Deluxe Q3 Adjusted EBITDA Rises as Payments and Data Offset Print Decline

Deluxe (DLX) reported higher third-quarter revenue and adjusted EBITDA as growth across Merchant Services, B2B Payments and Data Solutions outweighed continued declines in Print. GAAP net income fell sharply, however, as acquisition-related costs and higher amortization weighed on reported earnings.

Revenue for the quarter ended September 30 rose 2.5% year over year to $553.9 million. Comparable adjusted revenue, which excludes a business exited in 2026 from the prior-year comparison, increased 9.1% from $507.9 million.

Adjusted EBITDA rose 6.9% to $127.1 million, while comparable adjusted EBITDA increased 9.6%. The adjusted EBITDA margin reached 22.9%, up 90 basis points on a reported basis and 10 basis points on a comparable basis. Comparable adjusted diluted earnings per share increased 1.9% to $1.06.

GAAP net income declined to $13.0 million, or $0.28 per diluted share, from $33.7 million, or $0.74 per share, a year earlier. Deluxe attributed the decline to acquisition-related expenses. The quarter included $9.8 million of acquisition transaction costs, while depreciation and amortization increased to $45.4 million from $32.3 million. Operating income fell to $52.7 million from $75.8 million.

Payments and data drive the revenue mix

Merchant Services delivered the strongest growth among Deluxe’s segments, with revenue rising 37.9% to $135.1 million. The total included $33.5 million from Celero; excluding that contribution, Merchant Services revenue grew 3.7%. Segment adjusted EBITDA increased 57.4% to $32.1 million, and its margin expanded 300 basis points to 23.8%, reflecting revenue growth, channel and partner mix, and the purchase of residual commission rights.

B2B Payments revenue increased 5.7% to $77.3 million, while adjusted EBITDA climbed 33.9% to $22.5 million. Its margin widened by 610 basis points to 29.1%, driven by revenue wins and cost efficiencies.

Data Solutions revenue advanced 15.4% to $102.9 million, but adjusted EBITDA declined 5.2% to $27.6 million. The segment’s margin fell to 26.8% from 32.6%, with Deluxe pointing to the effect of a prior-year vendor rebate. Management said the margin was moving toward its full-year outlook in the low- to mid-20% range.

Together, Deluxe’s Payments and Data businesses generated $315.3 million of quarterly revenue, up from $260.3 million. Excluding Celero, their combined revenue grew 8.3%.

Print declines but retains a high margin

Print remained Deluxe’s largest segment but continued to contract. Revenue fell 14.8% to $238.6 million, partly reflecting the exited business. On a comparable adjusted basis, revenue declined 3.6%, while comparable adjusted EBITDA decreased 7.0% to $84.3 million.

Comparable adjusted check revenue fell 3.5%, and other comparable adjusted Print revenue declined 3.9%. The segment’s adjusted EBITDA margin was 35.3%, within management’s low- to mid-30% outlook, though below the comparable 36.6% margin in the prior-year quarter.

For the first nine months of 2026, Payments and Data represented 53.7% of Deluxe’s revenue and grew 14.6% year over year. Legacy Print businesses accounted for 46.3% and declined 4.7% on the company’s stated basis. Deluxe said cash generated by its legacy operations supports debt reduction and reinvestment in Payments and Data.

Cash flow strengthens as leverage rises

Net cash provided by operating activities increased 28.1% to $215.9 million for the first nine months of 2026. Free cash flow rose 40.7% to $134.9 million after $81.0 million of capital expenditures, representing 38.1% of adjusted EBITDA.

Selling, general and administrative expenses for the nine-month period declined by $14.3 million, or 2.2%, supporting operating leverage. Nine-month adjusted EBITDA increased to $353.8 million from $325.5 million, while comparable adjusted EBITDA rose to $353.8 million from $317.7 million.

Deluxe ended September with net debt of $1.93 billion, up from $1.39 billion at the end of 2025. Net debt was 4.2 times trailing 12-month adjusted EBITDA, compared with 3.2 times at year-end. Including Celero results and estimated synergies, the company calculated leverage at 3.8 times.

2026 outlook and risks

For 2026, Deluxe expects revenue of approximately $2.13 billion to $2.15 billion. Adjusted revenue is projected at $2.045 billion to $2.060 billion, representing growth of 1% to 2% from the comparable 2025 base. Modeling assumptions include about $130 million of interest expense, an adjusted tax rate of 26%, approximately $170 million of depreciation and amortization, and capital expenditures of roughly $110 million. Deluxe also declared its regular quarterly dividend of $0.30 per share.

The outlook remains subject to macroeconomic conditions, including tariffs, inflation and labor availability, as well as potential changes to the company’s portfolio. Other disclosed risks include the secular decline in checks and business forms, execution and integration challenges, financial-institution consolidation, supplier disruptions, competition, cybersecurity incidents and uncertainty surrounding the performance of new payments, data and treasury-management offerings.