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Deluxe (DLX) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Industrials· Aug 5, 2026

Source: earnings call transcript

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

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

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

Deals & partnerships

Celero Acquisition 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

Transaction-related expenses impacting GAAP net income Q2 FY26

$5.6 million

Moderation of Data segment growth due to tough prior-year comps H2 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 conditions Ongoing

Not quantified

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

Interest rate volatility Ongoing

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

Data segment growth moderation

H2 FY26 (Q3 and Q4)
Current Q2 FY26 growth of 21.4%
Target Moderation 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.

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Q&A highlights

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 read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.