Deluxe Corp. Earnings Call Highlights Profitable Shift

Deluxe Corp. ((DLX)) has held its Q1 earnings call. Read on for the main highlights of the call.

Deluxe Corp.’s latest earnings call struck an upbeat tone, spotlighting a business in the midst of a successful transition. Management stressed expanding profitability, stronger cash generation, and rapid progress on deleveraging, even as legacy print revenues continue to shrink and overall sales growth remains modest. Investors heard a clear transformation story outweighing the structural drag in print.

EBITDA Jump and Margin Expansion

Deluxe reported adjusted EBITDA of $117.9 million, up 19.7% on a comparable basis, as cost discipline and mix shift lifted profitability. The adjusted EBITDA margin climbed to 21.9%, an improvement of 310 basis points year over year, underscoring the earnings power of the Payments and Data segments.

EPS and Net Income Surge

Adjusted diluted EPS climbed to $1.05 from $0.72 a year ago, an increase of roughly 45% on a comparable basis. GAAP net income more than doubled to $35.8 million, or $0.77 per share, versus $14 million, or $0.31 per share, signaling that gains are flowing through to the bottom line.

Payments and Data Now Lead the Mix

For the first time, Payments and Data together accounted for 51% of total revenue, overtaking Print as the company’s primary engine. Combined Payments and Data revenue rose 12.5% year over year, reflecting the success of Deluxe’s pivot toward higher-growth, higher-value services.

Data Solutions Outperforms

Data Solutions revenue reached $97.5 million, up 26.3% year over year, as clients increasingly turned to data-driven marketing and analytics. Segment adjusted EBITDA rose 15.7% to $22.8 million, with margins in the low-to-mid‑20s, confirming data as a key growth and profit pillar.

Merchant and B2B Payments Gain Scale

Merchant Services revenue increased 7.3% to $104.9 million, while adjusted EBITDA in that unit jumped 25.2% to $26.8 million, pushing margins up 360 basis points to 25.5%. B2B payments revenue grew 4.7% to $73.5 million, with adjusted EBITDA up about 29.3% and margins at a healthy 23.4%.

Debt Reduction and Leverage Milestone

Net debt declined to $1.37 billion, down $22.6 million from year‑end, driven by free cash flow and disciplined balance sheet management. Net leverage fell to 3.0 times from 3.6 times a year earlier, allowing Deluxe to hit its long‑term leverage target three quarters ahead of schedule.

Free Cash Flow Strength Maintained

Free cash flow in the quarter totaled $27.3 million, up about $3 million year over year, supporting ongoing debt paydown and investment needs. Management reaffirmed full‑year free cash flow guidance at roughly $200 million, which would represent about 14% growth versus 2025.

Cost Controls and Operational Efficiency

SG&A expenses fell a little over 7% from the prior year, reflecting tighter expense management and efficiency initiatives across the portfolio. This helped deliver the company’s 13th straight quarter of comparable adjusted EBITDA growth and sustained margin expansion in multiple segments.

Strategic Partnerships and AI Adoption

Deluxe highlighted new strategic partnerships with institutions such as Washington Trust Bank and MRI Software that expand distribution and cross‑sell opportunities. The company also rolled out generative AI tools in data campaigns and B2B lockbox processing, cutting manual intervention by about two‑thirds and boosting productivity.

Print Margins Hold Despite Pressure

Print adjusted EBITDA came in at $85.7 million with margins rising 70 basis points to 32.7%, showing resilience in a declining market. Management credited operational discipline in print manufacturing and a focus on margin‑rich offerings for preserving profitability.

Print Revenue Slides Further

Print segment revenue fell 5.9% on a comparable basis to $262.2 million, as legacy check revenues declined 4.4% and the remainder of print dropped 8.4%. These trends highlight the ongoing structural headwinds in the print business, which continue to offset growth elsewhere.

Top-Line Growth Remains Modest

Total revenue was $538.1 million, up just 0.3% on a reported basis and 2.7% on a comparable basis, showing limited overall expansion. Strong Payments and Data growth is largely compensating for print declines, but not yet driving robust consolidated revenue acceleration.

Print EBITDA Under Absolute Pressure

While print margins improved, comparable adjusted EBITDA for the segment slipped 3.8% year over year, reflecting the impact of lower volumes. Management acknowledged that revenue erosion in print still weighs on absolute earnings, even as efficiency actions soften the blow.

Expected Moderation in Data Growth

Executives cautioned that Data Solutions’ rapid growth is likely to moderate in the back half as the company laps strong prior‑year comparisons. Some customer marketing spend was pulled forward, and normalization of that activity could temper headline data growth rates later in the year.

Promo Business Still Soft

The promotional products business remains under pressure, with management describing continued softness despite some signs of moderation. They did not tie this weakness to a specific macro shock, suggesting more structural or demand‑mix challenges in that niche.

Revenue Guidance Shows Limited Upside

Updated full‑year revenue guidance of $1.985 billion to $2.05 billion implies comparable adjusted growth between minus 1% and plus 2%. This outlook signals that, despite strong earnings and cash flow trends, Deluxe is bracing for a relatively flat top line in the near term.

Forward-Looking Guidance and Outlook

For 2026, management now expects revenue of $1.985 billion to $2.05 billion, adjusted EBITDA of $430 million to $455 million, and adjusted EPS of $3.60 to $4.00, all reflecting solid earnings growth on modest sales gains. Free cash flow is projected around $200 million, with assumptions for interest, taxes, and capital spending that reinforce a focus on deleveraging and disciplined investment.

Deluxe’s earnings call painted the picture of a company successfully reinventing itself around Payments and Data while managing the decline of its legacy print operations. Profitability, cash flow, and leverage trends are moving in the right direction, but investors should watch whether data growth moderation and print headwinds cap overall revenue momentum.