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Looking ahead to Q3, we expect nominal revenue growth to be in mid single-digits which could be a couple of percentage points below Q2’s growth rate. As signaled on last quarter’s call, a softer Q3 growth rate was also anticipated given continued FX headwinds of 2 percentage points, a 17% revenue comp in the prior year quarter, also driven impart by one-time events and a moderation in cross-border spend which we view as short-term. After two softer quarters in fiscal Q4, we expect to see constant dollar revenue growth more reflective of the secular shift as well as the e-commerce and mobile trends that have driven and will continue to drive attractive growth for years to come.

As a footnote to fiscal Q4, we expect very little impact from Chase card conversions, particularly given our quarter lag and reporting of service fees. This event will have more impact in fiscal year 2015.

Our guidance for client incentives remains unchanged, despite delivering first half client incentives as a percent of gross revenues of 15.8%, we expect incentives to be second half weighted and finish the year within the current guidance of 16.5% to 17.5%. On a full fiscal year basis, we now expect our guidance of low double-digit constant dollar net revenue growth to be in the 10% to 11% range with a negative 2 percentage point impact from FX.

Now let’s turn to payment volume and transaction growth. On a constant dollar basis global payment volume growth was 12% unchanged from Q1. U.S. payment volume growth for Q2 was 8%, also unchanged from Q1. With a boost from Easter timing and better weather U.S. payment volume growth for the first 21 days of April rose to 12%. The deceleration in cross-border growth seems to be bubbling out. Q2 constant dollar growth was 8%, 4 percentage points down from Q1, but the first 21 days of April registered 7% growth nearly flat to Q2. Cross-border weakness is pronounced in Latin America, as in Brazil, Argentina, Venezuela, the Canada to U.S. corridor and Russia.

Visa process transaction growth was a healthy 11% in Q2 and rose to 14% for the first 21 days in April. Taken together we are seeing a sustained economic recovery, but no signs yet of acceleration. A word on Russia and Ukraine, we have clearly seen a drop-off in cross-border volume and sanctions are expected to have some impact on volume. Our guidance assumes several pennies of EPS impact for the fiscal year. We are fully engaged with all parties involved and we’ll continue to adjust our outlook as the situation clarifies overtime.

Next callout relates to our effective tax rate for the period. At 22% for the quarter, our rate was positively influenced by the recognition of tax benefits under IRS Section 199 which allows for the deduction of a portion of the income related to U.S. domestically produced computer software. As a reminder, successfully employing strategies to manage our tax rate lower has been a consistent component of our earnings guidance since we went public in 2008 and will continue to be in the future.

The total benefit to the quarter was $218 million, $184 million of which represented prior years and $17 million of benefit for each of the first two fiscal quarters. We expect an additional 30 million to 35 million of benefit over the remaining two fiscal quarters and a continuing benefit in future years. Accordingly, we are adding to our guidance for fiscal 2014 a full year tax rate approaching 30%. Please note, this rate was contemplated in our full year EPS guidance for fiscal 2014.

Last callout, we remain bullish on our future growth prospects and fully committed to returning excess cash to our shareholders. To this end, we repurchased a total of 5.1 million shares during the quarter at an average price per share of $217 and change resulting in the total cost of 1.1 billion. This leaves an outstanding open to buy of 3 billion at the end of March, and as always we will take advantage of market movements to effectively repurchase at attractive rates.

Now let me dive a little deeper into the numbers. As noted earlier global payment volume growth for the March quarter in constant dollars was 12%, the U.S. grew 8% and international grew 16%. Drilling down further for the March quarter, U.S. credit growth was 11%, slightly higher than the 10% in Q1. Through April 21st credit improved to 14% growth, U.S. debit was 7% in Q2, flat compared to Q1 and through April 21st debit also improved, rising to 11% growth. As mentioned earlier, global cross-border volume delivered an 8% constant dollar growth rate in the March quarter, down from 12% in the December quarter.

The U.S. grew 7% and international grew 8%. Through April 21st cross-border volume on a constant dollar basis grew 7% with the U.S. growing 8% and international registering 7% growth. Transactions processed over Visa’s network totaled 15.4 billion in the fiscal second quarter, an 11% increase over the prior year period, the U.S. grew 7% while international delivered 23% growth. Through April 21st, processed transaction growth rose to 14%.

Now, turning to the income statement. Net operating revenue in the quarter was $3.2 billion, a 7% increase year-over-year, driven primarily by growth in both domestic and international transactions and as mentioned earlier, negatively impacted by a 2 percentage point foreign currency headwind.

