In This Article:
Release Date: April 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Deluxe Corp (NYSE:DLX) reported organic growth across key metrics, including revenue, adjusted EBITDA, EPS, and margin for the first quarter of 2025.
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The company achieved a significant year-over-year expansion of operating cash flow, contributing to a reduction in net debt levels.
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Deluxe Corp (NYSE:DLX) received an S&P ratings upgrade and a positive ratings outlook, reflecting strong progress in balance sheet optimization.
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The data segment experienced a 29% revenue growth year-over-year, driven by demand from financial institutions and the addition of 17 new customer logos.
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The company maintained its overall guidance ranges for 2025, indicating confidence in its strategic execution and market positioning.
Negative Points
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The print segment experienced a 4% year-over-year revenue decline, with legacy check revenues declining by 1.8% and other print areas declining by 7%.
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The merchant services business is expected to remain closer to a lower single-digit full-year revenue growth trajectory due to macroeconomic trends.
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There is ongoing demand softness in shorter cycle discretionary branded promotional products, impacting the print segment.
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The company faces macroeconomic uncertainty and volatility, which could impact consumer sentiment and discretionary spending.
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Medical benefit cost headwinds affected corporate operations, although these are anticipated to be mostly non-recurring.
Q & A Highlights
Q: Can you provide more detail on the merchant business and its performance in the current market conditions? A: Barry McCarthy, President and CEO, explained that the merchant business continues to perform well across various market conditions. The business earns fees whenever commerce occurs, such as when consumers use credit or debit cards. The portfolio is diversified across categories like government, non-profit, and auto repair, which ensures strong retention and ongoing volume.
Q: With a new leader in the business, are there any strategic changes planned? A: Barry McCarthy noted that with Brian Mahoney joining as Merchant Services President, the focus will be on improving partnership relationships and expanding distribution channels. The recent partnership with Town Bank exemplifies their strategy to move upmarket and win larger scale partnerships.
Q: How should we model the data segment given its recent success? A: Chip Zint, CFO, advised looking at a rolling 3 to 4 quarter average to understand trends in the data segment. While they don't expect the segment to continue growing at 29%, they anticipate high single-digit to low double-digit growth for the full year.