Deluxe (NYSE:DLX) reported first-quarter results on Wednesday that came in ahead of Wall Street expectations, although shares fell more than 2% in premarket trading after the company issued weaker-than-expected full-year guidance.
The payments and data services group posted adjusted earnings of $1.05 per share, exceeding analyst forecasts of $0.87 by $0.18.
Revenue totaled $538.1 million, slightly above consensus estimates of $534.97 million and up 0.3% from the same period last year.
Comparable adjusted revenue increased 2.7% year over year, supported by growth in the company’s Data Solutions and Merchant Services businesses.
Net income rises sharply as strategic transition continues
Net income climbed to $35.8 million during the quarter, compared with $14.0 million in the first quarter of 2025.
“We extended our strong 2025 performance through the first quarter of the year, with robust revenue expansion specifically across the Data Solutions and Merchant Services segments,” said Barry McCarthy, president and chief executive officer of Deluxe.
“We achieved two long-term strategic milestones, reaching our 3x leverage target and shifting mix towards Payments and Data that now together represent more than 50% of revenue.”
Full-year guidance falls short of Wall Street expectations
Deluxe forecast adjusted earnings per share for fiscal 2026 in a range of $3.60 to $4.00.
The midpoint of $3.80 came in below analyst consensus estimates of $4.07 per share.
The company also projected full-year revenue between $1.985 billion and $2.05 billion, with the midpoint of $2.02 billion trailing Wall Street expectations of $2.14 billion.
Deluxe said the updated guidance reflects the divestiture of its Safeguard small-business distributor channel completed in March.
Margins expand and debt levels decline
Comparable adjusted EBITDA increased 19.7% year over year to $117.9 million.
Adjusted EBITDA margin improved by 310 basis points to 21.9%.
Free cash flow rose to $27.3 million during the quarter, compared with $24.3 million a year earlier.
The company also reduced total debt by $32.3 million and lowered net debt by $22.6 million over the period.