Moving to the individual revenue line items, service revenue was $1.5 billion, up 7% over the prior year and was driven by moderating global payment volume growth. The difference between the 7% reported revenue growth and the 12% growth in constant dollar payment volume is largely due to 3 percentage points of negative FX. Visa service fees are disproportionately impacted by foreign exchange translation, compared to other revenue lines.

Data processing revenue was $1.2 billion, up 7% over the prior year’s quarter based on solid growth rates in Visa process transaction both in the U.S. and internationally. The difference between 7% revenue growth and 11% transaction growth in the period was due to one-time SAMs accrual reversals in the prior year in combination with the influence of the fixed fee component associated with the SAMs pricing structure that does not grow with transactions. International transaction revenue was up 5% to $871 million reflecting some moderation of growth across the globe that first impacted us at the outset of calendar year 2014.

Total operating expenses for the quarter were $1.1 billion, up 2% from the prior year. Certain expenses have been rephrased to the Q3 and Q4 fiscal quarters and as signaled last quarter, we continue to expect elevated marketing investments in Q3 and Q4 relative to Q1 tied to the 2014 FIFA World Cup event. Operating margin, 65% for the second quarter, ahead of our annual guidance of low 60s, but consistent with our expectations for higher expenses in the fiscal third and fourth quarters.

That said we now expect our full year operating margin to be in the low to mid 60s. Capital expenditures were $97 million in the quarter. At the end of the March quarter, we had 629 million shares of Class A common stock outstanding on an as converted basis. The weighted average number of fully diluted shares outstanding for the quarter totaled 634 million.

Finally, given our year-to-date results and our outlook for the balance of the year, let me recap our full year guidance. Constant dollar net revenue growth 10% to 11% with 2 percentage points of negative FX impact; client incentives in the 16.5 to 17.6 range; operating margin in the low to mid 60s; tax rate approaching 30%; EPS growth of mid to high-teens; free cash flow of about 5 billion.

And with that I’ll turn the call over to Charlie.

Charlie Scharf

Thanks a lot Byron and good afternoon everyone. Let me start with a couple of comments about the quarter and reiterate some of the things that Byron had said. First of all and probably most importantly to us as we look at our results underlying what we see the business drivers from the most part remains steady from last quarter. Specifically the U.S. spending levels grew consistent with that of the prior quarter, not accelerating or decelerating but still reasonably strong and as Byron had mentioned April is off to a strong start which is certainly encouraging for us.

Non-U.S. domestic spending grew consistent levels as well and non-U.S. cross-border spending was weaker and as Byron mentioned, it’s from very specific corridors which we can certainly talk more about. Revenue growth came in where we expected and as we mentioned it was impacted by the strong U.S. dollar and these non-recurring comps from the prior year, and we expect these effects to be slightly more pronounced in the third quarter. And looking even beyond the third quarter, we would expect in the fourth quarter to see revenue growth more reflective of the strong payment volumes that continue to underpin our quarterly results.

Let me move now for a second and just describe what we see in Russia. As I’m sure you all know the U.S. government imposed economic sanctions a few weeks ago which has forced us to take action. We’re complying with U.S. law as you would expect which means that two affected banks cannot issue or acquire transactions for Visa. These banks represent less than 1% of our volume in Russia and you would expect that we would continue to comply with U.S. law as sanctioned situation evolves. As of now all of the Visa systems are processing normally and we continue to serve all of our other clients in Russia today. Due to U.S. sanctions the Russian Duma is working on modifications to the current national payment system law, President Putin has directed the Duma to pass a series of changes which could pass as early as tomorrow. The proposed modifications are evolving, but as we understand them could include the following; first of all, all domestic data processing would need to be onshore; second, most domestic transactions data would need to remain domiciled within Russia; third, a payment network must provide continuity of services in compliance with Russian law; fourth, the creation of a settlement center 100% owned by the Central Bank of Russia; fifth, a collateral requirement for foreign payment systems; and lastly, the ability to impose volumes on foreign payment system providers.

Keep in mind, this is all still fluid and while none of this is certainly helpful for Visa if passed, parts might even cause us to rethink our domestic processing opportunity in Russia. But we are hopeful that there is still opportunity for Visa to participate in the growing in the electronic payments business in Russia. We will not understand the impact on our business in potential future until the laws and regulations are completed. But we remain committed to finding ways to provide our services as long as U.S. government and Russian governments allow.

On the legal and regulatory front, not a lot to talk about this quarter as I’m sure you know in late March the U.S. Court have appealed for the DC Court rule but the Federal reserve acted properly in its interpretation of Dodd-Frank a result which we are obviously pleased with.

