Deluxe NYSE: DLX reported second-quarter results that showed comparable adjusted revenue growth, higher margins and increased free cash flow, while outlining plans to integrate merchant-services provider Celero following the transaction’s July 31 closing.
Total second-quarter revenue was $499.3 million, down 4.2% from the prior-year reported figure but up 2.6% on a comparable adjusted basis. GAAP net income was $19.2 million, or $0.41 per share, compared with $22.4 million, or $0.50 per share, a year earlier. Chief Financial Officer Chip Zint said the decline in GAAP earnings reflected $5.6 million of one-time transaction-related expenses and a somewhat higher tax provision, partly offset by lower restructuring, selling and general administrative expenses, and interest expense.
Comparable adjusted EBITDA increased 5.3% to $108.8 million, while adjusted EBITDA margin rose 60 basis points to 21.8%. Adjusted diluted earnings per share were $0.87, compared with $0.82 on a comparable adjusted basis in the prior-year quarter.
Payments and Data Businesses Drive Growth
President and Chief Executive Officer Barry McCarthy said Deluxe continued to shift its business mix toward payments and data. The company’s payments and data businesses represented 52% of year-to-date revenue and grew 11% through the first half. In the second quarter, the two categories combined grew more than 9.5%.
The Data Solutions segment posted the fastest growth, with revenue increasing 21.4% year over year to $82.3 million. Segment adjusted EBITDA was $18.1 million, producing a 22% margin. McCarthy attributed the performance to demand for data-driven marketing campaigns, particularly from financial institutions and adjacent verticals.
“We’ve now grown data segment revenues by more than 15% for seven consecutive quarters,” McCarthy said, citing the company’s AI-supported data-driven marketing model.
Zint said the company remains positive on the data business but expects its growth rate to moderate in the second half as it faces stronger comparisons from the prior year. Deluxe maintained its expectation for high-single-digit full-year revenue growth in Data Solutions.
Deluxe Merchant Services revenue rose 6.1% to $107.6 million, supported by new partner onboarding, stable processing volumes and a resilient spending environment. Segment adjusted EBITDA increased 15.7% to $25.1 million, and its margin expanded 190 basis points to 23.3%.
B2B Payments revenue rose 3.5% to $73.5 million. Adjusted EBITDA grew 17.3% to $18.3 million, resulting in a 24.9% margin. Zint said margin improvement reflected operating efficiencies in the company’s physical lockbox operations and expense structure.
Print Margins Improve Despite Revenue Decline
Print segment revenue declined 4.3% on a comparable adjusted basis to $235.9 million. Legacy check revenue fell 1.7%, while the rest of the segment declined 10.1%.
Adjusted EBITDA for Print was $86 million, down 1.4% on a comparable adjusted basis, though the decline was smaller than the revenue decrease. Segment margins reached the mid-30% range, supported by a favorable mix and the divestiture of the Safeguard distribution channels earlier in the year.
McCarthy said the lower-margin Safeguard reseller channel had been declining and was not strategic. He also cited slower legacy-check revenue declines and prior investments in the check operating platform as contributors to the segment’s margin improvement. Zint said exiting Safeguard improved the overall Deluxe enterprise margin rate by roughly 80 basis points.
Celero Acquisition Expands Merchant Scale
Deluxe closed its acquisition of Celero on July 31. McCarthy said the addition expands Deluxe’s merchant-services scale to more than $70 billion in annual processing volume across over 210,000 merchants, placing the company among the top 10 non-bank merchant acquirers based on Nilson data.
The company expects the deal to create near-term cost synergies and potential revenue synergies over time. McCarthy said the combined company should be better positioned to compete for larger partnerships and customers, while Celero’s technology and relationships in the independent software vendor market could support growth.
He described the integration as “right down the middle of the fairway,” noting that Celero’s partner platform will be used to add Deluxe services and onboard new merchants onto Deluxe’s platform. The company also expects opportunities to consolidate certain processing, fee and organizational costs.
Zint said Celero is expected to be neutral to adjusted EPS in 2026 because of incremental interest costs, integration expenses and other transaction-related items, but is expected to be accretive to adjusted EPS in the first full year after closing.
Cash Flow, Debt Reduction and Updated Outlook
Year-to-date free cash flow rose 65% to $85.9 million, an increase of $33.8 million from the first half of 2025. Net debt stood at $1.32 billion as of June 30, down $75.2 million from year-end 2025. Pre-acquisition net debt to adjusted EBITDA was 2.9 times, compared with 3 times a year earlier.
In connection with the acquisition, Deluxe amended and extended its $1.2 billion credit facility, consisting of an $800 million term loan A and a $400 million revolving credit facility, with maturities extended to 2031. The company also entered into $600 million of floating-to-fixed interest-rate swaps and estimated that approximately 75% of its debt stack is now fixed-rate.
Deluxe raised its 2026 revenue and adjusted EBITDA outlook to include Celero’s expected contribution from August through December. The company now expects:
- Revenue of $2.095 billion to $2.12 billion, including flat to 1% comparable adjusted growth for the baseline Deluxe business.
- Adjusted EBITDA of $455 million to $475 million, representing 5% to 8% comparable adjusted growth.
- Adjusted EPS of $3.60 to $4.00.
- Free cash flow of approximately $200 million, up 14% from 2025.
Deluxe also declared a quarterly dividend of $0.30 per share, payable Sept. 1 to shareholders of record as of Aug. 18.
About Deluxe (NYSE:DLX)
Deluxe Corporation, founded in 1915 and headquartered in Shoreview, Minnesota, is a provider of integrated business and financial technology solutions. Originally established as a check printing company, Deluxe has evolved its offerings to support small businesses, financial institutions and entrepreneurs with a comprehensive suite of services spanning print, digital and software platforms.
The company's core business activities include printing checks, forms and promotional materials, as well as delivering digital marketing and customer engagement solutions.
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