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, highlighting a clear shift toward higher-margin businesses and improved financial discipline. Executives emphasized strong adjusted EBITDA and EPS growth, expanding margins, healthier cash generation, and faster deleveraging, all while acknowledging persistent revenue pressure in the legacy print segment and a likely slowdown ahead in data growth.

Profitability Surges on Adjusted EBITDA and Margin Gains

Adjusted EBITDA climbed to $117.9 million, up 19.7% on a comparable basis, signaling solid profit momentum despite modest sales growth. The adjusted EBITDA margin reached 21.9%, an expansion of 310 basis points year over year, underscoring the benefits of mix shift, cost control, and scaling newer businesses.

EPS Rebounds Sharply as Net Income Nearly Doubles

Adjusted diluted EPS jumped to $1.05 from $0.72 a year earlier, an improvement of roughly 45% on a comparable basis that reflects both operating leverage and lower financing drag. GAAP net income more than doubled to $35.8 million, or $0.77 per share, from $14 million, giving investors tangible evidence of earnings power.

Payments and Data Now Drive More Than Half of Revenue

For the first time in Deluxe’s history, combined Payments and Data businesses represented 51% of total revenue, marking a decisive shift away from print dependence. These two segments delivered a blended 12.5% year-over-year growth rate, helping to offset ongoing declines in traditional print operations.

Data Solutions Delivers Standout Growth and Solid Margins

Data Solutions revenue rose 26.3% to $97.5 million, making it one of the fastest-growing parts of the portfolio and a key engine of the company’s transformation story. Segment adjusted EBITDA reached $22.8 million, up 15.7%, with margins in the low-to-mid 20s, showing that growth is coming with healthy profitability.

Merchant and B2B Payments See Revenue and Margin Expansion

Merchant Services revenue increased 7.3% to $104.9 million, while adjusted EBITDA surged 25.2% to $26.8 million, pushing margins up 360 basis points to 25.5%. B2B payments revenue rose 4.7% to $73.5 million, with adjusted EBITDA up around 29.3% and margins at 23.4%, indicating strong operating leverage in the payments franchise.

Debt Reduced and Leverage Target Hit Ahead of Plan

Net debt fell to $1.37 billion, down $22.6 million since year-end, bringing net leverage to 3.0 times from 3.6 times a year earlier and achieving the long-term leverage goal three quarters early. Total debt declined by more than $30 million, reinforcing management’s focus on balance sheet strength and giving the company more flexibility for future capital allocation.

Free Cash Flow Builds as Guidance Is Reaffirmed

First-quarter free cash flow reached $27.3 million, up $3 million year over year, which management framed as roughly 12% growth. The company maintained its full-year free cash flow outlook of about $200 million, implying roughly 14% growth versus last year and signaling confidence in the durability of cash generation.

Cost Discipline and Operational Efficiency Drive Margin Gains

SG&A expenses fell just over 7% year over year, reflecting ongoing efficiency programs and tighter expense management across the organization. This discipline helped deliver the 13th straight quarter of comparable adjusted EBITDA expansion, with margins improving across multiple segments.

Strategic Partnerships and AI Adoption Enhance Competitive Edge

Deluxe signed new merchant and ISV partnerships, including with Washington Trust Bank and MRI Software, to deepen distribution and cross-sell opportunities in payments and data. Management also highlighted the rollout of generative AI in data campaigns and B2B lockbox processing, claiming around a two-thirds reduction in manual intervention and signaling future productivity gains.

Print Margins Hold Firm Despite Revenue Pressure

Print adjusted EBITDA reached $85.7 million, and segment margins improved by 70 basis points to 32.7%, demonstrating continued operational discipline in a declining business. Management credited manufacturing efficiencies and a focus on higher-margin offerings for preserving profitability even as demand for traditional print products wanes.

Print Revenue Continues to Decline Across Legacy Offerings

Print segment revenue fell 5.9% year over year on a comparable basis to $262.2 million, with legacy check revenue down 4.4% and other print categories down 8.4%. These declines remain a structural headwind, limiting top-line growth and reinforcing the need to accelerate the shift toward payments and data-driven solutions.

Overall Revenue Growth Remains Modest as Mix Shifts

Total revenue came in at $538.1 million, up just 0.3% on a reported basis and 2.7% on a comparable adjusted basis, underscoring the drag from the print business. While growth in payments and data is robust, the company’s aggregate revenue profile still reflects a transition phase rather than a broad-based expansion.

Print EBITDA Slips as Volume Declines Outpace Efficiency Gains

Print comparable adjusted EBITDA declined 3.8% year over year despite margin improvement, indicating that falling volumes are still pressuring absolute earnings in this segment. The result highlights that cost cuts and mix improvements can only partially offset the structural erosion in legacy print demand.

Data Growth Expected to Moderate in the Second Half

Management signaled that Data Solutions’ rapid growth is likely to cool later in the year as the company laps strong prior-year results and customers normalize marketing spend after some pull-forward. While the business remains a key pillar of the growth strategy, investors were cautioned not to extrapolate current growth rates indefinitely.

Promotional Business Remains a Soft Spot

The promotional products line continues to decline, with management describing the environment as soft and showing only modest signs of moderation. No specific macroeconomic trigger was cited, suggesting the weakness is more tied to structural or competitive factors than to a single external shock.

Revenue Outlook Shows Limited Near-Term Upside

Updated full-year revenue guidance of $1.985 billion to $2.05 billion implies between a 1% decline and 2% growth on a comparable basis, pointing to constrained top-line momentum. The outlook underscores that investors should focus more on margin expansion, cash flow, and mix improvement than on headline revenue acceleration in the near term.

Guidance Highlights Profit and Cash Priorities in 2026

For 2026, management guided to revenue of $1.985 billion to $2.05 billion, adjusted EBITDA of $430 million to $455 million, adjusted EPS of $3.60 to $4.00, and free cash flow of about $200 million, with ranges updated for the Safeguard divestiture. Assumptions include interest expense near $110 million, an adjusted tax rate of 26%, depreciation and amortization around $135 million, and capital spending of $90 million to $100 million, reinforcing a plan centered on profitable growth and disciplined investment.

Deluxe’s earnings call painted a picture of a company in the midst of a credible transformation, with payments and data businesses increasingly driving profits and cash flow. While legacy print and promotional products remain drags on revenue, the combination of margin expansion, deleveraging, and disciplined capital allocation offers investors a story built more on earnings quality than on sheer top-line growth.