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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ___________
Commission file number: 1-7945
DELUXE CORPORATION
(Exact name of registrant as specified in its charter)

MN | 41-0216800
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)
801 S. Marquette Ave., Minneapolis, MN | 55402-2807
(Address of principal executive offices) | (Zip Code)

(651) 483-7111
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading symbol(s) | Name of each exchange on which registered
Common Stock, par value $1.00 per share | DLX | NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer | ☒ | Accelerated Filer | ☐
Non-accelerated Filer | ☐ | Smaller Reporting Company | ☐
|  | Emerging Growth Company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes ☒ No
The number of shares outstanding of registrant’s common stock as of April 23, 2025 was 44,739,840.
1

DELUXE CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2025
TABLE OF CONTENTS

Item |  | Page
Part I - FINANCIAL INFORMATION |  |
Item 1. |  | Consolidated Balance Sheets |  | 3
|  | Consolidated Statements of Comprehensive Income |  | 4
|  | Consolidated Statements of Shareholders' Equity |  | 5
|  | Consolidated Statements of Cash Flows |  | 6
|  | Condensed Notes to Unaudited Consolidated Financial Statements |  |
|  | Note 1: Consolidated Financial Statements |  | 7
|  | Note 2: New Accounting Pronouncements |  | 7
|  | Note 3: Supplemental Balance Sheet and Cash Flow Information |  | 7
|  | Note 4: Earnings per Share |  | 11
|  | Note 5: Other Comprehensive Income (Loss) |  | 12
|  | Note 6: Divestitures |  | 13
|  | Note 7: Fair Value Measurements |  | 13
|  | Note 8: Restructuring and Integration Expense |  | 14
|  | Note 9: Income Tax Provision |  | 15
|  | Note 10: Postretirement Benefits |  | 15
|  | Note 11: Debt |  | 16
|  | Note 12: Other Commitments and Contingencies |  | 18
|  | Note 13: Business Segment Information |  | 19
Item 2. |  | Management's Discussion and Analysis of Financial Condition and Results of Operations |  | 22
Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk |  | 34
Item 4. |  | Controls and Procedures |  | 35
Part II - OTHER INFORMATION |  |
Item 1. |  | Legal Proceedings |  | 35
Item 1A. |  | Risk Factors |  | 35
Item 2. |  | Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities |  | 35
Item 3. |  | Defaults Upon Senior Securities |  | 35
Item 4. |  | Mine Safety Disclosures |  | 35
Item 5. |  | Other Information |  | 36
Item 6. |  | Exhibits |  | 36
Signatures |  |  |  | 37

2

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

DELUXE CORPORATION CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands, except share par value) |  | March 31, 2025 |  | December 31, 2024
ASSETS |  |  |  |
Current assets: |  |  |  |
Cash and cash equivalents |  | $ | 30,316 |  |  | $ | 34,399 |
Trade accounts receivable, net of allowance for credit losses |  | 173,690 |  |  | 174,076 |
Inventories and supplies, net of reserve |  | 34,509 |  |  | 36,393 |
Settlement processing assets |  | 34,019 |  |  | 271,876 |
Prepaid expenses |  | 35,195 |  |  | 32,751 |
Revenue in excess of billings |  | 28,628 |  |  | 26,741 |
Other current assets |  | 31,265 |  |  | 35,403 |
Total current assets |  | 367,622 |  |  | 611,639 |
Deferred income taxes |  | 9,370 |  |  | 6,969 |
Long-term investments |  | 57,775 |  |  | 61,025 |
Property, plant and equipment, net of accumulated depreciation of $360,458 and $354,832, respectively |  | 107,008 |  |  | 111,587 |
Operating lease assets |  | 47,967 |  |  | 49,382 |
Intangibles, net of accumulated amortization of $645,057 and $616,817, respectively |  | 322,356 |  |  | 331,053 |
Goodwill |  | 1,422,741 |  |  | 1,422,737 |
Other non-current assets |  | 238,978 |  |  | 236,644 |
Total assets |  | $ | 2,573,817 |  |  | $ | 2,831,036 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |
Current liabilities: |  |  |  |
Accounts payable |  | $ | 175,135 |  |  | $ | 164,878 |
Settlement processing obligations |  | 35,614 |  |  | 273,915 |
Accrued liabilities |  | 148,836 |  |  | 149,593 |
Current portion of long-term debt |  | 37,163 |  |  | 37,130 |
Total current liabilities |  | 396,748 |  |  | 625,516 |
Long-term debt |  | 1,455,382 |  |  | 1,466,021 |
Operating lease liabilities |  | 46,891 |  |  | 48,982 |
Deferred income taxes |  | — |  |  | 2,104 |
Other non-current liabilities |  | 52,332 |  |  | 67,495 |
Commitments and contingencies (Note 12) |  |  |  |
Shareholders' equity: |  |  |  |
Common shares $1 par value (authorized: 500,000 shares; outstanding: March 31, 2025 – 44,740; December 31, 2024 – 44,315) |  | 44,740 |  |  | 44,315 |
Additional paid-in capital |  | 117,846 |  |  | 117,122 |
Retained earnings |  | 489,709 |  |  | 489,231 |
Accumulated other comprehensive loss |  | (30,032) |  |  | (29,916) |
Non-controlling interest |  | 201 |  |  | 166 |
Total shareholders’ equity |  | 622,464 |  |  | 620,918 |
Total liabilities and shareholders’ equity |  | $ | 2,573,817 |  |  | $ | 2,831,036 |

See Condensed Notes to Unaudited Consolidated Financial Statements
3

DELUXE CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

|  | Quarter Ended March 31, |  |
(in thousands, except per share amounts) |  | 2025 |  | 2024 |  |  |  |
Product revenue |  | $ | 288,313 |  |  | $ | 300,312 |  |  |  |  |
Service revenue |  | 248,158 |  |  | 234,643 |  |  |  |  |
Total revenue |  | 536,471 |  |  | 534,955 |  |  |  |  |
Cost of products |  | (109,680) |  |  | (114,336) |  |  |  |  |
Cost of services |  | (145,744) |  |  | (137,082) |  |  |  |  |
Total cost of revenue |  | (255,424) |  |  | (251,418) |  |  |  |  |
Gross profit |  | 281,047 |  |  | 283,537 |  |  |  |  |
Selling, general and administrative expense |  | (225,312) |  |  | (234,093) |  |  |  |  |
Restructuring and integration expense |  | (7,668) |  |  | (13,804) |  |  |  |  |
Gain on sale of businesses and long-lived assets |  | — |  |  | 8,581 |  |  |  |  |
Operating income |  | 48,067 |  |  | 44,221 |  |  |  |  |
Interest expense |  | (31,266) |  |  | (30,809) |  |  |  |  |
Other income, net |  | 2,468 |  |  | 2,940 |  |  |  |  |
Income before income taxes |  | 19,269 |  |  | 16,352 |  |  |  |  |
Income tax provision |  | (5,221) |  |  | (5,522) |  |  |  |  |
Net income |  | 14,048 |  |  | 10,830 |  |  |  |  |
Net income attributable to non-controlling interest |  | (35) |  |  | (27) |  |  |  |  |
Net income attributable to Deluxe |  | $ | 14,013 |  |  | $ | 10,803 |  |  |  |  |
Total comprehensive income |  | $ | 13,932 |  |  | $ | 15,021 |  |  |  |  |
Comprehensive income attributable to Deluxe |  | 13,897 |  |  | 14,994 |  |  |  |  |
Basic earnings per share |  | 0.31 |  |  | 0.25 |  |  |  |  |
Diluted earnings per share |  | 0.31 |  |  | 0.24 |  |  |  |  |

See Condensed Notes to Unaudited Consolidated Financial Statements
4

DELUXE CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (unaudited)

(in thousands) |  | Common shares |  | Common shares par value |  | Additional paid-in capital |  | Retained earnings |  | Accumulated other comprehensive loss |  | Non-controlling interest |  | Total
Balance, December 31, 2024 |  | 44,315 |  |  | $ | 44,315 |  |  | $ | 117,122 |  |  | $ | 489,231 |  |  | $ | (29,916) |  |  | $ | 166 |  |  | $ | 620,918 |
Net income |  | — |  |  | — |  |  | — |  |  | 14,013 |  |  | — |  |  | 35 |  |  | 14,048 |
Cash dividends ($0.30 per share) |  | — |  |  | — |  |  | — |  |  | (13,535) |  |  | — |  |  | — |  |  | (13,535) |
Common shares issued, net of tax withholding |  | 425 |  |  | 425 |  |  | (4,825) |  |  | — |  |  | — |  |  | — |  |  | (4,400) |
Employee share-based compensation |  | — |  |  | — |  |  | 5,549 |  |  | — |  |  | — |  |  | — |  |  | 5,549 |
Other comprehensive loss |  | — |  |  | — |  |  | — |  |  | — |  |  | (116) |  |  | — |  |  | (116) |
Balance, March 31, 2025 |  | 44,740 |  |  | $ | 44,740 |  |  | $ | 117,846 |  |  | $ | 489,709 |  |  | $ | (30,032) |  |  | $ | 201 |  |  | $ | 622,464 |

(in thousands) |  | Common shares |  | Common shares par value |  | Additional paid-in capital |  | Retained earnings |  | Accumulated other comprehensive loss |  | Non-controlling interest |  | Total
Balance, December 31, 2023 |  | 43,743 |  |  | $ | 43,743 |  |  | $ | 99,141 |  |  | $ | 491,238 |  |  | $ | (30,028) |  |  | $ | 522 |  |  | $ | 604,616 |
Net income |  | — |  |  | — |  |  | — |  |  | 10,803 |  |  | — |  |  | 27 |  |  | 10,830 |
Cash dividends ($0.30 per share) |  | — |  |  | — |  |  | — |  |  | (13,724) |  |  | — |  |  | — |  |  | (13,724) |
Common shares issued, net of tax withholding |  | 303 |  |  | 303 |  |  | (2,993) |  |  | — |  |  | — |  |  | — |  |  | (2,690) |
Employee share-based compensation |  | — |  |  | — |  |  | 5,169 |  |  | — |  |  | — |  |  | — |  |  | 5,169 |
Other comprehensive income |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,191 |  |  | — |  |  | 4,191 |
Balance, March 31, 2024 |  | 44,046 |  |  | $ | 44,046 |  |  | $ | 101,317 |  |  | $ | 488,317 |  |  | $ | (25,837) |  |  | $ | 549 |  |  | $ | 608,392 |

See Condensed Notes to Unaudited Consolidated Financial Statements
5

DELUXE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

|  | Quarter Ended March 31,
(in thousands) |  | 2025 |  | 2024
Cash flows from operating activities: |  |  |  |
Net income |  | $ | 14,048 |  |  | $ | 10,830 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |
Depreciation |  | 5,604 |  |  | 6,049 |
Amortization of intangibles |  | 29,675 |  |  | 35,698 |
Amortization of prepaid product discounts |  | 8,268 |  |  | 8,180 |
Employee share-based compensation expense |  | 5,459 |  |  | 5,121 |
Operating lease expense |  | 3,674 |  |  | 5,367 |
Amortization of cloud computing arrangement implementation costs |  | 4,211 |  |  | 4,119 |
Gain on sale of businesses and long-lived assets |  | — |  |  | (8,581) |
Deferred income taxes |  | (4,768) |  |  | (6,040) |
Other non-cash items, net |  | 4,605 |  |  | 10,153 |
Changes in assets and liabilities: |  |  |  |
Trade accounts receivable |  | (1,371) |  |  | 16,655 |
Inventories and supplies |  | 2,233 |  |  | 1,942 |
Other current and non-current assets |  | (2,588) |  |  | (21,672) |
Accounts payable |  | 11,323 |  |  | 6,217 |
Prepaid product discount payments |  | (8,518) |  |  | (10,503) |
Other accrued and non-current liabilities |  | (21,574) |  |  | (36,945) |
Net cash provided by operating activities |  | 50,281 |  |  | 26,590 |
Cash flows from investing activities: |  |  |  |
Purchases of capital assets |  | (25,968) |  |  | (20,442) |
Proceeds from sale of businesses and long-lived assets |  | 1,968 |  |  | — |
Other |  | (595) |  |  | (116) |
Net cash used by investing activities |  | (24,595) |  |  | (20,558) |
Cash flows from financing activities: |  |  |  |
Proceeds from issuing long-term debt and swingline loans, net of debt issuance costs |  | 167,680 |  |  | 165,557 |
Payments on long-term debt and swingline loans |  | (179,287) |  |  | (200,125) |
Net change in settlement processing obligations |  | (237,037) |  |  | (272,806) |
Cash dividends paid to shareholders |  | (14,531) |  |  | (13,956) |
Other |  | (5,464) |  |  | (5,249) |
Net cash used by financing activities |  | (268,639) |  |  | (326,579) |
Effect of exchange rate change on cash, cash equivalents, restricted cash, and restricted cash equivalents |  | 1,085 |  |  | (2,642) |
Net change in cash, cash equivalents, restricted cash, and restricted cash equivalents |  | (241,868) |  |  | (323,189) |
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of year |  | 309,153 |  |  | 458,033 |
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period (Note 3) |  | $ | 67,285 |  |  | $ | 134,844 |

