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    DLX
    Earnings call· Jun 2026(Q2 FY26)

    DELUXE Q2 FY26 earnings call DLX

    Aug 5, 2026 Source

    Executive summary

    Deluxe Q2 FY26 — Strong Performance and Celero Acquisition Accelerate Payments & Data Shift

    Deluxe delivered strong Q2 FY26 results, with comparable adjusted growth across key metrics and significant free cash flow expansion, enabling debt reduction. The Celero acquisition, closed post-quarter, decisively accelerates the strategic shift towards payments and data, now comprising the majority of revenue, positioning the company for enhanced scale and synergy opportunities. Management affirmed its strategic planks and will provide updated long-term outlook at an Investor Day in December.

    Highlights

    7

    • Comparable adjusted revenue grew just over 2.5% in Q2 FY26.

    • Comparable adjusted EBITDA grew 5.3% in Q2 FY26, 2x the rate of revenue.

    • Adjusted EBITDA margins reached nearly 22% for the quarter, expanding 60 bps on a comparable adjusted basis.

    • Free cash flow increased nearly 65% year-to-date, reaching $85.9 million.

    • Net debt was reduced by over $75 million from year-end 2025, improving the pre-acquisition leverage ratio to 2.9x.

    • Payments and Data businesses expanded revenue over 9.5% in Q2 FY26, representing 52% of total year-to-date revenue.

    • Data segment revenues expanded over 21% versus prior year Q2, marking 7 consecutive quarters of over 15% growth.

    Concerns

    4

    • GAAP net income decreased from $22.4 million ($0.50/share) in Q2 2025 to $19.2 million ($0.41/share) in Q2 2026, driven by $5.6 million of one-time transaction-related expenses.

    • Legacy Checks revenue declined less than 2% on a comparable adjusted basis.

    • Print segment revenue declined 4.3% year-over-year on a comparable adjusted basis.

    • Data segment growth is expected to moderate in H2 FY26 due to tougher prior-year comparisons (46% and 31% growth in Q3 and Q4 2025, respectively).

    Guidance & targets

    17
    CategoryTargetConfidence
    Full-year Revenue
    $2.095 billion to $2.120 billion
    high materiality
    High
    Full-year Adjusted EBITDA
    $455 million to $475 million
    high materiality
    High
    Full-year Adjusted EPS
    $3.60 to $4
    high materiality
    High
    Full-year Free Cash Flow
    approximately $200 million
    high materiality
    High
    Celero Adjusted EPS Accretion
    accretive
    high materiality
    High
    Net Leverage Ratio
    3x
    high materiality
    High
    Full-year Interest Expense
    approximately $130 million
    medium materiality
    High
    Full-year Adjusted Tax Rate
    25%
    medium materiality
    High
    Full-year Depreciation and Amortization
    approximately $155 million to $160 million
    medium materiality
    High
    Full-year Acquisition Amortization
    approximately $55 million to $60 million
    medium materiality
    High
    Full-year Average Outstanding Share Count
    approximately 46.5 million shares
    medium materiality
    High
    Full-year Capital Expenditures
    approximately $100 million to $110 million
    medium materiality
    High
    Print Segment Revenue Growth
    low to mid-single-digit comparable adjusted declines
    medium materiality
    High
    Print Segment Adjusted EBITDA Margins
    low to mid-30s
    medium materiality
    High
    B2B Segment Revenue Growth
    low single-digit
    medium materiality
    High
    B2B Segment EBITDA Margins
    low to mid-20% range
    medium materiality
    High
    Data Segment Revenue Growth
    high single-digit
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Merchant Services
    Revenue growth reflected overall stable base processing volume levels and onboarding of new business wins, net of attrition. Margin expansion driven by revenue growth, channel mix dynamics, and impacts from the December 2025 purchase of residual commission rights from a large ISO partner. Full year guidance expects mid-single-digit revenue growth and mid-20% adjusted EBITDA margin profile for the base DMS business.
    Adjusted EBITDA margin: 23.3%Adjusted EBITDA growth: 15.7%Adjusted EBITDA margin expansion: 190 bps vs prior year Q2Year-to-date margin expansion: 280 bps
    		$107.6 million6.1%—$25.1 million
    B2B Payments
    Installed lockbox volumes remained in line with expectations, with newer digital treasury management offerings building momentum. EBITDA growth driven by continued operating efficiencies across physical lockbox footprint and overall optimization of the expense structure. Full year outlook anticipates low single-digit revenue growth and EBITDA margins in the low to mid-20% range.
    Adjusted EBITDA margin: 24.9%Adjusted EBITDA growth: 17.3%
    		$73.5 million3.5%—$18.3 million
    Data Solutions
    Segment continued to drive robust incremental year-over-year revenue growth, supported by strong customer marketing campaign demand. Adjusted EBITDA margin consistent with longer-term low to mid-20s expectation, noting prior year margins included material nonrecurring vendor rebates. Full year guidance reflects expected high single-digit revenue growth, moderating in H2 due to tougher prior year comps.
    Adjusted EBITDA margin: 22%Revenue growth: >15% for 7 consecutive quarters
    		$82.3 million21.4%—$18.1 million
    Print
    Blended comparable adjusted decline rates moderated due to shifting overall print revenues more towards legacy Checks, reflective of the divestiture of Safeguard-related promo revenues. Overall adjusted EBITDA decline aligned favorably to revenue declines as margin rates expanded due to improving mix, including favorable margin impacts from the Safeguard divestiture. Full year outlook expects low to mid-single-digit comparable adjusted revenue declines and adjusted EBITDA margins in the low to mid-30s.
    Adjusted EBITDA margin: mid-30sLegacy Checks revenue decline: 1.7% (comparable adjusted)Balance of segment revenue decline: 10.1%Comparable adjusted EBITDA decline: 1.4%Adjusted EBITDA margin improvement: 110 bps
    		$235.9 million-4.3%—$86 million

