Deluxe Q4 Earnings Call Highlights

Core Insights - Deluxe reported strong financial performance for fiscal 2025, with comparable adjusted EBITDA of $431.5 million, a 6.2% increase from the previous year, and an adjusted EBITDA margin of 20.2% [1][7] - Total revenue for the year reached $2.133 billion, reflecting a 0.5% increase on a reported basis and a 1.1% increase on a comparable adjusted basis [2] - The company achieved a GAAP net income of $85.3 million, up from $52.9 million in 2024, driven by revenue growth and improved operating margins [2] Financial Performance - Comparable adjusted EPS increased by 12.6% to $3.67, attributed to higher operating profits and lower interest expenses [1] - Free cash flow climbed to $175.3 million, up from $100 million in 2024, with net debt reduced by $76.2 million to $1.39 billion [8] - The net debt to adjusted EBITDA ratio improved to 3.2x, down from 3.6x a year earlier [8] Strategic Focus - The company is shifting its business mix towards Payments and Data, which now account for 47% of revenue, with Data revenue growing by 31.3% to $307.3 million [6][9] - Management expects Payments and Data to reach revenue parity with Print by 2026, aligning with the long-term goal of transforming into a payments and data company [6][9] - Deluxe is implementing AI across various business areas, enhancing marketing, customer service, and operational efficiency [17] Segment Performance - In the Print segment, revenue declined by 5.7% to $1.14 billion, consistent with a low-to-mid-single-digit secular decline [12] - Merchant Services revenue increased by 3.8% to $398.6 million, with adjusted EBITDA rising by 9.4% [10] - B2B Payments revenue grew by 0.9% to $290.5 million, with adjusted EBITDA reflecting a 12.8% growth [11] 2026 Guidance - Management provided guidance for 2026, projecting revenue between $2.11 billion and $2.175 billion, adjusted EBITDA of $445 million to $470 million, and adjusted EPS of $3.90 to $4.30 [19] - Segment expectations include mid-single-digit growth for Merchant, low single-digit growth for B2B, and mid- to high-single-digit growth for Data, while Print is expected to see low- to mid-single-digit declines [15]