See Condensed Notes to Unaudited Consolidated Financial Statements
6

DELUXE CORPORATION CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts)

NOTE 1: | CONSOLIDATED FINANCIAL STATEMENTS

The consolidated balance sheet as of March 31, 2025, the consolidated statements of comprehensive income for the quarters ended March 31, 2025 and 2024, the consolidated statements of shareholders’ equity for the quarters ended March 31, 2025 and 2024, and the consolidated statements of cash flows for the quarters ended March 31, 2025 and 2024 are unaudited. The consolidated balance sheet as of December 31, 2024 was derived from audited consolidated financial statements, but does not include all disclosures required by U.S. generally accepted accounting principles (GAAP). In the opinion of management, all adjustments necessary for a fair statement of the consolidated financial statements are included. Adjustments consist only of normal recurring items, except for any items discussed in the notes below. Interim results are not necessarily indicative of results for a full year or future results. The consolidated financial statements and notes are presented in accordance with instructions for Form 10-Q and do not contain certain information included in our annual consolidated financial statements and notes. The consolidated financial statements and notes appearing in this report should be read in conjunction with the consolidated audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Form 10-K").
The process of preparing our consolidated financial statements involves making various estimates and assumptions that impact the reported amounts in the consolidated financial statements and accompanying notes. These estimates are derived from our historical experience and other relevant factors and assumptions that we consider reasonable. These factors and assumptions form the foundation for our judgments regarding the carrying values of our assets, liabilities, revenues, and expenses, as well as the disclosure of contingent assets and liabilities. It is important to note that actual results may vary significantly from these estimates and assumptions.
Comparability – The consolidated statement of cash flows for the quarter ended March 31, 2024 has been modified to conform to the current year presentation. Within net cash provided by operating activities, the immaterial payments for cloud computing arrangement implementation costs are no longer presented separately. Instead, they are included in other current and non-current assets.

NOTE 2: | NEW ACCOUNTING PRONOUNCEMENTS

ASU No. 2023-09 – In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-09, Improvements to Income Tax Disclosures. This standard modifies the required income tax disclosures to include specific categories in the income tax rate reconciliation and requires the disclosure of income tax payments by jurisdiction, among other changes. The guidance is effective for our annual consolidated financial statements for the year ending December 31, 2025. Both prospective and retrospective application of the standard is permitted upon adoption. We are currently evaluating the potential effects of adopting this new guidance on the disclosures within our consolidated financial statements.
ASU No. 2024-03 – In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses. This standard does not change the expense captions presented on the face of the income statement. Instead, it requires the disaggregation of certain expense captions into specified categories within the footnotes to the consolidated financial statements. This standard is effective for our annual consolidated financial statements for the year ending December 31, 2027. Both prospective and retrospective application of the standard is permitted upon adoption. We are currently evaluating the potential effects of adopting this new guidance on the disclosures within our consolidated financial statements.

NOTE 3: | SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION

Trade accounts receivable – Net trade accounts receivable was comprised of the following:

(in thousands) |  | March 31, 2025 |  | December 31, 2024
Trade accounts receivable – gross |  | $ | 182,837 |  |  | $ | 183,196 |
Allowance for credit losses |  | (9,147) |  |  | (9,120) |
Trade accounts receivable – net(1) |  | $ | 173,690 |  |  | $ | 174,076 |

(1) Includes unbilled receivables of $59,785 as of March 31, 2025 and $47,341 as of December 31, 2024.
7

DELUXE CORPORATION CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts)

Changes in the allowance for credit losses for the quarters ended March 31, 2025 and March 31, 2024 were as follows:

|  | Quarter Ended March 31,
(in thousands) |  | 2025 |  | 2024
Balance, beginning of year |  | $ | 9,120 |  |  | $ | 6,541 |
Bad debt expense |  | 1,770 |  |  | 2,960 |
Write-offs and other |  | (1,743) |  |  | (1,941) |
Balance, end of period |  | $ | 9,147 |  |  | $ | 7,560 |

Inventories and supplies – Inventories and supplies were comprised of the following:

(in thousands) |  | March 31, 2025 |  | December 31, 2024
Finished and semi-finished goods |  | $ | 28,335 |  |  | $ | 31,146 |
Raw materials and supplies |  | 17,191 |  |  | 16,787 |
Reserve for excess and obsolete items |  | (11,017) |  |  | (11,540) |
Inventories and supplies, net of reserve |  | $ | 34,509 |  |  | $ | 36,393 |

Revenue in excess of billings – Revenue in excess of billings was comprised of the following:

(in thousands) |  | March 31, 2025 |  | December 31, 2024
Conditional right to receive consideration |  | $ | 14,703 |  |  | $ | 16,943 |
Unconditional right to receive consideration(1) |  | 13,925 |  |  | 9,798 |
Revenue in excess of billings |  | $ | 28,628 |  |  | $ | 26,741 |

(1) Represents revenues that are earned but not currently billable under the related contract terms.
Intangibles – Intangibles were comprised of the following:

|  | March 31, 2025 |  | December 31, 2024
(in thousands) |  | Gross carrying amount |  | Accumulated amortization |  | Net carrying amount |  | Gross carrying amount |  | Accumulated amortization |  | Net carrying amount
Internal-use software |  | $ | 508,947 |  |  | $ | (357,609) |  |  | $ | 151,338 |  |  | $ | 488,840 |  |  | $ | (339,683) |  |  | $ | 149,157 |
Customer lists/relationships |  | 311,066 |  |  | (231,158) |  |  | 79,908 |  |  | 311,578 |  |  | (223,272) |  |  | 88,306 |
Partner relationships |  | 76,200 |  |  | (19,874) |  |  | 56,326 |  |  | 76,252 |  |  | (19,632) |  |  | 56,620 |
Technology-based intangibles |  | 65,000 |  |  | (31,146) |  |  | 33,854 |  |  | 65,000 |  |  | (29,115) |  |  | 35,885 |
Software to be sold |  | 6,200 |  |  | (5,270) |  |  | 930 |  |  | 6,200 |  |  | (5,115) |  |  | 1,085 |
Intangibles |  | $ | 967,413 |  |  | $ | (645,057) |  |  | $ | 322,356 |  |  | $ | 947,870 |  |  | $ | (616,817) |  |  | $ | 331,053 |

8

DELUXE CORPORATION CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts)

Amortization of intangibles was $29,675 for the quarter ended March 31, 2025 and $35,698 for the quarter ended March 31, 2024. Based on the intangibles in service as of March 31, 2025, estimated future amortization expense is as follows:

(in thousands) |  | Estimated amortization expense
Remainder of 2025 |  | $ | 76,913 |
2026 |  | 77,306 |
2027 |  | 48,964 |
2028 |  | 28,754 |
2029 |  | 16,108 |

In the normal course of business, we acquire and develop internal-use software. We also, at times, purchase customer list and partner relationship assets. During the quarter ended March 31, 2025, we acquired or developed internal-use software of $19,133 with a weighted-average useful life of 3 years. Other intangibles acquired during the period were not material.
Goodwill – Changes in goodwill by reportable segment and in total were as follows for the quarter ended March 31, 2025:

(in thousands) |  | Merchant Services |  | B2B Payments |  | Data Solutions(1) |  | Print(1) |  | Total
Balance, December 31, 2024 |  | $ | 727,688 |  |  | $ | 160,431 |  |  | $ | 40,804 |  |  | $ | 493,814 |  |  | $ | 1,422,737 |
Currency translation adjustment |  | — |  |  | — |  |  | — |  |  | 4 |  |  | 4 |
Balance, March 31, 2025 |  | $ | 727,688 |  |  | $ | 160,431 |  |  | $ | 40,804 |  |  | $ | 493,818 |  |  | $ | 1,422,741 |

(1) The Data Solutions and Print balances are net of accumulated impairment charges of $145,584 and $193,699, respectively, for each period.
Other non-current assets – Other non-current assets were comprised of the following:

(in thousands) |  | March 31, 2025 |  | December 31, 2024
Postretirement benefit plan asset |  | $ | 109,279 |  |  | $ | 107,524 |
Cloud computing arrangement implementation costs |  | 38,787 |  |  | 42,470 |
Prepaid product discounts(1) |  | 38,591 |  |  | 32,847 |
Deferred contract acquisition costs(2) |  | 19,008 |  |  | 18,780 |
Loans and notes receivable from distributors, net of allowance for credit losses(3) |  | 10,570 |  |  | 10,789 |
Other |  | 22,743 |  |  | 24,234 |
Other non-current assets |  | $ | 238,978 |  |  | $ | 236,644 |

(1) Amortization of prepaid product discounts was $8,268 for the quarter ended March 31, 2025 and $8,180 for the quarter ended March 31, 2024.
(2) Amortization of deferred contract acquisition costs was $2,857 for the quarter ended March 31, 2025 and $3,091 for the quarter ended March 31, 2024.
(3) Amount includes the non-current portion of loans and notes receivable. The current portion of these receivables is included in other current assets on the consolidated balance sheets and was $1,387 as of March 31, 2025 and $1,753 as of December 31, 2024. The allowance for credit losses was not material in either period.
We categorize loans and notes receivable into risk categories based on information about the ability of borrowers to service their debt, including current financial information, historical payment experience, current economic trends, and other factors. The highest quality receivables are assigned a 1-2 internal grade. Those that have a potential weakness requiring management's attention are assigned a 3-4 internal grade. Past due receivables and those on non-accrual status were not material as of March 31, 2025 or December 31, 2024.
9

DELUXE CORPORATION CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts)

The following table presents loans and notes receivable from distributors, including the current portion, by credit quality indicator and by year of origination, as of March 31, 2025. There were no write-offs or recoveries recorded during the quarter ended March 31, 2025.

|  | Loans and notes receivable from distributors amortized cost basis by origination year |  |
(in thousands) |  | 2024 |  | 2023 |  | 2020 |  | Prior |  | Total
Risk rating: |  |  |  |  |  |  |  |  |  |
1-2 internal grade |  | $ | 893 |  |  | $ | 300 |  |  | $ | 827 |  |  | $ | 10,748 |  |  | $ | 12,768 |
3-4 internal grade |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Loans and notes receivable |  | $ | 893 |  |  | $ | 300 |  |  | $ | 827 |  |  | $ | 10,748 |  |  | $ | 12,768 |

Accrued liabilities – Accrued liabilities were comprised of the following:

(in thousands) |  | March 31, 2025 |  | December 31, 2024
Deferred revenue(1) |  | $ | 28,250 |  |  | $ | 31,605 |
Employee cash bonuses, including sales incentives |  | 15,643 |  |  | 33,422 |
Interest |  | 14,610 |  |  | 9,493 |
Operating lease liabilities |  | 12,057 |  |  | 12,406 |
Customer rebates |  | 9,382 |  |  | 10,100 |
Prepaid product discounts |  | 8,071 |  |  | 2,583 |
Wages and payroll liabilities, including vacation |  | 7,843 |  |  | 10,321 |
Restructuring and integration (Note 8) |  | 6,363 |  |  | 3,755 |
Other |  | 46,617 |  |  | 35,908 |
Accrued liabilities |  | $ | 148,836 |  |  | $ | 149,593 |

(1) Revenue recognized for amounts included in deferred revenue at the beginning of the period was $12,318 for the quarter ended March 31, 2025 and $14,644 for the quarter ended March 31, 2024.
Supplemental cash flow information – The reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents to the consolidated statements of cash flows was as follows:

(in thousands) |  | March 31, 2025 |  | March 31, 2024
Cash and cash equivalents |  | $ | 30,316 |  |  | $ | 23,544 |
Restricted cash and restricted cash equivalents included in settlement processing assets |  | 34,019 |  |  | 108,227 |
Non-current restricted cash included in other non-current assets |  | 2,950 |  |  | 3,073 |
Total cash, cash equivalents, restricted cash, and restricted cash equivalents |  | $ | 67,285 |  |  | $ | 134,844 |

10

DELUXE CORPORATION CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts)

NOTE 4: | EARNINGS PER SHARE

The following table reflects the calculation of basic and diluted earnings per share. During each period, certain share-based awards, as noted below, were excluded from the calculation of diluted earnings per share because their effect would have been antidilutive.

