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DC

DELUXE CORP (DLX)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered revenue of $540.2M (+2.2% YoY; +3.6% QoQ) and comparable adjusted EBITDA of $118.9M (+13.8% YoY), with comparable adjusted diluted EPS of $1.09 (+29.8% YoY). Management raised FY25 adjusted EPS to $3.45–$3.60 and affirmed revenue ($2.11–$2.13B), adjusted EBITDA ($425–$435M), and FCF ($140–$150M) within narrowed ranges .
  • Results beat Wall Street consensus: revenue $526.5M* vs. $540.2M, EPS $0.90* vs. $1.09, and EBITDA $106.1M* vs. $110.0M (GAAP) / $118.9M (adj). Consensus count: 4 estimates for EPS and revenue*. Values retrieved from S&P Global.
  • Segment mix shifts toward Payments and Data continued; Data Solutions revenue rose 46% YoY to $89.2M with margins up 400 bps to 32.6%, while Print margins improved to 33.4% despite revenue decline .
  • Net debt fell to $1.424B; leverage reached 3.3x a quarter ahead of plan, lowering interest costs under the credit agreement; dividend of $0.30 payable Dec 1, 2025 (record date Nov 17) .

What Went Well and What Went Wrong

What Went Well

  • Margin expansion across all segments drove operating leverage; comparable adjusted EBITDA margin rose 220 bps YoY to 22.0%. “We were very pleased to deliver adjusted EBITDA margin expansion across all four operating segments simultaneously.”
  • Data Solutions outperformed: revenue +46% YoY to $89.2M; adjusted EBITDA +66.3% YoY; margins up 400 bps to 32.6%. “We put our proprietary AI tools on top of [our data lake] to build high‑converting lead lists...”
  • Strong free cash flow and deleveraging: Q3 FCF $43.8M; YTD FCF $95.9M (+$31.6M YoY); net debt down ~$20.6M QoQ; achieved 3.3x leverage target early .

What Went Wrong

  • Print revenue declined 5.9% YoY to $279.9M (promo headwinds), though profitability was largely preserved; branded promo down 14.7% YoY .
  • Merchant Services faced ongoing macro pressure on discretionary spend; QoQ revenue fell to $98.0M from $101.4M despite YoY growth (+4.8%) .
  • B2B Payments revenue declined 2.7% YoY to $73.1M (timing of onboarding), though margins expanded 260 bps YoY to 23% .

Financial Results

Consolidated performance (YoY and QoQ comparison)

MetricQ3 2024Q2 2025Q3 2025
Revenue ($M)528.4 521.3 540.2
Comparable Adjusted Revenue ($M)527.0 521.3 540.2
Operating Income ($M)41.6 60.8 75.8
Net Income ($M)8.9 22.4 33.7
GAAP Diluted EPS ($)0.20 0.50 0.74
Comparable Adjusted Diluted EPS ($)0.84 0.88 1.09
Comparable Adjusted EBITDA ($M)104.5 106.5 118.9
Comparable Adjusted EBITDA Margin (%)19.8% 20.4% 22.0%

Segment revenue

Segment Revenue ($M)Q3 2024Q2 2025Q3 2025
Merchant Services93.5 101.4 98.0
B2B Payments75.1 71.0 73.1
Data Solutions61.1 67.8 89.2
Print297.3 281.1 279.9
Total528.4 521.3 540.2

Segment EBITDA and margins

Segment EBITDA ($M) / Margin (%)Q3 2024Q2 2025Q3 2025
Merchant Services17.8 / 19.0% 21.7 / 21.4% 20.4 / 20.8%
B2B Payments15.3 / 20.4% 15.6 / 22.0% 16.8 / 23.0%
Data Solutions17.5 / 28.6% 20.4 / 30.1% 29.1 / 32.6%
Print97.4 / 32.8% 90.4 / 32.2% 93.5 / 33.4%
Total Adj. EBITDA / Margin104.9 / 19.9% 106.5 / 20.4% 118.9 / 22.0%

KPIs and balance sheet

KPIQ1 2025Q2 2025Q3 2025
Free Cash Flow ($M)24.3 27.8 43.8
Cash from Operations ($M, YTD)50.3 101.4 (H1) 168.5 (9M)
Net Debt ($B)1.462 1.445 1.424
Net Debt / Adj. EBITDA (x)3.6x (FY24 end) 3.5x (Q2 end) 3.3x (Q3 end)
Dividend per share ($)0.30 (payable Jun 2, 2025) 0.30 (payable Sep 2, 2025) 0.30 (payable Dec 1, 2025)

Versus Wall Street consensus (S&P Global)

MetricQ3 2025 Consensus*Q3 2025 Actual
Revenue ($M)526.5*540.2
Primary EPS ($)0.8975*1.09
EBITDA ($M)106.1*110.0 (GAAP) / 118.9 (Adj)

Note: Values retrieved from S&P Global. Significant beats in bold in narrative below.