A quick update on payment security and specifically industry collaboration, last quarter I spoke at length about the need for the industry defined broadly to work together to create payment standards and improve security. We believe there is an opportunity for this collaboration to occur and are encouraged. We and MasterCard have formed a cross-industry working group to accelerate this joint-collaboration. The purpose is to work with a broad group of participants in the payments landscape, not just to move forward to more secure technologies in the short-term, but to think in long-term as well. This includes driving EMV adoption, but it looks to create a clear roadmap for the future of payment security, inclusive of both physical, POS as well as card-not-present transactions.

The group will have representation of banks of all sizes, credit unions, acquirers, retailers, point of sale manufacturers and industry trade groups. We also look forward to broad network participation so we can be as effective as possible. On EMV specifically First Data Star Network, FIS’s NYCE Network, Discovery Financial Services PULSE Network, and other regional network providers have agreed to participate in the common debit solution that these introduced last year. The collaboration between Visa and our partners will help enable the deployment of debit EMV solutions. This is again an example of industry players working together to move payment security forward.

Let me talk for a second about tokenization. The standards, services and technologies we’re working on will play an important role, not just in security but in enabling and securing new payment experiences in the online mobile and face-to-face channels. We are making progress on our work towards getting it into the marketplace. The token standard that we, MasterCard and American Express jointly wrote and sponsored has been adopted by EMVCo, the industry standards body, and is currently at a common period across the other card networks, banks and security industry groups.

We will be rolling out our token services capable of associating a limited use of Visa token with an underlying card credential and are working with issuers, processors, and acquirers that introduced our first wave of token programs. You will see applications deployed within the next 12 months and these tokens will play a role in our offerings but also those of select strategic partner engagements ranging from remote online or mobile purchases to proximity mobile interactions.

We have also talked a great deal about our merchant efforts. We recently reorganized the Company to strengthen the outreach to our merchant partners. We are lucky to have hired Ramón Martin, a well-respected industry expert in payments with a great deal of merchant knowledge. As an example, he has a history as the member of the Board of Directors of the National Retail Federation. We are excited that he will lead our efforts relative to our merchant strategy, and help deliver customized products and services, and look forward to discussing more specifics in the future.

Let me now just turn for a second and just talk about small business merchants. We have had made changes to our FANF structure, our fixed acquirer network fee, including modifications that are designed to lower or in some cases eliminate FANF, on volume from small merchants with less than $15,000 in annual gross Visa sales. Most importantly, we believe these changes can serve to expand the Visa acceptance among very small businesses, while eliminating the fees for smaller retailers we’re also making other adjustments to FANF to improve the alignment of these fees, regardless of whether a merchant connects to Visa through an acquirer, a processor, a payment facilitator, or other party.

We have also talked on these calls about rules in the past and our efforts to simplify our operating regulations. On October 1st we will be eliminating close to half of our operating rules. This includes reducing the complexity of our dispute resolution processes, and while we are making substantial changes now we continue to get client feedback and we will continue to introduce more changes beyond.

Let me talk for a second about Japan. I have spoken about two things here in the past, both the opportunity within Japan but also the importance of growing our processing business globally. Just a reminder, that although Japan is the third largest economy in the world by GDP, the number of payment cards in the market and usage is still very low, only 14% of PCE and just 8% on Visa products. Earlier this month we acquired 100% ownership of GP Net, a joint-venture that we have founded with seven leading Japanese issuers back in 1995, as a result of having total control, we now control our domestic transaction processing activities. It will allow us to further integrate our processing and product solutions to merchants, acquirers and issuers something that we are very excited about.

We are also very focused on the debit opportunity in Japan. While debit is still considered in its infancy stage, there is a meaningful opportunity for growth given the large deposit base which exists in the banks from which to grow a debit business. As an example, this quarter we launched Visa Debit with Bank of Tokyo-Mitsubishi, one of the three mega banks, again just one example of how we’re working collaboratively with the banks to target a very meaningful opportunity.

So to conclude, let me just make a couple of comments looking ahead. First of all I continue to remain very excited about the opportunity that we have to continue growing the business. While the strengthening U.S. dollar and difficult comps from the prior year have affected our reported revenue and will again next quarter, the underlying revenue growth of the business is strong. It will accelerate as the economic recovery accelerates as well, and most importantly the long-term secular trends and our competitive position remain as strong as ever and I’m constantly reminded that there’s more cash to dis-intermediate than when the Company went public in 2008.

And with that Byron and I are glad to take your question.

Earnings Call Part 2:

• Q&A with Visa Inc. CEO