|  | Quarter Ended March 31, |  |
(in thousands, except per share amounts) |  | 2025 |  | 2024 |  |  |  |
Earnings per share – basic: |  |  |  |  |  |  |  |
Net income |  | $ | 14,048 |  |  | $ | 10,830 |  |  |  |  |
Net income attributable to non-controlling interest |  | (35) |  |  | (27) |  |  |  |  |
Net income attributable to Deluxe |  | 14,013 |  |  | 10,803 |  |  |  |  |
Income allocated to participating securities |  | (3) |  |  | (9) |  |  |  |  |
Income attributable to Deluxe available to common shareholders |  | $ | 14,010 |  |  | $ | 10,794 |  |  |  |  |
Weighted-average shares outstanding |  | 44,551 |  |  | 43,917 |  |  |  |  |
Earnings per share – basic |  | $ | 0.31 |  |  | $ | 0.25 |  |  |  |  |
Earnings per share – diluted: |  |  |  |  |  |  |  |
Net income |  | $ | 14,048 |  |  | $ | 10,830 |  |  |  |  |
Net income attributable to non-controlling interest |  | (35) |  |  | (27) |  |  |  |  |
Net income attributable to Deluxe |  | 14,013 |  |  | 10,803 |  |  |  |  |
Income allocated to participating securities |  | (3) |  |  | (9) |  |  |  |  |
Re-measurement of share-based awards classified as liabilities |  | (66) |  |  | (37) |  |  |  |  |
Income attributable to Deluxe available to common shareholders |  | $ | 13,944 |  |  | $ | 10,757 |  |  |  |  |
Weighted-average shares outstanding |  | 44,551 |  |  | 43,917 |  |  |  |  |
Dilutive impact of potential common shares |  | 729 |  |  | 570 |  |  |  |  |
Weighted-average shares and potential common shares outstanding |  | 45,280 |  |  | 44,487 |  |  |  |  |
Earnings per share – diluted |  | $ | 0.31 |  |  | $ | 0.24 |  |  |  |  |
Antidilutive potential common shares excluded from calculation |  | 1,197 |  |  | 1,350 |  |  |  |  |

11

DELUXE CORPORATION CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts)

NOTE 5: | OTHER COMPREHENSIVE INCOME (LOSS)

Reclassification adjustments – Information regarding amounts reclassified from accumulated other comprehensive loss to net income was as follows:

Accumulated other comprehensive loss components |  | Amounts reclassified from accumulated other comprehensive loss |  | Affected line item in consolidated statements of comprehensive income
|  | Quarter Ended March 31, |  |  |  |
(in thousands) |  | 2025 |  | 2024 |  |  |  |  |  |
Amortization of postretirement benefit plan items: |  |  |  |  |  |  |  |  |  |
Prior service credit |  | $ | 355 |  |  | $ | 355 |  |  |  |  |  |  | Other income, net
Net actuarial loss |  | (212) |  |  | (334) |  |  |  |  |  |  | Other income, net
Total amortization |  | 143 |  |  | 21 |  |  |  |  |  |  | Other income, net
Tax expense |  | (75) |  |  | (43) |  |  |  |  |  |  | Income tax provision
Amortization of postretirement benefit plan items, net of tax |  | 68 |  |  | (22) |  |  |  |  |  |  | Net income
Cash flow hedges: |  |  |  |  |  |  |  |  |  |
Realized gain on cash flow hedges |  | — |  |  | 915 |  |  |  |  |  |  | Interest expense
Tax expense |  | — |  |  | (247) |  |  |  |  |  |  | Income tax provision
Realized gain on cash flow hedges, net of tax |  | — |  |  | 668 |  |  |  |  |  |  | Net income
Total reclassifications, net of tax |  | $ | 68 |  |  | $ | 646 |  |  |  |  |  |  |

Accumulated other comprehensive loss – Changes in the components of accumulated other comprehensive loss for the quarters ended March 31, 2025 and March 31, 2024 were as follows:

(in thousands) |  | Postretirement benefit plans |  | Currency translation adjustment |  | Accumulated other comprehensive loss
Balance, December 31, 2024 |  | $ | (16,566) |  |  | $ | (13,350) |  |  | $ | (29,916) |
Other comprehensive loss before reclassifications |  | — |  |  | (48) |  |  | (48) |
Amounts reclassified from accumulated other comprehensive loss |  | (68) |  |  | — |  |  | (68) |
Net current-period other comprehensive loss |  | (68) |  |  | (48) |  |  | (116) |
Balance, March 31, 2025 |  | $ | (16,634) |  |  | $ | (13,398) |  |  | $ | (30,032) |

(in thousands) |  | Postretirement benefit plans |  | Net unrealized gain on cash flow hedges(1) |  | Currency translation adjustment |  | Accumulated other comprehensive loss
Balance, December 31, 2023 |  | $ | (19,824) |  |  | $ | (286) |  |  | $ | (9,918) |  |  | $ | (30,028) |
Other comprehensive income (loss) before reclassifications |  | — |  |  | 5,864 |  |  | (1,027) |  |  | 4,837 |
Amounts reclassified from accumulated other comprehensive loss |  | 22 |  |  | (668) |  |  | — |  |  | (646) |
Net current-period other comprehensive income (loss) |  | 22 |  |  | 5,196 |  |  | (1,027) |  |  | 4,191 |
Balance, March 31, 2024 |  | $ | (19,802) |  |  | $ | 4,910 |  |  | $ | (10,945) |  |  | $ | (25,837) |

(1) Other comprehensive income before reclassifications is net of income tax expense of $2,169.
12

DELUXE CORPORATION CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts)

NOTE 6: | DIVESTITURES

In recent years, we decided to exit certain businesses and dispose of other assets. We believe these actions have enabled us to concentrate our resources on our growth businesses, while optimizing our operations.
In September and December 2023, we executed agreements to transition our U.S. and Canadian payroll and human resources services customers to other service providers. The recognition of income from this business exit was based on the timing of customer conversion and retention activities, which were substantially completed during 2024. The remaining cash proceeds from this business exit were received during the quarter ended March 31, 2025. The results of this business are reported as All other in Note 13.
Business exits and asset sales were as follows for the quarters ended March 31, 2025 and March 31, 2024:

(in thousands) |  | Gain on sale of businesses and long-lived assets |  | Proceeds from sale of businesses and long-lived assets
Quarter ended March 31, 2025: |  |  |  |
Payroll and human resources services business |  | $ | — |  |  | $ | 1,968 |
Quarter ended March 31, 2024: |  |  |  |
Payroll and human resources services business |  | $ | 7,581 |  |  | $ | — |
Small business distributor customer list(1) |  | 1,000 |  |  | — |
Total |  | $ | 8,581 |  |  | $ | — |

(1) A note receivable was executed in conjunction with this sale. No cash proceeds were received.

NOTE 7: | FAIR VALUE MEASUREMENTS

Information regarding the fair values of our financial instruments was as follows:

|  |  |  |  |  | Fair value measurements using
|  |  |  | March 31, 2025 |  | Quoted prices in active markets for identical assets (Level 1) |  | Significant other observable inputs (Level 2) |  | Significant unobservable inputs (Level 3)
(in thousands) |  | Balance sheet location |  | Carrying value |  | Fair value |  |  |
Amortized cost: |  |  |  |  |  |  |  |  |  |  |  |
Loans and notes receivable from distributors |  | Other current and other non-current assets |  | $ | 11,957 |  | $ | 13,320 |  | $ | — |  | $ | — |  | $ | 13,320
Long-term debt |  | Current portion of long-term debt and long-term debt |  | 1,492,545 |  | 1,470,714 |  | — |  | 1,470,714 |  | —

13

DELUXE CORPORATION CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts)

|  |  |  |  |  | Fair value measurements using
|  |  |  | December 31, 2024 |  | Quoted prices in active markets for identical assets (Level 1) |  | Significant other observable inputs (Level 2) |  | Significant unobservable inputs (Level 3)
(in thousands) |  | Balance sheet location |  | Carrying value |  | Fair value |  |  |
Amortized cost: |  |  |  |  |  |  |  |  |  |  |  |
Loans and notes receivable from distributors |  | Other current and other non-current assets |  | $ | 12,541 |  |  | $ | 13,013 |  |  | $ | — |  |  | $ | — |  |  | $ | 13,013 |
Long-term debt |  | Current portion of long-term debt and long-term debt |  | 1,503,151 |  |  | 1,508,347 |  |  | — |  |  | 1,508,347 |  |  | — |

NOTE 8: | RESTRUCTURING AND INTEGRATION EXPENSE

Restructuring and integration expense consists of costs related to initiatives aimed at driving earnings and cash flow growth, including costs related to the consolidation and migration of certain applications and processes. These costs consist primarily of consulting, project management services, internal labor, and other items such as facility closure and consolidation costs. Additionally, we have recorded employee severance costs across functional areas. Restructuring and integration expense is not allocated to our reportable business segments.
We are currently pursuing several initiatives designed to support our growth strategy and to increase our efficiency, including several initiatives that we collectively refer to as our North Star program. The goal of this program is to enhance shareholder value by (1) accelerating our adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) growth, (2) increasing cash flow, (3) reducing debt, and (4) improving our leverage ratio. North Star is a comprehensive, multi-year plan that balances cost reduction and growth opportunities. On the cost side, we are focused on refining our organizational structure and transforming our infrastructure and operations. We have successfully completed the material elements of our organizational redesign, which included consolidating similar roles, reducing hierarchical layers, and expanding spans of control. We are also leveraging technology and process automation to digitize and streamline our operations. Additionally, we are scaling our operations by consolidating back-office functions and tapping into the global labor market. The associated restructuring and integration expense, which consisted primarily of consulting and employee severance costs, was approximately $8,000 during the quarter ended March 31, 2025 and $12,000 during the quarter ended March 31, 2024. To date, we have incurred expense of approximately $103,000, and we anticipate that we will incur approximately $7,000 of additional North Star restructuring and integration expense in 2025.
Restructuring and integration expense is reflected on the consolidated statements of comprehensive income as follows:

|  | Quarter Ended March 31, |  |
(in thousands) |  | 2025 |  | 2024 |  |  |  |
Total cost of revenue |  | $ | 752 |  |  | $ | 933 |  |  |  |  |
Operating expenses |  | 7,668 |  |  | 13,804 |  |  |  |  |
Restructuring and integration expense |  | $ | 8,420 |  |  | $ | 14,737 |  |  |  |  |

14

DELUXE CORPORATION CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts)

Restructuring and integration expense for each period was comprised of the following:

|  | Quarter Ended March 31, |  |
(in thousands) |  | 2025 |  | 2024 |  |  |  |
Employee severance benefits |  | $ | 4,453 |  |  | $ | 1,972 |  |  |  |  |
External consulting and other costs |  | 2,523 |  |  | 7,969 |  |  |  |  |
Internal labor |  | 988 |  |  | 838 |  |  |  |  |
Other |  | 456 |  |  | 3,958 |  |  |  |  |
Restructuring and integration expense |  | $ | 8,420 |  |  | $ | 14,737 |  |  |  |  |

Our restructuring and integration accruals are included in accrued liabilities on the consolidated balance sheets. These accruals represent the anticipated cash payments necessary to fulfill the remaining severance obligations for employees who have already been terminated, as well as those expected to be terminated under our various initiatives. We expect that the majority of employee reductions and the associated severance payments will be completed by the end of 2025.
Changes in our restructuring and integration accruals were as follows:

(in thousands) |  | Employee severance benefits
Balance, December 31, 2024 |  | $ | 3,755 |
Charges |  | 4,644 |
Reversals |  | (191) |
Payments |  | (1,845) |
Balance, March 31, 2025 |  | $ | 6,363 |

The charges and reversals shown in the rollforward of our restructuring and integration accruals exclude items that are expensed as incurred, as these items are not included in accrued liabilities on the consolidated balance sheets.

NOTE 9: | INCOME TAX PROVISION

Our effective income tax rate was 27.1% for the quarter ended March 31, 2025, while our effective income tax rate for the year ended December 31, 2024 was 30.8%. Compared to our 2024 annual rate, the 2025 tax rate benefited from lower tax impacts for our foreign operations, changes in the deferred income tax valuation allowance, and share-based compensation, partly offset by a benefit from return-to-provision adjustments recorded in 2024 that did not recur in 2025. For comparison, the reconciliation of our annual effective income tax rate for 2024 to the U.S. federal statutory tax rate can be found under the caption "Note 10: Income Tax Provision" in the Notes to Consolidated Financial Statements located in the 2024 Form 10-K.
Our effective income tax rate for the first quarter of 2025 decreased compared to the effective income tax rate of 33.8% for the first quarter of 2024. This reduction was primarily due to lower tax rate impacts in 2025 from our foreign operations, share-based compensation, and non-deductible executive compensation, partially offset by an increase in our effective state income tax rate.