    Operational metrics

    16
    Comparable adjusted revenue growth
    2.6%
    Q2 FY26

    Consolidated company performance.

    Comparable adjusted EBITDA growth
    5.3%
    Q2 FY26

    Consolidated company performance, grew at 2x the rate of revenue.

    Adjusted EBITDA margin
    21.8%60 bps expansion
    Q2 FY26

    Consolidated company performance.

    Adjusted diluted EPS
    $0.87up from $0.82
    Q2 FY26

    Consolidated company performance, driven by improved operating results and lower year-over-year interest expense.

    Net debt reduction
    $75.2 millionfrom year-end 2025
    H1 FY26

    Consistent with ongoing commitment to debt reduction as a top capital allocation priority.

    Net debt to adjusted EBITDA ratio
    2.9ximproved versus 3.5x a year ago
    Q2 FY26 end

    Reflects pre-acquisition leverage ratio.

    Payments and Data revenue mix
    52%up from less than 1/3 in 2021
    YTD Q2 FY26

    Represents non-print revenue sources.

    Payments and Data revenue growth
    11%
    YTD Q2 FY26

    Combined segments.

    Payments and Data revenue growth
    9.5%+
    Q2 FY26

    Combined segments.

    Celero annual volume processed
    $70 billion
    Annual

    Combined with Deluxe's existing merchant services, post-acquisition.

    Celero merchants
    210,000
    Current

    Combined with Deluxe's existing merchant services, post-acquisition.

    Credit facility total
    $1.2 billion
    Current

    Amended and extended concurrent with Celero closing.

    Interest rate swaps
    $600 million
    Current

    Helps insulate incremental variable rate debt from volatility.

    Fixed rate debt
    75%
    Current

    Result of interest rate swaps.

    Quarterly dividend
    $0.30
    Q3 FY26

    Approved by the Board.

    Enterprise mix improvement from Safeguard exit
    80 bps
    Full year

    Roughly for the overall enterprise, getting out of the Safeguard business helped the mix.

    Industry KPIs

    1
    MetricValueDetails
    EBITDA margin21.8%%

    Deals & partnerships

    1
    CeleroAcquisition of a leading merchant services provider to enhance scale and market position in payments.

    Celero brings solid growth and margin rates, broad channel distribution, and important technology including a partner portal. Strategically complements existing merchant services offering and extends market position. Integration expected to be straightforward, leveraging Celero's partner platform.

    Risks & headwinds

    4
    Transaction-related expenses impacting GAAP net incomeQ2 FY26

    $5.6 million

    Moderation of Data segment growth due to tough prior-year compsH2 FY26

    Q3 2025 growth of 46%, Q4 2025 growth of 31%

    Mitigation: Continued execution of strategy to expand into new verticals, get new logos, and increase share of wallet from existing customers.

