally, and I think it's three or four weeks ago, has put out a new regulation that actually opens that space for people like us and our competitors to attempt to begin to process domestic transactions.

Now it will be a long road. Nothing happens over night. I mean SEPA has been one of the longest winding roads that we can think of but it's there. We're going to go after that kind of stuff. So stuff comes in and stuff goes out. I don't know that any one incident makes that whole domestic payment switch versus foreign company working here, whether it changes the balance greatly. Stuff comes in, stuff goes out. People keep talking to us. You get peaks and troughs of conversation around that space. And remember within it there are flavors. There's domestic payment switch versus on-soil processing, what constitutes on-soil level is still in the earlier answer is in itself a very detailed conversation. So that's kind of the whole element there.

China, we continue to grow in China with the partnership that we have with China UnionPay. As you know, they're winning, I'd say the overwhelming majority of the co-brands that get issued for domestic use [ph] with a blurb (64:12) on it and for overseas travel with MasterCard on it. And that's a good thing. We're also doing things with them on eCommerce. We're doing things with them on expanding acceptance in China and outside. But as far as the regulator is concerned, my sense is that they're actually working their way through what kind of policy they would have to open up their domestic market while ensuring that their country's needs are met and protected.

So I don't know that you'll go from having a completely closed domestic market to a U.S. kind of market. I never expected that to tell you the truth. The question is where in the middle, does it come? And honestly, I don't know enough about that to let you know. I was there, I don't know, five, six weeks ago at the China Development Forum when I go and speak there and I talked about a few things and met a number of regulators. I met senior leaders there. And my sense is they're very engaged and very open about the dialogue, but they're not there yet. They're still working their way through it.

<Q - Bob Napoli - William Blair & Co. LLC>: Great. Thank you.

<A - Barbara Gasper - MasterCard, Inc.>: Operator, I think we have time for one last question.

Operator: Of course. And our last question will be from Darrin Peller from Barclays. Go right ahead.

<Q - Darrin Peller - Barclays Capital, Inc.>: Thanks, guys. Listen, I thought your comments on the European regulations [ph] pertaining to the Russians implications, Chase (65:28) all three of those not impacting your guidance I guess long term is helpful. I just want to be clear, first of all: that is long-term, right? That's the 11% to 14% CAGR you're talking about? And then Martina, just as a follow-up around the dilution, I guess you mentioned earlier I think from acquisitions during the year being $0.06 to $0.07 now versus $0.01 to $0.02 earlier in the year. Can you just give a little more color on what's different now than in January? Maybe you can just frame the size, the relative size, of the deals?

<A - Ajay Banga - MasterCard, Inc.>: Let me answer the first part and let her do the acquisition part as well. Let me give a little clarity on that. I want to make sure that you hear where I'm coming from. The guidance we're referring to is up 2013 through 2015. That's the guidance we have given. That's what's called our long-term guidance.

<Q - Darrin Peller - Barclays Capital, Inc.>: Right.

<A - Ajay Banga - MasterCard, Inc.>: I believe that what's going on between Russia and the European regulation, Russia actually could be even more complicated given the level of detail we're having here as a conversation. Europe could be - some early impact which could be negative but there could be ways if we are innovative, if we are creative, and if we are competitive on the ground, I continue to believe that Europe is an enormous opportunity given that so much of Europe's expenditure outside of the Nordics is still in cash. And I think we bring a lot of assets to the table for the European government, and the European consumer, and the European merchant, and the European banks, and the European MNOs who are now good partners of ours.

So that's where we're coming from and we think that there's a lot of negative in there, but there's a lot of positives too in a business like ours. Conversion of secular trends, the market share we're winning, the deals we are doing, and somewhere in there is our attempt to balance and get to the guidance that we're giving you. It won't be easy but it's what we are committed to doing. And we have in the past found our way through somewhat complicated situations and I have some confidence that's what we're doing here too.

<A - Martina Hund-Mejean - MasterCard, Inc.>: So, as you can appreciate, we had to do a number of scenarios that gives us the comfort that we can go to the 11% to 14% for the 2013 to 2015 period. And that, you know, we feel comfortable that we can do that. Now, you asked your second question on the acquisitions. What changed is what acquisitions we have made. So first of all, we had only two acquisitions, Provus and HomeSend. This is the processing play as well as the remittance play that we talked about on the fourth quarter earnings call in January.

<Q - Darrin Peller - Barclays Capital, Inc.>: Sure.

<A - Martina Hund-Mejean - MasterCard, Inc.>: And they were relatively small properties. The other two that we have announced, one we have now closed, was see C-SAM that already Ajay quoted in terms of the mobile platform capabilities that C-SAM brings to us. That is a relatively larger property, as well as Pinpoint which is the loyalty play in Australia that will allow us to actually expand our loyalty capabilities all over Asia Pacific. That hasn't closed by the way. Both of those are a little larger, and that leads to the $0.06 to $0.08.

<Q - Darrin Peller - Barclays Capital, Inc.>: Okay. Got it.

<A - Ajay Banga - MasterCard, Inc.>: Pinpoint is also factored into Martina's thinking even though it's not closed. That's the real clarity that we want to make sure you get. And by the way back to the earlier question to make sure you feel comfortable where we're coming from, honestly what made me comfortable is the fact that there's a range there. And I don't know yet. I have no crystal ball to tell you I'll end up where in that range, and I know I'm going to have ups and downs, but that's what you guys invest in us for, which is to stay committed to trying to get to the right market share and revenue growth, and that's what we're going to do.

<Q - Darrin Peller - Barclays Capital, Inc.>: All right. Very helpful, guys. Thanks.

Operator: And, Barbara, do you have any final remarks?

Barbara L. Gasper, Head-Investor Relations

I'm going to turn the call over to Ajay for just a second.

Ajaypal Singh Banga, President and Chief Executive Officer

Thanks, Adrianna. So, everybody, thank you for your questions and I'm going to leave you with a couple closing thoughts. So we're off to a very good start in 2014. We feel good about them despite the mixed economic conditions. And I think we all believe those mixed economic conditions will probably be around for the near term. We do have some challenges with Russia and the European payments industry regulation, with the new wrinkle of commercial cards potentially being included that I just talked about. But you know what, there are opportunities too around the world which we believe give us some balance, and that's what the answer was just now in the last question about our guidance.

As Martina said, we're staying with our long-term guidance. We continue to make good progress on winning deals around the world, including our singles and doubles in U.S. consumer credit. We're also investing in new technology and other services. We're doing it organically. You heard about that through MasterPass, and tokenization. We're also doing it through acquisitions, C-SAM which will help us scale MasterPass and other things in that space, the loyalty acquisition Provus and processing and so on. All of these help increase our share, they're creating new opportunities for our business and, most importantly, they're driving the conversion of that fat target of 85% cash that exists in the world.

So all in all, our business continues with strong momentum. We're focused on delivering another good year. And I want to thank you all for your continued support and your consideration of what we are doing, and thank you for joining today's call.

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

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