NOTE 10: | POSTRETIREMENT BENEFITS

We have historically offered certain health care benefits to a large number of our eligible retired U.S. employees. In addition to our retiree health care plan, we also maintain an inactive U.S. supplemental executive retirement plan. Further information regarding our postretirement benefit plans can be found under the caption “Note 12: Postretirement Benefits” in the Notes to Consolidated Financial Statements located in the 2024 Form 10-K.
15

DELUXE CORPORATION CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts)

Postretirement benefit income is included in other income, net on the consolidated statements of comprehensive income and consisted of the following components:

|  | Quarter Ended March 31, |  |
(in thousands) |  | 2025 |  | 2024 |  |  |  |
Interest cost |  | $ | 397 |  |  | $ | 435 |  |  |  |  |
Expected return on plan assets |  | (2,137) |  |  | (2,099) |  |  |  |  |
Amortization of prior service credit |  | (355) |  |  | (355) |  |  |  |  |
Amortization of net actuarial losses |  | 212 |  |  | 334 |  |  |  |  |
Net periodic benefit income |  | $ | (1,883) |  |  | $ | (1,685) |  |  |  |  |

NOTE 11: | DEBT

Debt outstanding was comprised of the following:

(in thousands) |  | March 31, 2025 |  | December 31, 2024
Senior secured term loan facility |  | $ | 490,625 |  |  | $ | 500,000 |
Senior unsecured notes |  | 475,000 |  |  | 475,000 |
Senior secured notes |  | 450,000 |  |  | 450,000 |
Securitization obligations |  | 70,686 |  |  | 78,917 |
Amounts drawn on senior secured revolving credit facility |  | 24,000 |  |  | 18,000 |
Total principal amount |  | 1,510,311 |  |  | 1,521,917 |
Less: unamortized discount and debt issuance costs |  | (17,766) |  |  | (18,766) |
Total debt, net of discount and debt issuance costs |  | 1,492,545 |  |  | 1,503,151 |
Less: current portion of long-term debt, net of debt issuance costs |  | (37,163) |  |  | (37,130) |
Long-term debt |  | $ | 1,455,382 |  |  | $ | 1,466,021 |

Maturities of long-term debt were as follows as of March 31, 2025:

(in thousands) |  | Debt obligations
Remainder of 2025 |  | $ | 28,125 |
2026 |  | 37,500 |
2027 |  | 108,186 |
2028 |  | 50,000 |
2029 |  | 1,286,500 |
Total principal amount |  | $ | 1,510,311 |

Credit facility – In December 2024, we executed a $900,000 senior secured credit facility, which includes commitments of $400,000 under a revolving credit facility and $500,000 under a term loan facility. The revolving credit facility includes a $40,000 swingline sub-facility and a $25,000 letter of credit sub-facility. Loans under the revolving credit facility can be borrowed, repaid, and re-borrowed until February 1, 2029, at which point all outstanding amounts must be repaid. The term loan facility is structured to be repaid in equal quarterly installments of $9,375 through December 2027 and $12,500 from March 2028 to December 2028, with the remaining balance due on February 1, 2029. The term loan facility includes mandatory prepayment requirements related to asset sales, certain casualty or other insured damage to assets, and new debt (excluding permitted debt), subject to certain limitations. No premium or penalty is incurred for any mandatory or voluntary prepayment of the term loan facility.
16

DELUXE CORPORATION CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts)

Interest on the credit facility is payable at a fluctuating rate, as outlined in the credit agreement. A commitment fee is also payable on the unused portion of the revolving credit facility. Amounts outstanding under the credit facility had a weighted-average interest rate of 6.92% as of March 31, 2025 and 7.23% as of December 31, 2024.
Borrowings under the credit facility are secured by substantially all of the present and future tangible and intangible personal property held by us and our subsidiaries that have guaranteed our obligations under the credit facility, subject to certain exceptions. The credit agreement includes customary covenants that limit levels of indebtedness, liens, mergers, certain asset dispositions, changes in business, advances, investments, loans, and restricted payments. These covenants are subject to various limitations and exceptions outlined in the credit agreement. Additionally, the credit agreement imposes requirements on our consolidated total leverage ratio and our consolidated secured leverage ratio. The consolidated total leverage ratio is calculated as (i) consolidated indebtedness minus unrestricted cash and cash equivalents in excess of $15,000 to (ii) consolidated EBITDA for the period, as defined in the agreement. The consolidated secured leverage ratio is defined as (i) consolidated secured indebtedness minus unrestricted cash and cash equivalents in excess of $15,000 to (ii) consolidated EBITDA for the period, as defined in the agreement. These ratios may not equal or exceed the following amounts during the periods indicated:

Fiscal Quarter Ending |  | Consolidated total leverage ratio |  | Consolidated secured leverage ratio
March 31, 2025 through March 31, 2026 |  | 4.25 to 1.00 |  | 3.50 to 1.00
June 30, 2026 and each fiscal quarter thereafter |  | 4.00 to 1.00 |  | 3.25 to 1.00

Furthermore, we are required to maintain a minimum interest coverage ratio of at least 3.00 to 1.00 for the duration of the credit facility. This ratio is calculated as (i) consolidated EBITDA, as defined in the agreement, for the trailing four quarters to (ii) consolidated interest expense for the same period. In addition, if our consolidated total leverage exceeds 2.75 to 1.00, the aggregate amount of permitted dividends, incentive-based share repurchases, and repurchases under an open market repurchase program is limited to an annual amount of $60,000, provided that the amount of any share repurchases made under an open market repurchase program does not exceed $30,000 in a fiscal year.
Failure to comply with any of these requirements would constitute an event of default, which would enable the lenders to declare all amounts outstanding immediately due and payable. In such a scenario, the lenders would also have the right to enforce their interests against the collateral pledged if we are unable to settle the outstanding amounts. As of March 31, 2025, we were in compliance with all debt covenants.
The credit agreement includes customary representations and warranties. As a condition for borrowing, it requires that all such representations and warranties be true and correct in all material respects on the date of each borrowing. This includes representations affirming that there has been no material adverse change in our business, assets, operations, or financial condition.
As of March 31, 2025, amounts were available for borrowing under our revolving credit facility as follows:

(in thousands) |  | Total available
Revolving credit facility commitment |  | $ | 400,000 |
Amounts drawn on revolving credit facility |  | (24,000) |
Outstanding letters of credit(1) |  | (7,698) |
Net available for borrowing as of March 31, 2025 |  | $ | 368,302 |

(1) We use standby letters of credit primarily to collateralize certain obligations related to our self-insured workers' compensation claims, as well as claims for environmental matters, as required by certain states. These letters of credit reduce the amount available for borrowing under our revolving credit facility.
Senior unsecured and secured notes – In June 2021, we issued $500,000 of 8.0% senior unsecured notes that mature in June 2029. These notes were issued via a private placement under Rule 144A of the Securities Act of 1933. Proceeds from the offering, net of discount and offering costs, were $490,741, resulting in an effective interest rate of 8.3%. The net proceeds were utilized to finance the acquisition of First American Payment Systems, L.P. Interest payments are due each June and December. During 2022, we repurchased $25,000 of these notes on the open market.
In December 2024, we issued $450,000 of 8.125% senior secured notes that mature in September 2029. However, if any of the senior unsecured notes issued in 2021 remain outstanding as of February 1, 2029, the 2024 senior secured notes will mature on February 1, 2029. These notes were also issued via a private placement under Rule 144A of the Securities Act of
17

DELUXE CORPORATION CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts)

1933. The proceeds from this offering, net of discount and offering costs, were $441,481, resulting in an effective interest rate of 8.6%. The net proceeds, along with borrowings under the credit facility executed in December 2024, were used to refinance our previous senior secured term loan facility and revolving credit facility. Interest payments for these notes are due each March and September.
The indentures governing these notes include covenants that restrict our ability, and that of our restricted subsidiaries to undertake certain actions. These restrictions include limitations on incurring additional debt and liens, issuing redeemable and preferred stock, paying dividends and distributions, making loans and investments, and consolidating, merging, or selling all or substantially all of our assets.
Securitization facility – In March 2024, Deluxe Receivables LLC, a wholly-owned subsidiary, established a receivables financing agreement (the “Securitization Facility”). This agreement terminates in March 2027, unless extended per its terms. The maximum borrowing capacity under the Securitization Facility is $80,000, subject to certain borrowing base adjustments. Under this agreement, we have sold and will continue to automatically sell certain accounts receivable to the subsidiary, which serve as collateral for borrowings under the facility and which totaled approximately $120,000 as of March 31, 2025. The initial proceeds from these borrowings were used to prepay amounts due under our former secured term loan facility. Borrowings accrue interest at a commercial paper rate for borrowings funded by a conduit lender through the issuance of notes, and for other borrowings, at the Secured Overnight Financing Rate plus an applicable margin. A commitment fee is charged on the unused portion of the facility, and interest and fees are payable monthly. Amounts outstanding under the facility had an interest rate of 5.87% as of March 31, 2025 and 6.22% as of December 31, 2024.
The Securitization Facility is treated as a collateralized financing activity rather than a sale of assets. Consequently, the subsidiary is consolidated, and the receivable balances pledged as collateral are reported as accounts receivable on the consolidated balance sheets while the borrowings are classified as long-term debt. Cash receipts from the underlying receivables are reflected as operating cash flows on the consolidated statements of cash flows, and borrowings and repayments under the collateralized loans are reflected as financing cash flows.

NOTE 12: | OTHER COMMITMENTS AND CONTINGENCIES

Indemnifications – In the normal course of business, we periodically enter into agreements that incorporate general indemnification language. These indemnification provisions generally encompass third-party claims arising from our products and services. This includes, but is not limited to, service failures, breaches of security, intellectual property rights, compliance with governmental regulations, and employment-related matters. Performance under these indemnities would generally be triggered by our breach of the terms of the contract.
When disposing of assets or businesses, we often provide representations, warranties, and indemnities to cover various risks. These risks may include unknown damage to the assets, environmental risks involved in the sale of real estate, liability to investigate and remediate environmental contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities and legal matters related to periods prior to disposition.
We do not have the ability to estimate the potential liability from such indemnities because they relate to unknown conditions. However, we do not believe that any liability under these indemnities would have a material adverse effect on our financial position, annual results of operations, or annual cash flows. We have recorded liabilities for known indemnifications related to environmental matters. These liabilities were not material as of March 31, 2025 or December 31, 2024.
Self-insurance – We are self-insured for certain costs, primarily workers' compensation claims and medical and dental benefits for active employees and those employees on long-term disability. The liabilities associated with these items represent our best estimate of the ultimate obligations for reported claims, as well as those incurred, but not reported. These liabilities totaled $10,016 as of March 31, 2025 and $8,200 as of December 31, 2024, and are included in accrued liabilities and other non-current liabilities on the consolidated balance sheets. Our workers' compensation liability is recorded at present value, and the difference between the discounted and undiscounted liability was not material as of March 31, 2025 or December 31, 2024.
Our self-insurance liabilities are estimated, in part, by considering historical claims experience, demographic factors, and other actuarial assumptions. The estimated accruals for these liabilities could be significantly affected if future events and claims differ from these assumptions and historical trends.
Litigation – The liabilities recorded for legal matters, along with the related charges recorded in each period, did not have a material impact on our financial position, results of operations, or liquidity during the periods presented. We do not anticipate that any of the currently identified claims or litigation will materially affect our financial position, results of operations, or liquidity upon resolution. However, it is important to note that litigation carries inherent uncertainties, and unfavorable rulings are possible.
18

DELUXE CORPORATION CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts)

Should an unfavorable ruling occur, it could have a material adverse effect on our financial position, results of operations, or liquidity in the period of the ruling or in future periods.

