Deluxe's Q1 2025 Earnings Call: Contradictions on Revenue Growth, Margins, and Macroeconomic Pressures

Growth expectations for consolidated revenue, gross margin and revenue guidance, impact of federal government's check reduction, macroeconomic impact on business segments, and growth drivers for Merchant Services are the key contradictions discussed in Deluxe's latest 2025Q1 earnings call.



Revenue and Earnings Growth:
- Deluxe Corporation reported total revenue of over $536 million for Q1 2025, up 1.4% on a comparable adjusted basis year-over-year.
- The growth was driven by combined growth across payments businesses and double-digit growth trajectory across the data segment, offsetting expected low single-digit secular declines within print.

Data Segment Expansion:
- Data segment revenue grew 29% versus the prior year and achieved record levels for the segment.
- This growth was attributed to significant demand from financial institutions and the expansion of its portfolio across high-value adjacent market verticals.

Operating Efficiency and Cash Flow:
- Total comparable adjusted EBITDA for the quarter finished at over $100 million, increasing nearly 3.5% from 2024.
- The expansion was supported by a 3.8% improvement in SG&A spend and robust year-to-year expansion of operating cash flow, contributing to a reduction in net debt levels.

Payments and Partnerships:
- The Merchant Services business grew first quarter revenue by 1.3% year-over-year, with new partnerships like TowneBank demonstrating the company's ability to move up market and expand distribution.
- These partnerships are a strategic focus, leveraging Deluxe's robust platform, superior service, and strong brand presence to win new business in financial institutions.