Executive Summary

Q1 2025 delivered modest top-line growth with stronger profit conversion: revenue $536.5M (+0.3% YoY), comparable adjusted EBITDA $100.2M (+3.4% YoY), and comparable adjusted EPS $0.75 (+4.2% YoY). Management maintained FY25 guidance and highlighted operating leverage and cash generation under “North Star.”
Results were a clear beat vs S&P Global consensus: revenue $536.5M vs $525.4M and EPS $0.75 vs $0.71; sequentially, revenue rose from $520.5M in Q4 while comparable adjusted EPS declined to $0.75 from $0.84. Bolded catalysts: maintained FY25 guide, strong Data segment growth (+29% YoY), and improved free cash flow. *
Management flagged near-term caution: Q2 revenue expected “slightly negative” YoY, more softness in promo within Print, and Merchant FY growth now closer to low single-digits vs prior mid-single-digit framing. Full-year guidance ranges unchanged.
Capital allocation: continued deleveraging (net debt $1.462B), free cash flow $24.3M, dividend $0.30/share payable Jun 2, 2025.

What Went Well and What Went Wrong

What Went Well

Data Solutions posted a record quarter: revenue $77.2M (+29.3% YoY) with adjusted EBITDA $19.7M and margin 25.5% (+50 bps YoY), driven by demand from financial institutions and a 17-logo add; management cited advanced AI tools and a large consumer/SMB data lake as differentiators. “We put together that great database with very advanced AI tools that get smarter and better with every campaign.”
Operating leverage and cash generation improved: comparable adjusted EBITDA margin expanded 40 bps YoY to 18.7%; cash from operations was $50.3M and free cash flow increased to $24.3M.
Balance sheet and ratings momentum: net debt reduced YoY; S&P upgraded corporate rating to single B with positive outlook, reflecting deleveraging trajectory and reduced restructuring.

What Went Wrong

Promo softness weighed on Print: Print revenue fell to $291.3M (-4% YoY); management expects accelerated decline in Q2 due to constrained demand in shorter-cycle discretionary branded products.
Merchant growth tempered: Q1 revenue +1.3% to $97.8M, but FY growth outlook shifted “closer to lower single-digit” vs prior mid-single-digit, reflecting macro consumer sentiment and channel/vertical mix.
Near-term revenue caution: Company guided Q2 revenue “slightly negative” YoY; corporate medical benefit cost headwinds impacted margins but are expected to be mostly nonrecurring.

Financial Results

Consolidated Actuals

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$528.4	$520.5	$536.5
GAAP Diluted EPS ($)	$0.20	$0.28	$0.31
Comparable Adjusted Diluted EPS ($)	$0.84	$0.84	$0.75
Adjusted EBITDA ($USD Millions)	$104.5	$103.4	$100.2
Comparable Adjusted EBITDA Margin %	19.8%	19.9%	18.7%

YoY highlights for Q1 2025 (vs Q1 2024): revenue +0.3%; comparable adjusted revenue +1.4%; GAAP EPS +29.2%; comparable adjusted EPS +4.2%; margin +40 bps.

Segment Breakdown (Q1 2025)

Segment	Revenue ($M)	YoY Change	Adjusted EBITDA ($M)	Margin %
Merchant Services	$97.8	+1.3%	$21.4	21.9%
B2B Payments	$70.2	+1.2%	$13.3	18.9%
Data Solutions	$77.2	+29.3%	$19.7	25.5%
Print	$291.3	-4.0%	$90.8	31.2%
Total	$536.5	+1.4% comparable adj	$100.2	18.7%

KPIs

KPI	Q1 2024	Q4 2024	Q1 2025
Cash from Operations ($M)	$26.6	N/A	$50.3
Capital Expenditure ($M)	$20.4	N/A	$26.0
Free Cash Flow ($M)	$6.2	N/A	$24.3
Net Debt ($B)	N/A	$1.469	$1.462
Net Debt / Adjusted EBITDA (x)	N/A	3.6x	3.6x
Weighted Avg Dilutive Shares (M)	44.5	44.9	45.3

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	$2.090–$2.155B	$2.090–$2.155B	Maintained
Adjusted EBITDA	FY 2025	$415–$435M	$415–$435M	Maintained
Adjusted Diluted EPS	FY 2025	$3.25–$3.55	$3.25–$3.55	Maintained
Free Cash Flow	FY 2025	$120–$140M	$120–$140M	Maintained
Merchant Services Revenue	FY 2025	Mid-single-digit growth (prior outlook)	“Closer to lower single-digit” growth	Lowered
B2B Payments Revenue	FY 2025	Start low single-digit, ramp to mid-single-digit	Flat to low single-digit in H1; ramp H2; full-year low–mid single-digit	Maintained
Data Solutions Revenue	FY 2025	Mid–high single-digit	High single-digit to low double-digit	Raised
Print Revenue	FY 2025	Low–mid single-digit declines	Low–mid declines; Q2 decline accelerated in promo	Maintained / Near-term caution
Q2 Revenue	Q2 2025	N/A	Slightly negative YoY	New near-term color
Capex	FY 2025	$90–$100M	$90–$100M; “not perfectly linear”	Maintained
Interest Expense	FY 2025	~$120M	~$120M (implied)	Maintained
Adjusted Tax Rate	FY 2025	26%	26% (implied)	Maintained
Dividend	Q2 2025	$0.30/share (ongoing)	$0.30/share payable June 2; record May 19	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024)	Previous Mentions (Q4 2024)	Current Period (Q1 2025)	Trend
Operating leverage / North Star	EBITDA growth > revenue; margin +140 bps; SG&A efficiency; North Star execution milestone	Delivered operating leverage, EBITDA growth, free cash flow; SG&A reduced; 2025 ranges provided	Ninth consecutive quarter of earnings expansion outpacing revenue; margin +40 bps YoY; cash flow up	Improving
Data segment / AI & cloud	Sequential revenue improvement; margins strong; campaign timing noted	Mid–high single-digit growth outlook; cloud-native platform buildout	Record revenue; 17 logos; advanced AI tools; target high single-digit to low double-digit FY growth	Strong momentum
Merchant services	Growth +6% Q3; margins ~19–20%	FY25 mid–upper single-digit CAGR ambition; platform investment (APIs)	Q1 +1.3%; FY growth “closer to lower single-digit”; new FI wins (TowneBank)	Moderating
B2B payments / ISO 20022	Returned to modest YoY growth; lockbox wins onboarding	FY25 ramp to mid-single-digit; R360+ UI/UX	Q1 +1.2%; ISO 20022 compatibility announcement (IBM partnership)	Stabilizing; product upgrade
Print & promo	Low single-digit decline; check -1.8%; margins >30%	Low–mid declines; margins low-30s	Q1 -4%; promo softness; Q2 decline to accelerate; margins 31.2%	Cautious
Tariffs & macro	Monitoring consumer discretionary trends; stabilized in Q3	Limited direct tariff exposure; domestic sourcing for checks	“No material direct exposure”; promo small portion; potential demand effects unknown	Watchful