NOTE 13: | BUSINESS SEGMENT INFORMATION

We operate the following reportable segments, generally organized by product and service type:
•Merchant Services – provides electronic credit and debit card authorization and payment systems and processing services, primarily to small and medium-sized retail and service businesses.
•B2B Payments – provides treasury management solutions, including remittance and lockbox processing, remote deposit capture, cash application, and payment acceptance solutions, as well as integrated accounts payable disbursements, such as eChecks, Medical Payment Exchange, and Deluxe Payment Exchange+, as well as fraud and security services.
•Data Solutions – provides data, analytics, and marketing services for both business-to-business and business-to-consumer marketing, as well as financial institution profitability reporting and business incorporation services.
•Print – provides printed personal and business checks, business essentials, including printed business forms and business accessories, as well as branded promotional, print, apparel, and digital storefront solutions.
The accounting policies applied to our segments are consistent with those outlined in the Notes to Consolidated Financial Statements included in the 2024 Form 10-K. We allocate corporate costs for shared services functions to our business segments when the costs are directly attributable to a specific segment. This allocation includes certain expenses related to sales and marketing, supply chain, real estate, finance, information technology, and legal services. Costs that cannot be directly attributed to a specific business segment are reported under Corporate operations. These costs primarily include marketing, accounting, information technology, human resources, facilities, executive management, and the legal, tax, and treasury functions that support the overall corporate structure.
Our segments operate primarily within the U.S., with some activities in Canada. The revenue and long-lived assets associated with our foreign operations were not material to our consolidated financial statements for the periods covered by this report. No single customer contributed more than 10% of our consolidated revenue during the quarters ended March 31, 2025 and March 31, 2024.
Our Chief Executive Officer serves as our chief operating decision maker (CODM). In this role, he evaluates the performance of each segment and makes resources allocation decisions based on adjusted EBITDA. Adjusted EBITDA for each segment excludes depreciation and amortization expense, interest expense, income tax expense, and certain other amounts that can vary from period to period. These amounts may include asset impairment charges, restructuring and integration expense, share-based compensation expense, certain legal and environmental expenses that fall outside the normal course of business, and gains or losses on the sale of businesses and long-lived assets.
The CODM uses adjusted EBITDA in both the annual planning and interim forecasting processes. On a monthly basis, the CODM reviews variances between actual results and plan, forecast, and prior year results, using this analysis to guide resource distribution and strategic adjustments. Additionally, the CODM compares segment adjusted EBITDA margins to those of competitors. This benchmarking is essential for evaluating the relative performance of our segments within the industry, ensuring that we remain competitive, and identifying areas for improvement. Furthermore, adjusted EBITDA plays a significant role in establishing employee performance-based compensation, aligning employee incentives with our financial goals. The CODM does not review segment asset information when making investment or operating decisions regarding our reportable segments.
19

DELUXE CORPORATION CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts)

The following is our segment information for the quarters ended March 31, 2025 and March 31, 2024:

|  | Quarter Ended March 31, |  |
(in thousands) |  | 2025 |  | 2024 |  |  |  |
Merchant Services: |  |  |  |  |  |  |  |
Revenue |  | $ | 97,769 |  |  | $ | 96,477 |  |  |  |  |
Other segment items |  | (76,391) |  |  | (75,040) |  |  |  |  |
Adjusted EBITDA |  | 21,378 |  |  | 21,437 |  |  |  |  |
B2B Payments: |  |  |  |  |  |  |  |
Revenue |  | 70,155 |  |  | 69,418 |  |  |  |  |
Other segment items |  | (56,833) |  |  | (56,157) |  |  |  |  |
Adjusted EBITDA |  | 13,322 |  |  | 13,261 |  |  |  |  |
Data Solutions: |  |  |  |  |  |  |  |
Revenue |  | 77,227 |  |  | 59,712 |  |  |  |  |
Other segment items |  | (57,534) |  |  | (44,843) |  |  |  |  |
Adjusted EBITDA |  | 19,693 |  |  | 14,869 |  |  |  |  |
Print: |  |  |  |  |  |  |  |
Revenue |  | 291,304 |  |  | 303,334 |  |  |  |  |
Other segment items |  | (200,470) |  |  | (212,378) |  |  |  |  |
Adjusted EBITDA |  | 90,834 |  |  | 90,956 |  |  |  |  |
Total reportable segments: |  |  |  |  |  |  |  |
Revenue |  | $ | 536,455 |  |  | $ | 528,941 |  |  |  |  |
Other segment items |  | (391,228) |  |  | (388,418) |  |  |  |  |
Adjusted EBITDA |  | 145,227 |  |  | 140,523 |  |  |  |  |
All other:(1) |  |  |  |  |  |  |  |
Revenue |  | 16 |  |  | 6,014 |  |  |  |  |
Other segment items |  | (52) |  |  | (2,378) |  |  |  |  |
Adjusted EBITDA |  | (36) |  |  | 3,636 |  |  |  |  |
Total: |  |  |  |  |  |  |  |
Revenue |  | $ | 536,471 |  |  | $ | 534,955 |  |  |  |  |
Other segment items |  | (391,280) |  |  | (390,796) |  |  |  |  |
Adjusted EBITDA |  | 145,191 |  |  | 144,159 |  |  |  |  |

(1) Includes the payroll and human resources services business, which we substantially exited during 2024 (Note 6).
The CODM does not review segment expense information. Instead, he receives commentary that discusses variances between planned, forecasted, or prior year adjusted EBITDA amounts. This commentary may include discussion of relevant expense categories, which can vary from period to period based on the drivers of the variances. Additionally, the CODM reviews consolidated expense information as presented in our consolidated financial statements, as well as consolidated expenses for our various shared services support functions.
For all our segments, other segment items primarily consist of cost of revenue, selling expenses, and allocated costs of our shared services functions, including information technology, real estate, and finance costs. For our digital businesses, which include Merchant Services, B2B Payments, and Data Solutions, cost of revenue includes information technology costs, payroll and related expenses, and related overhead. For the Print segment, cost of revenue includes raw materials used to manufacture products, shipping and handling costs, third-party costs for outsourced products, payroll and related expenses, information technology costs, and related overhead. Selling expenses for all segments include costs associated with our sales organization and certain marketing and advertising expenses. They also encompass the costs of our call center operations for the Merchant Services, B2B Payments, and Print segments, as well as external commissions for the B2B Payments and Print segments.
20

DELUXE CORPORATION CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts)

The following table presents the reconciliation of total segment adjusted EBITDA to consolidated income before income taxes:

|  | Quarter Ended March 31, |  |
(in thousands) |  | 2025 |  | 2024 |  |  |  |
Total segment adjusted EBITDA |  | $ | 145,191 |  |  | $ | 144,159 |  |  |  |  |
Corporate operations |  | (45,021) |  |  | (43,701) |  |  |  |  |
Depreciation and amortization expense |  | (35,279) |  |  | (41,747) |  |  |  |  |
Interest expense |  | (31,266) |  |  | (30,809) |  |  |  |  |
Net income attributable to non-controlling interest |  | 35 |  |  | 27 |  |  |  |  |
Restructuring and integration expense |  | (8,420) |  |  | (14,737) |  |  |  |  |
Share-based compensation expense |  | (5,459) |  |  | (5,121) |  |  |  |  |
Certain legal and environmental expense |  | (512) |  |  | (300) |  |  |  |  |
Gain on sale of businesses and long-lived assets |  | — |  |  | 8,581 |  |  |  |  |
Income before income taxes |  | $ | 19,269 |  |  | $ | 16,352 |  |  |  |  |

The following tables present revenue disaggregated by our product and service offerings:

|  | Quarter Ended March 31, 2025
(in thousands) |  | Merchant Services |  | B2B Payments |  | Data Solutions |  | Print |  | All Other |  | Consolidated
Checks |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 175,209 |  |  | $ | — |  |  | $ | 175,209 |
Merchant services |  | 97,769 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 97,769 |
Data-driven marketing |  | — |  |  | — |  |  | 71,994 |  |  | — |  |  | — |  |  | 71,994 |
Forms and other business products |  | — |  |  | — |  |  | — |  |  | 60,530 |  |  | — |  |  | 60,530 |
Promotional solutions |  | — |  |  | — |  |  | — |  |  | 55,565 |  |  | — |  |  | 55,565 |
Treasury management solutions |  | — |  |  | 54,312 |  |  | — |  |  | — |  |  | — |  |  | 54,312 |
Other payment solutions |  | — |  |  | 15,843 |  |  | — |  |  | — |  |  | — |  |  | 15,843 |
Other web-based solutions |  | — |  |  | — |  |  | 5,233 |  |  | — |  |  | — |  |  | 5,233 |
Other |  | — |  |  | — |  |  | — |  |  | — |  |  | 16 |  |  | 16 |
Total revenue |  | $ | 97,769 |  |  | $ | 70,155 |  |  | $ | 77,227 |  |  | $ | 291,304 |  |  | $ | 16 |  |  | $ | 536,471 |

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DELUXE CORPORATION CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts)

|  | Quarter Ended March 31, 2024
(in thousands) |  | Merchant Services |  | B2B Payments |  | Data Solutions |  | Print |  | All other |  | Consolidated
Checks |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 178,484 |  |  | $ | — |  |  | $ | 178,484 |
Merchant services |  | 96,477 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 96,477 |
Data-driven marketing |  | — |  |  | — |  |  | 54,325 |  |  | — |  |  | — |  |  | 54,325 |
Forms and other business products |  | — |  |  | — |  |  | — |  |  | 63,792 |  |  | — |  |  | 63,792 |
Promotional solutions |  | — |  |  | — |  |  | — |  |  | 61,058 |  |  | — |  |  | 61,058 |
Treasury management solutions |  | — |  |  | 55,077 |  |  | — |  |  | — |  |  | — |  |  | 55,077 |
Other payment solutions |  |  |  | 14,341 |  |  |  |  |  |  | — |  |  | 14,341 |
Other web-based solutions |  |  |  |  |  | 5,387 |  |  |  |  | — |  |  | 5,387 |
Other |  | — |  |  | — |  |  | — |  |  | — |  |  | 6,014 |  |  | 6,014 |
Total revenue |  | $ | 96,477 |  |  | $ | 69,418 |  |  | $ | 59,712 |  |  | $ | 303,334 |  |  | $ | 6,014 |  |  | $ | 534,955 |

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") includes the following sections:
•Executive Overview that discusses what we do and our operating results at a high level;
•Consolidated Results of Operations, Restructuring and Integration Expense, and Segment Results that includes a more detailed discussion of our revenue and expenses;
•Cash Flows and Liquidity and Capital Resources that discusses key aspects of our cash flows, financial commitments, capital structure, and financial position; and
•Critical Accounting Estimates that discusses the estimates that involve a significant level of judgment and uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations.
Please be aware that this MD&A discussion contains forward-looking statements that involve risks and uncertainties. Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Form 10-K") details known material risks and important information to consider when evaluating our forward-looking statements and is incorporated into this Item 2 of this report on Form 10-Q as if fully stated herein. The Private Securities Litigation Reform Act of 1995 (the "Reform Act") provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information. When we use terms such as “should result,” “believe,” “intend,” “plan,” “are expected to,” “targeted,” “will continue,” “will approximate,” “is anticipated,” “estimate,” “project,” “outlook,” "forecast," or similar expressions in this Quarterly Report on Form 10-Q, in future filings with the Securities and Exchange Commission, in our press releases, investor presentations, and in oral statements made by our representatives, these indicate forward-looking statements within the meaning of the Reform Act.
This MD&A includes financial information prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP"). Additionally, we discuss non-GAAP financial measures such as free cash flow, net debt, adjusted diluted earnings per share (EPS), consolidated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and consolidated adjusted EBITDA margin. We believe that these non-GAAP financial measures, when reviewed alongside GAAP financial measures, can provide valuable insight for investors analyzing our current period operating performance and assessing our future operating performance. Consequently, our internal management reporting also includes these financial measures, which should be considered in addition to, and not as superior to or as a substitute for, GAAP financial measures. We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely solely on any single financial measure. Our non-GAAP financial measures may not be comparable to similarly titled measures used by other companies and therefore, may not facilitate useful comparisons. The reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the Consolidated Results of Operations section.
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EXECUTIVE OVERVIEW