Guidance Changes

MetricPeriodPrevious Guidance (Q2 2025)Current Guidance (Q3 2025)Change
Revenue ($B)FY 20252.090–2.155 2.11–2.13 Maintained; narrowed
Adjusted EBITDA ($M)FY 2025415–435 425–435 Maintained (upper half reaffirmed)
Adjusted Diluted EPS ($)FY 20253.25–3.55 3.45–3.60 Raised
Free Cash Flow ($M)FY 2025130–150 140–150 Maintained; narrowed
Interest Expense ($M)FY 2025~122.5 ~123 Slightly higher
Adjusted Tax Rate (%)FY 202526 26 Maintained
D&A ($M)FY 2025~135 (Acq ~45) ~133 (Acq ~45) Slightly lower D&A
Avg Diluted Shares (M)FY 2025~45.5 ~45.5 Maintained
Capex ($M)FY 202590–100 90–100 Maintained
Dividend ($/share)Q4 20250.30 (Sep 2 payable) 0.30 (Dec 1 payable) Maintained
Segment GuidanceFY 2025Merchant low-single-digit growth; B2B low-single-digit with Q4 exit growth; Data low double-digit; Print mid-single-digit decline Unchanged commentary; Data margins to normalize to low-20s in Q4; seasonal Q4 moderation Maintained with margin normalization note

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
AI/data platform executionQ1: Data revenue 77.2M; launched Generative AI enterprise platform; reimagined Deluxe.connect . Q2: Data +18.1% YoY; leveraging cloud data lake .Data +46% YoY; “proprietary AI tools” driving high‑converting leads; margins boosted by vendor rebates (normalize in Q4) .Uptrend; expected moderation Q4 .
Merchant partnerships/ISVQ1: TowneBank, SchoolAuction.net partnerships . Q2: ISV alliances (Chargent, MyKidReports) .Expanded Peoples Bank to include Merchant Services (One Deluxe cross‑sell) .Pipeline building; sequentially improving mix .
B2B digitization (CheckMatch/DPN)Q2: Acquired CheckMatch; DPN expansion; JPMorgan lockboxes join network .Sequential B2B revenue growth; YoY decline per onboarding timing; expect Q4 exit growth .Ramping; 2026 scale benefits .
Print margin disciplineQ1 margin 31.2% ; Q2 32.2% .Q3 margin 33.4% despite promo headwinds .Improving/stable low-30s .
Deleveraging/interestQ2 leverage 3.5x; ample revolver .Reached 3.3x ahead of schedule; into lower interest tier .Improving leverage and interest expense outlook .
Macro/discretionary demandQ2: persistent macro uncertainty; discretionary spending stress .Similar tone; cautious on promo; Merchant stable volumes .Persistent but manageable .

Management Commentary

  • “This was our 11th consecutive quarter of year-over-year EBITDA expansion... margins expanding across each operating segment.”
  • “We reached our targeted year-end leverage ratio of 3.3x, a full quarter ahead of our previously indicated pacing.”
  • “Our on-going cost discipline... allowed us to narrow our full-year 2025 guidance ranges, while raising our adjusted EPS outlook.”
  • “Data was our standout performer again in Q3, growing revenue by 46% year-over-year.”
  • “Third‑quarter free cash flow of just under $44 million reflected a 37% cash‑to‑EBITDA conversion rate.”

Q&A Highlights

  • Free cash flow sustainability: Management reiterated drivers (improved profitability, lower restructuring, working capital efficiency) and confidence in adding $100M annual run-rate FCF into 2026 .
  • Merchant pipeline and One Deluxe cross‑sell: Peoples Bank win exemplifies landing to expand across divisions; new ISV sales leadership to accelerate effort .
  • Data growth durability: Large cloud‑hosted data lake + proprietary AI tools drive measurable ROI for FIs; expect seasonal moderation and margin normalization to low‑20s in Q4 .
  • Print margins: Focus on profitable volume, walking away from low‑margin promo deals; checks remain solid, margin stabilizing in low‑30s .
  • Capital allocation: Despite early leverage target attainment, priorities unchanged—debt reduction, investing in growth segments, dividend continuity; year‑end leverage ~3.25x .

Estimates Context

  • Revenue beat: $540.2M actual vs. $526.5M consensus* (+$13.7M; +2.6%). Values retrieved from S&P Global. Actual: .
  • EPS beat: $1.09 actual vs. $0.8975 consensus* (+$0.19; +21%). Values retrieved from S&P Global. Actual: .
  • EBITDA beat: $110.0M GAAP EBITDA / $118.9M adj vs. $106.1M consensus*; note consensus/actual definitions may differ (GAAP vs. adjusted) and S&P’s “actual” EBITDA field may reflect methodology variance*. Values retrieved from S&P Global. Actual: .

Key Takeaways for Investors

  • Broad-based margin expansion and a meaningful EPS beat, coupled with an FY EPS raise, are supportive for near-term sentiment; continued deleveraging (3.3x) and entry into a lower interest tier are incremental positives .
  • Data Solutions is the growth engine (AI‑enabled targeting, high-ROI campaigns) with strong unit economics; expect seasonal Q4 moderation and margin normalization from rebate effects, but full-year double-digit growth remains intact .
  • Merchant growth is mid-single digit YoY with improving trajectory via ISV/FI partnerships; watch discretionary demand and attrition offset vs. pricing actions .
  • B2B Payments is poised for a return to growth exiting 2025 as onboarding timings resolve; CheckMatch/DPN integration should support 2026 growth and efficiencies .
  • Print profitability is resilient; management’s discipline to avoid low-margin promo preserves EBITDA and sustains low‑30s margins despite revenue headwinds .
  • FY25 modeling guardrails: revenue $2.11–$2.13B; adj EBITDA $425–$435M; adj EPS $3.45–$3.60; FCF $140–$150M; interest ~$123M; tax 26%; D&A ~$133M; capex $90–$100M; shares ~45.5M .
  • Risk watch: Q4 Data seasonality and tougher comps, macro uncertainty in promo/merchant, and segment margin normalization; upside from cross‑sell momentum and continued cost discipline .
* Values retrieved from S&P Global.