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What were the key takeaways from Deluxe's earnings call?

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- **Revenue Growth**: 2.5% YoY comparable adjusted revenue growth, driven by 46% Data segment expansion.
- **Margin Expansion**: 220bps EBITDA margin improvement to 22%, with Data segment margins at 32.6%.
- **Debt Reduction**: Achieved 3.3x leverage ratio a quarter early, with $44.5 million net debt reduction YoY.
- **Segment Strength**: Merchant Services +5% revenue, Print 33.4% margins despite 5.9% decline.
- **Free Cash Flow**: $95.9 million YoY, with guidance for $140-150 million full year.

**【CEO Summary Section】**
- **Strong Q3 Results**: Comparable adjusted revenue grew 2.5% YoY, driven by 46% growth in the Data segment. Adjusted EBITDA expanded 13.8% to $118.9 million, with margins rising 220 basis points to 22%.
- **Strategic Priorities**: 
  1. **Revenue Mix Shift**: Payments and Data now account for 47% of revenue (up 400bps YoY), with Data revenue up 46% YoY.
  2. **Operating Efficiency**: Reduced SG&A by $15 million (7% YoY), enabling EBITDA margin expansion across all segments.
  3. **Debt Reduction**: Achieved year-end leverage target of 3.3x a quarter early, with net debt down $44.5 million YoY.
- **Segment Highlights**: 
  - **Data**: 46% revenue growth, 66% EBITDA growth, 32.6% margins (vs. 20%+ long-term target).
  - **Merchant Services**: 5% revenue growth, 14.6% EBITDA growth, 20.8% margins.
  - **Print**: 5.9% revenue decline but 33.4% margins (up 60bps YoY) due to focus on high-margin checks.

**【CFO Financial Commentary】**
- **Q3 Financials**: 
  - Total revenue: $540.2 million (+2.2% YoY)
  - GAAP net income: $33.7 million ($0.74 EPS vs. $0.20 EPS YoY)
  - Free cash flow: $95.9 million YoY (up $31.6 million)
- **Updated Guidance**: 
  - Revenue: $2.11-2.13 billion (flat to +1%)
  - Adjusted EBITDA: $425-435 million (+5-7%)
  - Adjusted EPS: $3.45-3.60 (+6-10%)
  - Free cash flow: $140-150 million
- **Capital Allocation**: 
  - Debt reduction remains top priority (target 3x leverage by end-2026)
  - Dividend of $0.30/share maintained
  - CapEx: $90-100 million for high-return projects

**【Q&A Key Highlights】**
- **Free Cash Flow Sustainability**: Chip Zint emphasized $100 million+ annual free cash flow growth driven by EBITDA expansion and working capital efficiency.
- **Merchant Pipeline**: Barry McCarthy highlighted Peoples Bank partnership as example of cross-selling across segments, with ISV channel expansion underway.
- **Data Growth Drivers**: Strong FI demand for deposit gathering and lending campaigns, with 46% YoY revenue growth.
- **Print Margin Resilience**: 33.4% margins despite 5.9% revenue decline, driven by focus on high-margin checks and cost control.
- **Capital Allocation**: Chip Zint reaffirmed debt reduction as top priority, with no immediate plans for buybacks or M&A.

Deluxe Corporation (DLX) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

DLX

DLX fundamentals

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