We help businesses strengthen their customer relationships through trusted, technology-enabled solutions that facilitate payments, drive growth, and enhance operational efficiency. Our comprehensive suite of solutions includes merchant services, marketing and data analytics, treasury management solutions, and promotional products, along with customized checks and business forms. We support small and medium-sized businesses, financial institutions, and some of the world’s largest consumer brands. We also provide checks and accessories directly to consumers. Our reach, scale, and distribution channels position us to be a trusted business partner, providing the tools and support our customers need to succeed.
Our Strategy
A detailed discussion of our strategy can be found in Part I, Item 1 of the 2024 Form 10-K. Having substantially completed our infrastructure modernization efforts and the divestiture of non-strategic businesses, we have redirected our focus toward growth investments. This shift is aimed at driving scale and accelerating profit growth at a pace that surpasses revenue growth. Our operations continue to benefit from our disciplined pricing actions and comprehensive cost management practices. In 2023, we launched our North Star program with the objective of enhancing shareholder value by (1) accelerating our adjusted EBITDA growth, (2) increasing cash flow, (3) reducing debt, and (4) improving our leverage ratio. We have started to realize the benefits of our North Star initiatives. If not for the impact of business exits, both adjusted EBITDA and adjusted EBITDA margin would have shown an increase in the first quarter of 2025 compared to the first quarter of 2024. A key driver of this improvement was a 3.8% reduction in selling, general and administrative (SG&A) expense for the first quarter of 2025 compared to the first quarter of 2024. Additionally, free cash flow increased $18 million for the same period, and we reduced net debt by $7 million from the previous year end.
2025 Financial Results
Highlights of our financial results for the first quarter of 2025 compared to the first quarter of 2024 include:
•Consolidated revenue – Increased by $2 million to $536 million, including a decrease of $6 million resulting from business exits. The increase was primarily driven by our pricing actions, as well as growth in our data-driven marketing business. These positive impacts were partially offset by the continuing secular decline in order volumes for checks, business forms, and various business accessories, as well as soft demand for certain of our promotional products.
•Net income – Increased by $3 million to $14 million, reflecting the impact of our pricing and cost management actions, reduced restructuring and integration expense, and growth in our data-driven marketing business. These positive factors were partially offset by the continuing secular revenue declines in the Print segment, inflationary pressures affecting hourly wages, materials, and delivery, as well as the loss of earnings from exited businesses. Additionally, we recognized a $9 million gain from the sale of businesses and long-lived assets in the first quarter of 2024, which did not recur in 2025.
•Adjusted EBITDA – Remained nearly unchanged at $100 million for each period, despite the impact of business exits, which drove a $4 million decrease year-over-year. Excluding this impact from business exits, adjusted EBITDA would have increased, driven by the benefits of our pricing and cost management actions, as well as growth in data-driven marketing. These positive impacts were partially offset by the continuing secular declines in the Print segment and inflationary pressures on our cost structure.
Adjusted EBITDA margin was 18.7% for the first quarter of 2025, virtually the same as the 18.8% reported for the first quarter of 2024. This includes the impact of business exits, which drove a 0.5 point year-over-year decrease. Excluding the impact of business exits, adjusted EBITDA margin would have increased due to our pricing and cost management actions and the favorable impact of new data-driven marketing business. These factors were partially offset by the impact of inflationary pressures. A reconciliation of net income to adjusted EBITDA can be found in the Consolidated Results of Operations section.
•Net cash provided by operating activities – Increased by $24 million to $50 million, reflecting the positive impacts of our pricing and cost management actions, lower performance-based employee cash bonuses, reduced restructuring and integration spend, and the growth in data-driven marketing. These impacts were partially offset by the continuing secular declines in the Print segment, higher income tax payments due to the timing of federal payments, inflationary pressures on our cost structure, and the impact of business exits.
•Free cash flow – Increased by $18 million to $24 million, defined as net cash provided by operating activities less purchases of capital assets. We continue to reinvest the free cash flow generated by our Print business into our
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growth businesses. A reconciliation of free cash flow to its comparable GAAP financial measure can be found in the Consolidated Results of Operations section.
Recent Market Conditions
We continually monitor the interest rate environment and its effect on our outstanding debt. As of March 31, 2025, 61% of our debt carried a weighted-average fixed interest rate of 8.1%, providing us with some protection against potential future interest rate increases.
We also closely monitor the impact of inflation on our labor, delivery, and material costs. In response to inflationary pressures, we have implemented targeted price increases, particularly within our Print and Merchant Services segments. Despite these price adjustments, our revenue volumes remain robust, underscoring the strength of our business and the sustained demand for our products and services. We have occasionally faced supply chain disruptions, particularly in the supply of certain printed products within our Print segment. Additionally, ongoing global unrest and uncertainties related to trade policies, treaties, and tariffs could further disrupt the global supply chain and lead to increased costs. To mitigate these risks, we actively monitor our supply chain to prevent delays or disruptions. We have also previously encountered labor supply challenges in certain areas of our business. The severity and duration of inflation, as well as supply chain and labor issues, remains difficult to predict and could continue to impact our business, financial position, and results of operations.
We also monitor trends in small business sentiment and consumer discretionary spending. We analyze various data sources, including information from credit card brands, the Federal Reserve, other economic forecast providers, and our proprietary data. These trends significantly influence multiple areas of our portfolio, particularly our Merchant Services and Print segments. The data suggests some erosion of consumer confidence, which raises some concern about overall general economic conditions. Notably, during the first quarter of 2025, we observed a continuation of the softer demand we experienced toward the end of last year, especially in more discretionary categories such as our promotional merchandise. We also monitor various factors that could affect our customers' purchasing power, including potential global trade disruptions due to tariffs and other changes to trade policy in the U.S. and other countries. Additionally, geopolitical events, such as war or other hostilities, could lead to a downturn in the global economy, which may negatively impact our performance.
Liquidity
As of March 31, 2025, we held cash and cash equivalents of $30 million, along with an additional $368 million available for borrowing under our revolving credit facility. We anticipate that capital expenditures will be between $90 and $100 million for the full year, compared to $94 million for 2024, as we continue to build scale across our product categories and invest in innovation. Our capital allocation priorities remain focused on responsible growth investments, debt reduction, and returning capital to shareholders through dividends. We expect to maintain our regular quarterly dividend payments. However, dividends are subject to approval by our board of directors each quarter and, therefore, may change.
We believe that net cash generated by operations, combined with cash and cash equivalents on hand and the availability under our credit facility, will be sufficient to support our operations over the next 12 months. This includes meeting our contractual obligations, debt service requirements, and addressing our long-term capital needs. Information regarding our longer term capital requirements can be found in the Cash Flows and Liquidity and Capital Resources sections. As of March 31, 2025, we were in compliance with our debt covenants.

CONSOLIDATED RESULTS OF OPERATIONS

Consolidated Revenue

|  | Quarter Ended March 31, |  |
(in thousands) |  | 2025 |  | 2024 |  | Change |  |  |  |  |  |
Total revenue |  | $ | 536,471 |  |  | $ | 534,955 |  |  | 0.3% |  |  |  |  |  |

Total revenue for the first quarter of 2025 increased compared to the first quarter of 2024, despite the impact of business exits, which drove a $6 million decrease. Revenue benefited from several factors, including price increases in response to inflation, primarily in our Print and Merchant Services segments. Additionally, there was strong demand for our data-driven marketing services, particularly among financial institutions, which contributed an $18 million increase in revenue.
These improvements in revenue were partially offset by the continuing secular decline in order volumes for checks, business forms, and various business accessories, as well as soft demand for certain of our promotional products.
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We do not manage our business based on product versus service revenue. Instead, we analyze our revenue based on the product and service offerings shown under the caption "Note 13: Business Segment Information" in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report. Our revenue mix by business segment was as follows:

|  | Quarter Ended March 31, |  |
|  | 2025 |  | 2024 |  |  |  |
Merchant Services |  | 18.2 | % |  | 18.0 | % |  |  |  |
B2B Payments |  | 13.1 | % |  | 13.0 | % |  |  |  |
Data Solutions |  | 14.4 | % |  | 11.2 | % |  |  |  |
Print |  | 54.3 | % |  | 56.7 | % |  |  |  |
All other |  | — |  |  | 1.1 | % |  |  |  |
Total revenue |  | 100.0 | % |  | 100.0 | % |  |  |  |

Consolidated Cost of Revenue

|  | Quarter Ended March 31, |  |
(in thousands) |  | 2025 |  | 2024 |  | Change |  |  |  |  |  |
Total cost of revenue |  | $ | 255,424 |  |  | $ | 251,418 |  |  | 1.6% |  |  |  |  |  |
Total cost of revenue as a percentage of total revenue |  | 47.6 | % |  | 47.0 | % |  | 0.6 pts. |  |  |  |  |  |

Cost of revenue primarily consists of raw materials used to manufacture our products, shipping and handling costs, third-party costs for outsourced products and services, payroll and related expenses, information technology costs, depreciation and amortization of assets used in the production process and in support of digital service offerings, and related overhead.
Total cost of revenue for the first quarter of 2025 increased compared to the first quarter of 2024, driven by several factors, including revenue growth in data-driven marketing and inflationary pressures on hourly wages, materials, and delivery. These increases in total cost of revenue were partially offset by a reduction in revenue volume due to the continuing secular decline in checks, business forms, and various business accessories, as well as softer demand for certain promotional products. Additionally, total cost of revenue benefited from our various cost management actions and the impact of business exits reduced our costs by approximately $6 million, including the impact of accelerated amortization expense in the first quarter of 2024.
Total cost of revenue as a percentage of total revenue increased for the first quarter of 2025 compared to the first quarter of 2024. The benefits of our pricing and cost management actions and the accelerated amortization expense in 2024 were more than offset by the inflationary impacts and the shift in revenue to lower margin business.
Consolidated Selling, General and Administrative (SG&A) Expense

|  | Quarter Ended March 31, |  |
(in thousands) |  | 2025 |  | 2024 |  | Change |  |  |  |  |  |
SG&A expense |  | $ | 225,312 |  |  | $ | 234,093 |  |  | (3.8%) |  |  |  |  |  |
SG&A expense as a percentage of total revenue |  | 42.0 | % |  | 43.8 | % |  | (1.8) pts. |  |  |  |  |  |

SG&A expense for the first quarter of 2025 decreased compared to the first quarter of 2024, primarily due to various cost management actions, including workforce adjustments and the optimization of our marketing and sourcing strategies. Additionally, external commissions decreased due to lower Print revenue volumes. These reductions in SG&A expense were partially offset by an increase in medical costs within our Corporate operations. This increase is indicative of higher-cost claims that are expected to arise from time to time as part of our self-insurance program.
Total SG&A expense as a percentage of total revenue decreased for the first quarter of 2025 compared to the first quarter of 2024, as the combined effects of price increases and our cost management actions more than offset the increase in medical costs.
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Restructuring and Integration Expense

|  | Quarter Ended March 31, |  |
(in thousands) |  | 2025 |  | 2024 |  | Change |  |  |  |  |  |
Restructuring and integration expense |  | $ | 7,668 |  |  | $ | 13,804 |  |  | (44.5%) |  |  |  |  |  |

We are actively pursuing several initiatives aimed at aligning our business with our growth strategy and enhancing operational efficiency. As we implement these initiatives, the amount of restructuring and integration expense is expected to fluctuate from period to period. Further information regarding these costs can be found in the Restructuring and Integration Expense section.
Gain on Sale of Businesses and Long-Lived Assets

|  | Quarter Ended March 31, |  |
(in thousands) |  | 2025 |  | 2024 |  | Change |  |  |  |  |  |
Gain on sale of businesses and long-lived assets |  | $ | — |  |  | $ | 8,581 |  |  | (100.0%) |  |  |  |  |  |

Income recognized in the first quarter of 2024 related to the exit from our payroll and human resources services business that we substantially completed during 2024. Further information can be found under the caption "Note 6: Divestitures" in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part 1, Item 1 of this report.
Interest Expense

|  | Quarter Ended March 31, |  |
(in thousands) |  | 2025 |  | 2024 |  | Change |  |  |  |  |  |
Interest expense |  | $ | 31,266 |  |  | $ | 30,809 |  |  | 1.5% |  |  |  |  |  |
Weighted-average debt outstanding |  | 1,553,645 |  |  | 1,600,910 |  |  | (3.0%) |  |  |  |  |  |
Weighted-average interest rate |  | 7.6 | % |  | 7.1 | % |  | 0.5 pts. |  |  |  |  |  |

Interest expense for the first quarter of 2025 increased compared to the first quarter of 2024, as the impact of higher interest rates exceeded the decrease in our average debt outstanding. Based on the amount of variable-rate debt outstanding as of March 31, 2025, a one percentage point change in the weighted-average interest rate would result in a $4 million change in interest expense for the remainder of 2025.
Income Tax Provision

|  | Quarter Ended March 31, |  |
(in thousands) |  | 2025 |  | 2024 |  | Change |  |  |  |  |  |
Income tax provision |  | $ | 5,221 |  |  | $ | 5,522 |  |  | (5.5%) |  |  |  |  |  |
Effective income tax rate |  | 27.1 | % |  | 33.8 | % |  | (6.7) pts. |  |  |  |  |  |

The effective income tax rate for the first quarter of 2025 decreased compared to the first quarter of 2024. This reduction was primarily due to lower tax rate impacts in 2025 from our foreign operations, share-based compensation, and non-deductible executive compensation. These decreases in our effective income tax rate were partially offset by an increase in our effective state income tax rate.
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Net Income, Diluted EPS, and Adjusted Diluted EPS

|  | Quarter Ended March 31, |  |
(in thousands, except per share amounts) |  | 2025 |  | 2024 |  | Change |  |  |  |  |  |
Net income |  | $ | 14,048 |  |  | $ | 10,830 |  |  | 29.7% |  |  |  |  |  |
Diluted EPS |  | 0.31 |  |  | 0.24 |  |  | 29.2% |  |  |  |  |  |
Adjusted diluted EPS |  | 0.75 |  |  | 0.76 |  |  | (1.3%) |  |  |  |  |  |