Management Commentary

CEO: “We reported a strong start to 2025… expanding comparable adjusted EBITDA margin and generating robust operating cash flow.”
CEO: “Our payments and data segments expanded… and execution remained strong… Data segment revenue grew 29%… added 17 new customer logos.”
CFO: “Adjusted EBITDA was $100.2M, increasing 3.4%… margins 18.7%, improving 40 bps… medical benefit cost headwinds are mostly nonrecurring.”
CFO: “Net debt level of $1.46B… S&P ratings upgrade… expect to end 2025 at ~3.3x leverage, targeting ≤3x by end of 2026.”

Q&A Highlights

Merchant fundamentals and strategy: diversified verticals (government, not-for-profit, auto repair), emphasis on service; new Merchant Services President focusing on FI partnerships (TowneBank) and distribution/channel expansion.
Near-term modeling: Q2 revenue “slightly negative” YoY; promo softness key driver; data growth to continue; merchant and B2B low single-digit sequential improvement.
Data “secret sauce”: scaled data lake (>100 sources), advanced AI-driven modeling, rapid campaign pivoting to demand (deposits, P&C insurance), strong FI demand.
Checks policy question: No direct exposure to federal check phase-out; checks remain ~40% of B2B payments due to remittance complexity; limited viable substitutes.
Capex and FCF: FY25 Capex $90–$100M with non-linear cadence; strong FCF a focus as restructuring winds down; deleveraging path reiterated.

Estimates Context

Q1 2025 results beat consensus on both revenue and EPS; Q3 2024 beat; Q4 2024 revenue missed while EPS was in-line/slight beat.

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue Consensus ($M)	$525.83*	$534.03*	$525.42*
Revenue Actual ($M)	$528.44	$520.55	$536.47
EPS Consensus ($)	$0.74*	$0.8325*	$0.71*
EPS Actual ($)	$0.84 (comp adj)	$0.84 (comp adj)	$0.75 (comp adj)

Values marked with an asterisk were retrieved from S&P Global.

Q1 2025: Revenue and EPS both beat; bold implication: positive estimate revisions likely in Data segment; Merchant estimates may edge down given FY growth tempering. *
Q4 2024: Revenue miss vs consensus; EPS met/slightly exceeded on adjusted basis. *

Earnings Call Themes & Trends (Selected Press Releases, Q1 Window)

FI partnerships: TowneBank partnership enhances merchant solutions distribution through bank channel.
B2B product upgrade: ReceivablesR360+ achieved ISO 20022 compatibility via IBM partnership, improving data integration and onboarding speed.
Vertical expansion: Bonko partnership (insurance agents) and SchoolAuction.net integration (nonprofits/education) broaden merchant addressable market.

Key Takeaways for Investors

Free cash flow inflection and deleveraging are intact; FY25 FCF $120–$140M guide maintained, net leverage targeted ~3.3x by YE25 and ≤3x by YE26—supportive of multiple expansion and balance sheet resiliency.
Data Solutions momentum is the growth engine; record revenue, AI-enabled targeting, and FI demand should underpin upward estimate pressure and offset Print headwinds.
Merchant growth recalibration to low single-digit reduces top-line risk; watch FI onboarding cadence and partner-driven channel mix for margin stability.
Near-term caution for Q2 (“slightly negative” YoY) driven by promo softness; sequential improvement expected in H2—trade the setup around confirmation of H2 ramp.
Maintain focus on non-GAAP adjustments: adjusted EPS excludes amortization, restructuring, and exits; comparable adjusted metrics remove business exits—key for apples-to-apples trend analysis.
Dividend continuity ($0.30/share) and ratings upgrade (single B, positive outlook) reinforce capital allocation discipline; positive credit signaling is a tailwind to cost of capital.
Medium-term thesis: ongoing mix shift to Payments/Data, margin expansion under North Star, and product upgrades (ISO 20022, merchant platform) support the 2–4% long-term revenue algorithm with profit growing faster than revenue.

Note: All consensus values marked with * were retrieved from S&P Global.

DELUXE CORP (DLX)·Q1 2025 Earnings Summary