DLX — Deluxe Corporation

Summary of Deluxe (DLX) Q4 2025 Earnings Call

1. Key Financial Results and Metrics:

• Total Revenue: $2,133 million for the full year, a 0.5% increase year-over-year; 1.1% growth on a comparable adjusted basis.
• Net Income: $85.3 million ($1.87 per share), up from $52.9 million ($1.18 per share) in 2024.
• Adjusted EBITDA: $431.5 million, a 6.2% increase from the prior year, with margins at 20.2% (up 90 basis points).
• Adjusted EPS: $3.67, a 12.6% increase from $3.26 in 2024.
• Free Cash Flow: $175 million, up from $100 million in 2024.
• Net Debt: Reduced by $76 million to $1,390 million, with a leverage ratio of 3.2 times.

2. Strategic Updates and Business Highlights:

• Revenue Mix Shift: Payments and data now constitute 47% of total revenue, up from 43% in 2024, with expectations to reach parity with print revenue in 2026.
• Segment Performance:
  • Merchant Services: Revenue of $398.6 million, up 3.8% year-over-year; fourth-quarter revenue growth of 6.3%.
  • B2B Payments: Revenue of $290.5 million, a 0.9% increase; fourth-quarter revenue of $76.3 million (up 4.5%).
  • Data Segment: Revenue of $307.3 million, a 31.3% increase; fourth-quarter revenue of $73 million (up 30.6%).
  • Print Business: Revenue of $1,140 million, down 5.7% year-over-year.
• Operational Efficiency: SG&A expenses reduced by $40 million, contributing to a 23% growth in operating income.

3. Forward Guidance and Outlook:

• 2026 Guidance:
  • Revenue: $2,110 million to $2,175 million (negative 1% to positive 2% growth).
  • Adjusted EBITDA: $445 million to $470 million.
  • Adjusted EPS: $3.90 to $4.30.
  • Free Cash Flow: Approximately $200 million (14% growth).
• Segment Expectations:
  • Merchant Services: Mid-single-digit revenue growth.
  • B2B Payments: Low single-digit growth.
  • Data: Mid to high single-digit growth.
  • Print: Continued low to mid-single-digit decline.

4. Bad News, Challenges, or Points of Concern:

• Print Segment Decline: Continued secular decline in print revenue, with a 5.7% drop in 2025, reflecting ongoing challenges in this area.
• Macroeconomic Risks: Potential impacts from broader economic conditions, including consumer spending patterns and inflation, could affect growth.
• High Comparables: The data segment may face tougher year-over-year comparisons in the latter half of 2026, which could impact growth rates.

5. Notable Q&A Insights:

• AI Utilization: Management emphasized the successful application of AI across various segments, enhancing customer engagement and operational efficiency.
• Pipeline Growth: Strong optimism about the merchant services pipeline, particularly through the ISV channel, with expectations for further distribution growth.
• Build vs. Buy Strategy: Management remains committed to fiscal responsibility, balancing organic growth investments with strategic acquisitions to enhance capabilities.
• Consumer Behavior: Management noted stabilization in consumer behavior patterns, providing confidence for future growth despite previous macroeconomic uncertainties.

This summary encapsulates the key takeaways from the earnings call, highlighting Deluxe's financial performance, strategic direction, and outlook for the coming year while acknowledging challenges and risks.