Net income and diluted EPS for the first quarter of 2025 increased compared to the first quarter of 2024, reflecting the changes noted above. Adjusted diluted EPS decreased $0.01 per share year-over-year, driven by the impact of business exits, which drove a $0.04 per share decrease. Excluding the impact of business exits, adjusted diluted EPS would have increased due to the benefits of our pricing and cost management actions, as well as growth in our data-driven marketing business. These positive impacts were partially offset by the secular declines in the Print segment and inflationary pressures on our cost structure. A reconciliation of net income to adjusted net income, as used in the calculation of adjusted diluted EPS, can be found in the following section.
Reconciliation of Non-GAAP Financial Measures
Free cash flow – We define free cash flow as net cash provided by operating activities minus purchases of capital assets. We consider free cash flow to be an important indicator of cash available for servicing debt and for shareholders, after making necessary capital investments to maintain or expand our asset base. One limitation of using the free cash flow measure is that not all of our free cash flow is available for discretionary spending. We may have mandatory debt payments and other cash requirements that must be deducted from our available cash. Despite this limitation, we believe that the measure of free cash flow offers an additional metric to consistently compare cash generated by operations. It also provides insight into the cash flow available to fund various items such as dividends, mandatory and discretionary debt reduction, acquisitions or other strategic investments, and share repurchases.
Net cash provided by operating activities reconciles to free cash flow as follows:

|  | Quarter Ended March 31,
(in thousands) |  | 2025 |  | 2024
Net cash provided by operating activities |  | $ | 50,281 |  |  | $ | 26,590 |
Purchases of capital assets |  | (25,968) |  |  | (20,442) |
Free cash flow |  | $ | 24,313 |  |  | $ | 6,148 |

Net debt – Net debt is calculated by subtracting cash and cash equivalents from total debt. One limitation associated with using net debt is that by subtracting cash and cash equivalents, it may imply that management intends to use these funds to reduce outstanding debt. Additionally, net debt can suggest that our debt obligations are lower than what the most comparable GAAP measure indicates. Despite these limitations, management believes that net debt is a valuable metric for assessing our financial leverage and overall balance sheet health. It provides a measure of our debt burden by considering the funds available to offset our debt obligations.
Total debt reconciles to net debt as follows:

(in thousands) |  | March 31, 2025 |  | December 31, 2024
Total debt |  | $ | 1,492,545 |  |  | $ | 1,503,151 |
Cash and cash equivalents |  | (30,316) |  |  | (34,399) |
Net debt |  | $ | 1,462,229 |  |  | $ | 1,468,752 |

Adjusted EBITDA and adjusted EBITDA margin – We believe that adjusted EBITDA and adjusted EBITDA margin are useful metrics for evaluating our operating performance. These measures eliminate the effect of interest expense, income taxes, the accounting effects of capital investments (i.e., depreciation and amortization), and certain other items that may vary for reasons unrelated to current period operating performance. Management uses these measures to assess the operating results and performance of the business, perform analytical comparisons, and identify strategies to improve performance. Additionally, we believe that an increasing adjusted EBITDA and adjusted EBITDA margin indicate an increase in the company's value.
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It is important to note that we do not consider adjusted EBITDA to be a measure of cash flow, as it does not account for certain cash requirements such as interest, income taxes, debt service payments, or capital investments.
Net income reconciles to adjusted EBITDA and adjusted EBITDA margin as follows:

|  | Quarter Ended March 31, |  |
(in thousands) |  | 2025 |  | 2024 |  |  |  |
Net income |  | $ | 14,048 |  |  | $ | 10,830 |  |  |  |  |
Net income attributable to non-controlling interest |  | (35) |  |  | (27) |  |  |  |  |
Depreciation and amortization expense |  | 35,279 |  |  | 41,747 |  |  |  |  |
Interest expense |  | 31,266 |  |  | 30,809 |  |  |  |  |
Income tax provision |  | 5,221 |  |  | 5,522 |  |  |  |  |
Restructuring and integration expense |  | 8,420 |  |  | 14,737 |  |  |  |  |
Share-based compensation expense |  | 5,459 |  |  | 5,121 |  |  |  |  |
Certain legal and environmental expense |  | 512 |  |  | 300 |  |  |  |  |
Gain on sale of businesses and long-lived assets |  | — |  |  | (8,581) |  |  |  |  |
Adjusted EBITDA |  | $ | 100,170 |  |  | $ | 100,458 |  |  |  |  |
Adjusted EBITDA margin |  | 18.7 | % |  | 18.8 | % |  |  |  |

Adjusted diluted EPS – We believe that adjusted diluted EPS is a valuable metric for providing comparable information that assists in analyzing our current period operating performance and assessing our future operating performance. By excluding the impact of non-cash items or items that we believe are not indicative of current period operating performance, adjusted diluted EPS offers a useful view of our underlying business performance. Adjusted diluted EPS is one of the key financial performance metrics we use to evaluate the operating results and performance of the business, and it helps us identify strategies to improve performance. While it is reasonable to expect that one or more of the excluded items will occur in future periods, the amounts recognized may vary significantly.
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Diluted EPS reconciles to adjusted diluted EPS as follows:

|  | Quarter Ended March 31, |  |
(in thousands, except per share amounts) |  | 2025 |  | 2024 |  |  |  |
Net income |  | $ | 14,048 |  |  | $ | 10,830 |  |  |  |  |
Net income attributable to non-controlling interest |  | (35) |  |  | (27) |  |  |  |  |
Net income attributable to Deluxe |  | 14,013 |  |  | 10,803 |  |  |  |  |
Acquisition amortization |  | 11,799 |  |  | 14,816 |  |  |  |  |
Accelerated amortization |  | — |  |  | 3,069 |  |  |  |  |
Restructuring and integration expense |  | 8,420 |  |  | 14,737 |  |  |  |  |
Share-based compensation expense |  | 5,459 |  |  | 5,121 |  |  |  |  |
Certain legal and environmental expense |  | 512 |  |  | 300 |  |  |  |  |
Gain on sale of businesses and long-lived assets |  | — |  |  | (8,581) |  |  |  |  |
Adjustments, pretax |  | 26,190 |  |  | 29,462 |  |  |  |  |
Income tax provision impact of pretax adjustments(1) |  | (6,282) |  |  | (6,417) |  |  |  |  |
Adjustments, net of tax |  | 19,908 |  |  | 23,045 |  |  |  |  |
Adjusted net income attributable to Deluxe |  | 33,921 |  |  | 33,848 |  |  |  |  |
Re-measurement of share-based awards classified as liabilities |  | (70) |  |  | (40) |  |  |  |  |
Adjusted income attributable to Deluxe available to common shareholders |  | $ | 33,851 |  |  | $ | 33,808 |  |  |  |  |
Weighted average shares and potential common shares outstanding |  | 45,280 |  |  | 44,487 |  |  |  |  |
Adjustment(2) |  | 9 |  |  | 32 |  |  |  |  |
Adjusted weighted average shares and potential common shares outstanding |  | 45,289 |  |  | 44,519 |  |  |  |  |
GAAP diluted EPS |  | $ | 0.31 |  |  | $ | 0.24 |  |  |  |  |
Adjustments, net of tax |  | 0.44 |  |  | 0.52 |  |  |  |  |
Adjusted diluted EPS |  | $ | 0.75 |  |  | $ | 0.76 |  |  |  |  |

(1) The tax effect of the pretax adjustments takes into account the tax treatment and related tax rate(s) applicable to each adjustment in the relevant tax jurisdiction(s). Generally, this results in a tax impact that approximates the U.S. effective tax rate for each adjustment. However, the tax impact of certain adjustments, such as share-based compensation expense and gains on sales of businesses, depends on whether the amounts are deductible in the respective tax jurisdictions and the applicable effective tax rate(s) in those jurisdictions.
(2) The total of weighted-average shares and potential common shares outstanding used in the calculation of adjusted diluted EPS differs from the GAAP calculation due to differences in the amount of dilutive securities in each calculation.

RESTRUCTURING AND INTEGRATION EXPENSE

Restructuring and integration expense consists of costs related to initiatives aimed at driving earnings and cash flow growth, including costs related to the consolidation and migration of certain applications and processes. These costs consist primarily of consulting, project management services, internal labor, and other items such as facility closure and consolidation costs. Additionally, we have recorded employee severance costs across functional areas.
We are currently pursuing several initiatives designed to support our growth strategy and to increase our efficiency, including several initiatives that we collectively refer to as our North Star program. The goal of this program is to enhance shareholder value by (1) accelerating our adjusted EBITDA growth, (2) increasing cash flow, (3) reducing debt, and (4) improving our leverage ratio. North Star is a comprehensive, multi-year plan that balances cost reduction and growth opportunities. On the cost reduction front, we focused on refining our organizational structure and transforming our infrastructure and operations. We have successfully completed the material elements of our organizational redesign, which included consolidating similar roles, reducing hierarchical layers, and expanding spans of control. We are also leveraging technology and process automation to digitize and streamline our operations. Additionally, we are scaling our operations by consolidating back-office functions and tapping into the global labor market. On the revenue growth side, our priorities include developing an integrated software channel in Merchant Services, expanding our Data Solutions business to cater to more industry verticals, and enhancing our marketing and sales capabilities. We have made significant progress on all of the remaining North Star initiatives and anticipate continued
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positive impacts on our results of operations. For example, SG&A expense decreased 3.8% for the first quarter of 2025 compared to the first quarter of 2024, and free cash flow increased $18 million for the same period. Further information regarding restructuring and integration expense can be found under the caption "Note 8: Restructuring and Integration Expense" in the condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report.
All investments under the North Star program are required to meet our internal hurdle rate and provide a higher return compared to other uses of capital, such as debt repayment. The North Star program aims to achieve a $100 million run-rate improvement in free cash flow and an $80 million run-rate improvement in adjusted EBITDA by 2026. Through March 31, 2025, we incurred related restructuring and integration expense of approximately $103 million, and we expect to incur approximately $7 million in additional North Star restructuring and integration expense in 2025. These charges include professional services fees, employee severance, and other restructuring-related costs.
The majority of the employee reductions included in our restructuring and integration accruals as of March 31, 2025, along with the related severance payments, are expected to be completed by the end of 2025. As a result of these employee reductions, including those related to our North Star program, we expect to realize annual cost savings of approximately $5 million in cost of sales and $13 million in SG&A expense in 2025, in comparison to our 2024 results of operations. Note that these savings do not reflect all of our cost saving actions and they may be offset by increased labor and other costs, including inflationary impacts and investments in the business.

SEGMENT RESULTS

We operate four reportable business segments: Merchant Services, B2B Payments, Data Solutions, and Print. Our segments are generally organized by product and service type and reflect the way we manage the business. The financial information presented below is consistent with that presented under the caption "Note 13: Business Segment Information" in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part 1, Item 1 of this report, where information regarding revenue from our various product and service offerings can also be found.
Merchant Services
Results for our Merchant Services segment were as follows:

|  | Quarter Ended March 31, |  |
(in thousands) |  | 2025 |  | 2024 |  | Change |  |  |  |  |  |
Total revenue |  | $ | 97,769 |  |  | $ | 96,477 |  |  | 1.3% |  |  |  |  |  |
Adjusted EBITDA |  | 21,378 |  |  | 21,437 |  |  | (0.3%) |  |  |  |  |  |
Adjusted EBITDA margin |  | 21.9 | % |  | 22.2 | % |  | (0.3 pts.) |  |  |  |  |  |

Total revenue for the first quarter of 2025 increased compared to the first quarter of 2024, due to higher volumes from government clients, which were driven by increased property tax remittances. Additionally, there was growth in the banking channel, along with the positive impact of modest pricing actions implemented in response to inflation. These gains were partially offset by pressure on processing volumes within certain discretionary categories.
Adjusted EBITDA and adjusted EBITDA margin for the first quarter of 2025 were virtually flat compared to the first quarter of 2024, as the modest price increase offset the impact of normal channel mix dynamics. While our portfolio remains well-positioned, encompassing a diversified range of both traditional discretionary and less discretionary spending categories, we continue to monitor consumer spending trends, as these trends may impact our volumes going forward.
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B2B Payments
Results for our B2B Payments segment were as follows:

|  | Quarter Ended March 31, |  |
(in thousands) |  | 2025 |  | 2024 |  | Change |  |  |  |  |  |
Total revenue |  | $ | 70,155 |  |  | $ | 69,418 |  |  | 1.1% |  |  |  |  |  |
Adjusted EBITDA |  | 13,322 |  |  | 13,261 |  |  | 0.5% |  |  |  |  |  |
Adjusted EBITDA margin |  | 19.0 | % |  | 19.1 | % |  | (0.1) pts. |  |  |  |  |  |

Total revenue for the first quarter of 2025 increased compared to the first quarter of 2024, primarily driven by the onboarding of new clients and a modest price increase to counteract inflation. These increases in revenue were partially offset by declining trends in lockbox processing volumes.
Adjusted EBITDA and adjusted EBITDA margin for the first quarter of 2025 were virtually flat compared to the first quarter of 2024, reflecting our ongoing efforts to transition this business toward a more recurring revenue model centered around software offerings.
Data Solutions
Results for our Data Solutions segment were as follows:

|  | Quarter Ended March 31, |  |
(in thousands) |  | 2025 |  | 2024 |  | Change |  |  |  |  |  |
Total revenue |  | $ | 77,227 |  |  | $ | 59,712 |  |  | 29.3% |  |  |  |  |  |
Adjusted EBITDA |  | 19,693 |  |  | 14,869 |  |  | 32.4% |  |  |  |  |  |
Adjusted EBITDA margin |  | 25.5 | % |  | 24.9 | % |  | 0.6 pts. |  |  |  |  |  |

