Deluxe (DLX) Q4 2025: Data Segment Surges 31%, Accelerating Payments Transformation
Deluxe’s Q4 capped a pivotal year as its data-driven marketing segment soared over 30%, decisively shifting the company’s revenue mix toward payments and data. With print in structural decline but still generating strong cash, Deluxe’s operational discipline and technology investments are rapidly recasting its business model. Management’s 2026 outlook signals further margin expansion and free cash flow gains, as payments and data near revenue parity with print for the first time.
Summary
- Data-Led Growth: Data segment outpaced expectations, reinforcing Deluxe’s pivot away from legacy print.
- Margin Expansion: Cost discipline and operational leverage drove profit growth across all business lines.
- 2026 Inflection: Payments and data are set to match print revenue, marking a strategic business model milestone.
Performance Analysis
Deluxe delivered a year of robust execution, with profit growth outpacing revenue for the third consecutive year. Comparable adjusted EBITDA rose over 6%, while organic revenue grew 1%, reflecting successful operating leverage. The print segment, though in secular decline, maintained strong margins and cash generation, with revenue down just under 2% for core check products and a blended print margin rate holding in the low 30s.
The standout was Deluxe’s data-driven marketing segment, which posted 31% year-over-year revenue growth and a 28% margin. Payments and data now comprise 47% of total revenue, up from 43% last year, and are projected to reach parity with print in 2026. Merchant services and B2B payments segments both saw sequential revenue improvement, with merchant revenue up 3.8% for the year and B2B up 0.9%, each achieving margin expansion through operational efficiencies and technology investments.
- Revenue Mix Shift: Payments and data now drive nearly half of Deluxe’s revenue, up nearly 400 basis points year-over-year.
- Free Cash Flow Acceleration: Free cash flow hit $175 million, meeting the 2026 target a year early and enabling a $76 million net debt reduction.
- Print Margin Durability: Despite revenue decline, print’s margin profile improved by 100 basis points, underscoring disciplined portfolio management.
Deluxe’s financials reflect a business in transition, with legacy print funding growth investments in payments and data, and disciplined cost controls supporting margin expansion across all business lines.
Executive Commentary
"Payments and data now account for 47% of revenue, up from 43% a year ago, and around 30% in early 2021. The payments and data businesses combined grew 12% during Q4 and 10% for the full year. We expect to achieve our strategic goal of payments and data achieving revenue parity with the print businesses later this year, delivering on our promise of transforming Deluxe into a payments and data company."
Barry McCarthy, President and Chief Executive Officer
"Our strong momentum toward key investor day outcomes is clearly embedded within our 2026 guidance ranges... Our improving capital structure drove two S&P upgrades, the most recent in late in November, and Fitch also moved our outlook to a positive watch position."
Chip Zint, Chief Financial Officer
Strategic Positioning
1. Data and Payments Mix Transformation
Deluxe is executing a deliberate pivot from its legacy print roots to a technology-centric payments and data model. The data segment’s 31% growth, underpinned by proprietary AI-enabled analytics and a vast consumer/business data lake, is driving client acquisition and retention across financial and non-financial verticals. Payments, through both merchant services and B2B, are scaling via new digital offerings, embedded software integrations, and targeted investments like the Visa Direct-enabled Fast Funds solution.
2. Margin Expansion Through Operational Discipline
Cost control and process improvements are producing margin gains in every segment. SG&A was reduced by $40 million, and EBITDA margins expanded across all lines. The print segment, despite volume declines, improved its margin profile by prioritizing higher-margin products and shedding unprofitable business, while payments and data benefited from automation, platform enhancements, and recurring revenue streams.
3. Capital Allocation and Balance Sheet Strengthening
Free cash flow generation and debt reduction are central to Deluxe’s value creation playbook. Early achievement of leverage targets and ongoing dividend payments reflect a balanced approach to growth investment and shareholder returns. Recent tuck-in acquisitions in B2B and merchant services were small and strategic, with a clear focus on profitability and integration, not scale for its own sake.
