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Deluxe (NYSE: DLX) reported stronger results for the first quarter of 2026, citing growth in its Payments and Data businesses, margin expansion and progress on debt reduction. Management said the company delivered organic growth across revenue, adjusted EBITDA, earnings per share and free cash flow.
President and Chief Executive Officer Barry McCarthy highlighted two milestones: Deluxe reached its long-term 3x net leverage target earlier than previously expected, and for the first time in the company’s history, its Payments and Data segments together accounted for more than 50% of total revenue. McCarthy also said the company’s strategy remains focused on using cash flow from its legacy checks business to invest in digital payments and data.
Chief Financial Officer Chip Zint said Deluxe posted total revenue of $538.1 million for the quarter, up 0.3% from the prior-year reported period and up 2.7% on a comparable adjusted basis.
GAAP net income increased to $35.8 million, or $0.77 per share, from $14 million, or $0.31 per share, in the first quarter of 2025. Zint attributed the improvement to better operating results, lower restructuring and SG&A expenses, lower interest expense and a gain related to a business exit, partly offset by a higher tax provision.
Adjusted EBITDA was $117.9 million, up 19.7% on a comparable adjusted basis. The adjusted EBITDA margin improved by 310 basis points to 21.9%. Adjusted diluted EPS was $1.05, compared with $0.72 on a comparable adjusted basis a year earlier.
McCarthy said Deluxe reduced SG&A expense by just over 7% from the prior year, contributing to the company’s 13th consecutive quarter of year-over-year comparable adjusted EBITDA growth.
Deluxe said its combined Payments and Data segments grew revenue 12.5% year over year, led by Data Solutions.
The Data segment generated $97.5 million in revenue, up 26.3% from the first quarter of 2025, driven by campaign demand from financial institutions and adjacent markets. Segment adjusted EBITDA rose 15.7% to $22.8 million, with a 23.4% margin.
McCarthy said Deluxe uses what it described as one of the largest aggregated consumer and small business marketing data lakes in the industry, along with generative AI-enabled tools, to help clients target high lifetime value customers.
Merchant Services revenue increased 7.3% to $104.9 million, reflecting stable processing volumes and continued wins across the company’s pipeline. Segment adjusted EBITDA rose 25.2% to $26.8 million, and margins expanded 360 basis points to 25.5%.
McCarthy cited a new strategic merchant partnership with Washington Trust Bank, which will offer Deluxe Merchant Services to its clients. He also pointed to a newly announced partnership with MRI Software, a real estate and rent payment solutions provider. McCarthy said MRI was already a B2B payments customer using Deluxe’s Lockbox services.
B2B Payments revenue rose 4.7% to $73.5 million, supported by stable Lockbox volumes and continued migration toward treasury management offerings that support more digital payment flows. Adjusted EBITDA for the segment rose 29.3% to $17.2 million, with a 23.4% margin.
The Print segment generated $262.2 million in first-quarter revenue, down 5.9% on a comparable adjusted basis after factoring in the sale of Safeguard, which closed March 1. Legacy check revenue declined 4.4% on a comparable adjusted basis, while the rest of the segment declined 8.4%.
Print adjusted EBITDA was $85.7 million, down 3.8% on a comparable adjusted basis. However, comparable adjusted EBITDA margin improved 70 basis points to 32.7%, which management attributed to operating expense discipline and efficiency across print operations.
McCarthy said Deluxe continues to prioritize stronger-margin insourced offerings and operational efficiencies across its print manufacturing footprint.
Deluxe ended the quarter with net debt of $1.37 billion, down from $1.39 billion at the end of 2025. The net debt-to-adjusted EBITDA ratio improved to 3x, compared with 3.6x a year earlier.
Free cash flow, defined as cash from operating activities less capital expenditures, was $27.3 million, up $3 million from the prior-year quarter. Zint said the improvement reflected stronger operating results, lower restructuring spending, lower cash taxes and lower SG&A expenses, partly offset by higher cash incentive payments.
The company reported $381 million of available revolver capacity at quarter-end. Zint said all material debt maturities remain aligned with a 2029 horizon following the company’s late-2024 refinancing.
Deluxe’s board approved a regular quarterly dividend of $0.30 per share, payable June 2, 2026, to shareholders of record as of May 19, 2026.
Deluxe updated its full-year 2026 guidance to reflect the Safeguard divestiture while maintaining its free cash flow outlook. The company now expects:
Zint said the free cash flow outlook was unchanged because Safeguard was a relatively lower-margin business and the cash flow impact, after taxes and other items, was immaterial.
During the question-and-answer session, McCarthy said Deluxe views artificial intelligence as a net positive. He said generative AI helps improve marketing campaign models in the Data business and is also being applied in B2B Lockbox processing to reduce manual intervention. McCarthy said Deluxe has achieved about a two-thirds reduction in manual intervention through AI in that area.
McCarthy also said the company is not seeing direct impacts from global uncertainty in its promotional business, though that area remains “a bit soft” in line with broader market trends.
Deluxe Corporation, founded in 1915 and headquartered in Shoreview, Minnesota, provides integrated business and financial technology solutions. Originally established as a check printing company, Deluxe has expanded to support small businesses, financial institutions and entrepreneurs with services spanning print, digital and software platforms.
The company’s activities include printing checks, forms and promotional materials, as well as delivering digital marketing and customer engagement solutions.
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