    Prevailing macroeconomic conditionsOngoing

    Not quantified

    Mitigation: Guidance remains subject to conditions including interest rates, labor supply issues, and inflation.

    Interest rate volatilityOngoing

    Not quantified

    Mitigation: Entered into $600 million worth of floating to fixed interest rate swaps, fixing approximately 75% of the debt stack.

    What to watch in Q3 FY26

    5

    Data segment growth moderation

    H2 FY26 (Q3 and Q4)
    CurrentQ2 FY26 growth of 21.4%
    TargetModeration from recent trends (e.g., below 21.4%)

    Why it matters

    Data segment has been a key growth driver; its moderation due to tough comps could impact overall revenue growth.

    Our full year 2026 guidance ranges continue to reflect expected high single-digit overall data segment revenue growth. This outlook continues to reflect moderation of recent quarter growth trends over the back half of the year as we lap increasingly more difficult prior year results for the data segment.

    Q&A highlights

    5

    What are the largest revenue synergy opportunities from the Celero integration?

    Barry McCarthy highlighted increased scale allowing competition for larger partnerships and customers, leveraging Celero's strength in the ISV space and specific market verticals, and utilizing Celero's technology for faster merchant onboarding and effective management.

    “So immediately, as we said in our prepared remarks, our scale as the business expands tremendously which then gives us opportunities to compete for business that we weren't otherwise able to compete for either Celero or Deluxe independently, helps us move up to consider -- be considered for larger partnerships as well as larger customers, given that we will have more scale.”

    asked by Kartik Mehta · answered by Barry McCarthy

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Transformation Progress

    Deluxe is accelerating its strategic transformation into a payments and data company, with non-print sources now representing 52% of year-to-date revenue, up from less than 1/3 in 2021. The Celero acquisition further shifts this mix, with a target of 60% of total revenue from payments and data by late 2027. This progress demonstrates consistent execution against the 3-year plan outlined at the December 2023 Investor Day, with key financial and balance sheet commitments delivered early.

    02

    Celero Acquisition Rationale and Impact

    The acquisition of Celero, a leading merchant services provider, closed on July 31, 2026, and significantly enhances Deluxe's scale in merchant services. The combined entity will process over $70 billion in annual volume across more than 210,000 merchants, moving Deluxe into the top 10 nonbank merchant acquirers. The acquisition is expected to enable significant near-term cost synergies and future revenue synergies, leveraging Celero's technology, sales relationships, and streamlined onboarding capabilities.

    03

    Data Segment Outperformance and Drivers

    The Data segment continued its robust performance, growing revenues over 21% in Q2 FY26, marking its seventh consecutive quarter of over 15% growth. This outperformance is driven by strong customer demand for data-driven marketing solutions that deliver measurable outcomes. Deluxe leverages its extensive data lake and AI-supported DDM model, which continuously improves with each of the thousands of campaigns executed on behalf of customers, expanding its competitive moat.

    04

    Print Segment Margin Expansion

    The Print segment achieved a notable adjusted EBITDA margin expansion of 110 basis points year-over-year, reaching the mid-30s during the quarter. This improvement was primarily due to three factors: the strategic exit from the lower-margin Safeguard distribution channels earlier in the year, successfully containing the legacy Checks revenue decline to less than 2%, and a prioritization of overall stronger-margin in-sourced printed offerings.

    05

    Balance Sheet and Capital Structure Updates

    Deluxe reduced net debt by $75.2 million from year-end 2025, achieving a pre-acquisition net debt to adjusted EBITDA ratio of 2.9x at the end of Q2. Concurrent with the Celero closing, the company amended and extended its credit facility to $1.2 billion, consisting of an $800 million term loan A and a $400 million revolving credit facility, both maturing in 2031. Additionally, Deluxe entered into $600 million worth of floating-to-fixed interest rate swaps, fixing approximately 75% of its debt stack.

    06

    Upcoming Investor Day

    Deluxe plans to host a live Investor Day presentation in New York in December 2026. This event will provide investors with further details regarding the Celero integration, reaffirm the company's unchanged strategic planks (shifting revenue mix, driving operating efficiencies, expanding EBITDA and free cash flow), and offer an updated outlook on the combined entity's long-term value creation algorithm.

    AI-generated summary of the company’s earnings call. Not investment advice.