4. Technology and AI as Growth Catalysts
AI is not an experiment at Deluxe—it is embedded in core offerings and operations. The company leverages generative AI for campaign analytics, customer targeting, and operational automation in areas like lockbox processing and chatbots. This technology edge is cited as a key driver behind the outperformance of the data segment and improved client outcomes.
5. Print as Cash Engine, Not Growth Platform
Print continues to fund the transformation, with management focused on margin preservation and cash generation. Deluxe is consciously letting low-margin print business go, while defending pricing and retention in its core check and forms products. This approach sustains the capital needed for payments and data growth, even as print’s revenue declines.
Key Considerations
Deluxe’s 2025 performance demonstrates the effectiveness of its strategy to transition from print to digital payments and data, while maintaining operational and financial discipline. The company’s ability to execute on margin expansion, cash generation, and technology investment will be critical as it faces tougher data comps and ongoing print declines.
Key Considerations:
- Data Segment Momentum: Sustained double-digit growth in the first half of 2026 is expected, but management warns of tougher comps in the back half.
- Payments Pipeline Strength: Merchant and B2B sales pipelines remain robust, supported by ISV channel investments and product innovation.
- Print Decline Management: Strategic focus on margin and cash flow, not volume, in print is maintaining funding for growth segments.
- Capital Allocation Discipline: Free cash flow and debt reduction remain top priorities, with opportunistic M&A reserved for high-return, tuck-in deals.
Risks
Deluxe’s transformation depends on continued execution in payments and data, but faces risks from macroeconomic volatility, tougher data segment comparisons, and secular print decline. Margin gains could be pressured if digital investments stall or if consumer and business spending weakens, while any misstep in technology or integration could slow the shift to recurring revenue and margin expansion.
Forward Outlook
For Q1 2026, Deluxe guided to:
- Revenue of $2.11 to $2.175 billion (down 1% to up 2% comparable adjusted growth)
- Adjusted EBITDA of $445 to $470 million (3% to 9% growth)
- Adjusted EPS of $3.90 to $4.30 (6% to 17% growth)
- Free cash flow of approximately $200 million (14% growth)
Segment outlooks call for mid-single-digit merchant growth, low-single-digit B2B growth, mid- to high-single-digit data growth, and continued low- to mid-single-digit print decline. Management expects payments and data to reach revenue parity with print in 2026, with margin expansion and leverage ratio improvement to sub-3x by mid-year.
Takeaways
Deluxe’s 2025 results confirm a successful pivot toward a payments and data-centric business model, with technology and operational discipline driving both growth and profitability.
- Strategic Revenue Shift: Payments and data are on track to eclipse print, fundamentally altering Deluxe’s business profile and long-term growth prospects.
- Profitability Outpaces Sales: Margin expansion and cost controls are supporting earnings growth, even as legacy print declines.
- Execution Remains Key: Investors should monitor pipeline conversion in payments, data segment growth sustainability, and the company’s ability to preserve print margins as transformation accelerates.
Conclusion
Deluxe’s Q4 and full-year 2025 performance marks a turning point in its transformation, with data and payments now nearly half of revenue and set to become the company’s primary growth engines. Operational discipline, technology investment, and capital allocation remain central to its value creation strategy as it enters 2026 with momentum and improved financial flexibility.
Industry Read-Through
Deluxe’s results highlight the accelerating shift from legacy print and paper-based payments to digital, data-driven solutions across the B2B and merchant landscape. The company’s success with AI-enabled analytics and embedded payments underscores the growing importance of technology investment for incumbents. Margin expansion through disciplined cost management and recurring revenue is increasingly critical as secular declines in traditional segments persist. Peers in business services and fintech face similar pressures to evolve their models, with Deluxe serving as a case study in balancing transformation with cash flow preservation.