Total revenue for the first quarter of 2025 increased compared to the first quarter of 2024, driven by strong demand for customer acquisition marketing activities, particularly from our financial institution partners. Additionally, we added new clients in various other verticals, contributing to the revenue growth. It is important to note that the timing of campaigns within this business can lead to quarter-to-quarter volatility, making specific quarterly growth rates more challenging to predict.
Adjusted EBITDA for the first quarter of 2025 increased compared to the first quarter of 2024, primarily driven by the increase in data-driven marketing volume. Adjusted EBITDA margin increased for the first quarter of 2025 compared to the first quarter of 2024, primarily due to a favorable mix of clients and campaigns compared to 2024.
Print
Results for our Print segment were as follows:

|  | Quarter Ended March 31, |  |
(in thousands) |  | 2025 |  | 2024 |  | Change |  |  |  |  |  |
Total revenue |  | $ | 291,304 |  |  | $ | 303,334 |  |  | (4.0%) |  |  |  |  |  |
Adjusted EBITDA |  | 90,834 |  |  | 90,956 |  |  | (0.1%) |  |  |  |  |  |
Adjusted EBITDA margin |  | 31.2 | % |  | 30.0 | % |  | 1.2 pts. |  |  |  |  |  |

Total revenue for the first quarter of 2025 decreased compared to the first quarter of 2024, primarily driven by the ongoing secular decline in order volumes for checks, business forms, and various business accessories. Additionally, we continued to experience softer demand in more discretionary categories such as our promotional merchandise. These revenue declines were partially offset by pricing actions implemented in response to inflation.
Adjusted EBITDA for the first quarter of 2025 was virtually flat compared to the first quarter of 2024, despite the decline in revenue and inflationary pressures on materials and delivery costs. Our cost management actions offset these challenges, as we continued to emphasize operating expense discipline and overall efficiency within this segment. Adjusted EBITDA margin for the
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first quarter of 2025 increased compared to the first quarter of 2024, as the benefits from our pricing and cost management actions and a shift toward check revenues during the quarter contributed positively. These factors more than offset the inflationary cost pressures.

CASH FLOWS AND LIQUIDITY

As of March 31, 2025, we held cash and cash equivalents of $30 million. Additionally, we had restricted cash and restricted cash equivalents, which were included in settlement processing assets and other non-current assets on the consolidated balance sheet, totaling $37 million. The following table should be read in conjunction with the consolidated statements of cash flows located in Part I, Item 1 of this report.

|  | Quarter Ended March 31, |  |
(in thousands) |  | 2025 |  | 2024 |  | Change |  |  |  |  |  |
Net cash provided by operating activities |  | $ | 50,281 |  |  | $ | 26,590 |  |  | $ | 23,691 |  |  |  |  |  |  |
Net cash used by investing activities |  | (24,595) |  |  | (20,558) |  |  | (4,037) |  |  |  |  |  |  |
Net cash used by financing activities |  | (268,639) |  |  | (326,579) |  |  | 57,940 |  |  |  |  |  |  |
Effect of exchange rate change on cash, cash equivalents, restricted cash, and restricted cash equivalents |  | 1,085 |  |  | (2,642) |  |  | 3,727 |  |  |  |  |  |  |
Net change in cash, cash equivalents, restricted cash, and restricted cash equivalents |  | $ | (241,868) |  |  | $ | (323,189) |  |  | $ | 81,321 |  |  |  |  |  |  |
Free cash flow(1) |  | $ | 24,313 |  |  | $ | 6,148 |  |  | $ | 18,165 |  |  |  |  |  |  |

(1) See Reconciliation of Non-GAAP Financial Measures within the Consolidated Results of Operations section, which defines and illustrates how we calculate free cash flow.
Net cash provided by operating activities increased $24 million for the first quarter of 2025 compared to the first quarter of 2024, reflecting the positive impacts of our pricing and cost management actions, a $15 million reduction in performance-based employee cash bonuses, reduced restructuring and integration spend, and the growth in our data-driven marketing business. These impacts were partially offset by the continuing secular declines in the Print segment, higher income tax payments due to the timing of federal payments, inflationary pressures on our cost structure, and the impact of business exits.
Included in net cash provided by operating activities were the following operating cash outflows:

|  | Quarter Ended March 31,
(in thousands) |  | 2025 |  | 2024 |  | Change
Interest payments |  | $ | 24,735 |  |  | $ | 24,410 |  |  | $ | 325 |
Performance-based employee cash bonuses(1) |  | 24,445 |  |  | 39,045 |  |  | (14,600) |
Income tax payments |  | 12,892 |  |  | 4,743 |  |  | 8,149 |
Prepaid product discount payments |  | 8,518 |  |  | 10,503 |  |  | (1,985) |
Severance payments |  | 1,845 |  |  | 4,225 |  |  | (2,380) |

(1) Amounts reflect compensation based on total company and segment performance.
Net cash used by investing activities for the first quarter of 2025 increased by $4 million compared to the first quarter of 2024. This increase was primarily driven by a $6 million increase in capital expenditures in 2025, partially offset by proceeds from business exit activities of $2 million in 2025.
Net cash used by financing activities for the first quarter of 2025 decreased by $58 million compared to the first quarter of 2024. This decrease was primarily driven by changes in settlement processing obligations during each period, including the impact of our exit from the payroll and human resources services business during 2024. Additionally, lower payments on long-term debt in 2025 contributed to the decrease.
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Significant investing and financing cash transactions for each period were as follows:

|  | Quarter Ended March 31,
(in thousands) |  | 2025 |  | 2024 |  | Change
Net change in settlement processing obligations |  | $ | (237,037) |  |  | $ | (272,806) |  |  | $ | 35,769 |
Purchases of capital assets |  | (25,968) |  |  | (20,442) |  |  | (5,526) |
Cash dividends paid to shareholders |  | (14,531) |  |  | (13,956) |  |  | (575) |
Net change in debt |  | (11,607) |  |  | (34,568) |  |  | 22,961 |

When evaluating our cash needs, we must consider our debt service requirements, lease obligations, other contractual commitments, and contingent liabilities. Detailed Information regarding the maturities of our long-term debt and our contingent liabilities can be found under the captions “Note 11: Debt” and "Note 12: Other Commitments and Contingencies," both of which appear in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report. Information regarding our lease obligations can be found under the caption "Note 14: Leases" in the Notes to Consolidated Financial Statements appearing in the 2024 Form 10-K, and information regarding our contractual obligations can be found in the MD&A section of the 2024 Form 10-K, under the section entitled Cash Flows and Liquidity. In the first quarter of 2025, we amended and extended an agreement for information technology services. This modification increased our contractual commitments by approximately $25 million, with the majority of those payments scheduled to be made during the years ending December 31, 2028 and 2029.
As of March 31, 2025, we held cash and cash equivalents of $30 million, with an additional $368 million available for borrowing under our revolving credit facility. We believe that net cash generated from our operations, combined with cash and cash equivalents on hand and the availability under our credit facility, will be sufficient to support our operations over the next 12 months. This includes meeting our contractual obligations, debt service requirements, and addressing our long-term capital needs. We expect to maintain our regular quarterly dividend payments. However, dividends are subject to approval by our board of directors each quarter and, therefore, may change.

CAPITAL RESOURCES

As of March 31, 2025, the principal amount of our debt obligations was $1.51 billion, compared to $1.52 billion as of December 31, 2024. Our capital structure for each period was as follows:

|  | March 31, 2025 |  | December 31, 2024 |  |
(in thousands) |  | Amount |  | Weighted- average interest rate |  | Amount |  | Weighted- average interest rate |  | Change
Fixed interest rate |  | $ | 925,000 |  |  | 8.1 | % |  | $ | 925,000 |  |  | 8.1 | % |  | $ | — |
Floating interest rate |  | 585,311 |  |  | 6.8 | % |  | 596,917 |  |  | 7.2 | % |  | (11,606) |
Debt principal |  | 1,510,311 |  |  | 7.6 | % |  | 1,521,917 |  |  | 7.7 | % |  | (11,606) |
Shareholders’ equity |  | 622,464 |  |  |  |  | 620,918 |  |  |  |  | 1,546 |
Total capital |  | $ | 2,132,775 |  |  |  |  | $ | 2,142,835 |  |  |  |  | $ | (10,060) |

As of March 31, 2025, total commitments under our revolving credit facility were $400 million, with $368 million available for borrowing. Detailed information regarding our outstanding debt, including our debt service obligations and debt covenants, can be found under the caption “Note 11: Debt” in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report.
In October 2018, our board of directors authorized the repurchase of up to $500 million of our common stock. This authorization does not have an expiration date. We have not repurchased any shares under this authorization since the first quarter of 2020. As of March 31, 2025, $287 million remained available for repurchase. Information regarding changes in shareholders' equity can be found in the consolidated statements of shareholders' equity located in Part I, Item 1 of this report.
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CRITICAL ACCOUNTING ESTIMATES

A description of our critical accounting estimates was provided in the MD&A section of the 2024 Form 10-K. During the first quarter of 2025, there were no modifications in the assessment or determination of these estimates.
New accounting pronouncements – Information regarding new accounting pronouncements not yet adopted can be found under the caption “Note 2: New Accounting Pronouncements” in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate risk – We are subject to fluctuations in interest rates primarily due to our borrowing activities, which are essential for maintaining our capital structure, ensuring liquidity, and funding our business operations and investments. We do not enter into financial instruments for speculative or trading purposes. The amount and nature of our outstanding debt is expected to change based on future business needs, market conditions, and other influencing factors.
Interest on amounts outstanding under our credit agreement and accounts receivable financing arrangement is payable at variable rates, as specified in the credit agreements. As of March 31, 2025, we also had $450 million of 8.125% senior secured notes and $475 million of 8.0% senior unsecured notes outstanding. When factoring in the related discount and debt issuance costs, the effective interest rate on these notes is 8.6% and 8.3%, respectively.
Our credit agreement matures on February 1, 2029, at which point any outstanding amounts under the revolving credit facility must be repaid. The term loan facility requires periodic principal payments through December 2028, with the remaining balance due on February 1, 2029. The senior unsecured notes are scheduled to mature in June 2029, while the senior secured notes will mature in September 2029. However, if any of the senior unsecured notes issued in 2021 remain outstanding as of February 1, 2029, the 2024 senior secured notes will also mature on that date. Quantitative information regarding the maturities of our long-term debt can be found under the caption "Note 11: Debt" in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report.
As of March 31, 2025, our total debt outstanding was as follows:

(in thousands) |  | Carrying amount(1) |  | Fair value(2) |  | Interest rate
Senior secured term loan facility |  | $ | 486,081 |  |  | $ | 490,625 |  |  | 6.9 | %
Senior unsecured notes |  | 469,709 |  |  | 432,986 |  |  | 8.0 | %
Senior secured notes |  | 442,069 |  |  | 452,417 |  |  | 8.1 | %
Securitization obligations |  | 70,686 |  |  | 70,686 |  |  | 5.9 | %
Amounts drawn on revolving credit facility |  | 24,000 |  |  | 24,000 |  |  | 6.9 | %
Total debt |  | $ | 1,492,545 |  |  | $ | 1,470,714 |  |  | 7.6 | %

(1) The carrying amount has been reduced by unamortized discount and debt issuance costs of $18 million.
(2) For the amounts outstanding under our credit facility agreements, fair value approximates carrying value because the interest rates are variable and reflect current market rates. The fair value of the senior unsecured and senior secured notes is based on quoted prices in active markets for the identical liability when traded as an asset.
As of March 31, 2025, based on the amount of variable-rate debt outstanding, a one percentage point change in the weighted-average interest rate would result in a $4 million change in interest expense for the reminder of 2025.
Foreign currency exchange rate risk – We are subject to fluctuations in foreign currency exchange rates. Our investments in, and loans and advances to, foreign subsidiaries and branches, along with the operations of these entities, are denominated in foreign currencies, primarily Canadian dollars. The impact of exchange rate changes on our earnings and cash flows is expected to be minimal, given that our foreign operations constitute a relatively small portion of our overall business. At this time, we have not engaged in hedging activities to mitigate the risks associated with changes in foreign currency exchange rates.
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ITEM 4. CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures – As of the end of the period covered by this report, March 31, 2025 (the "Evaluation Date"), we carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in applicable rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
(b) Internal Control Over Financial Reporting – There were no material changes in our internal control over financial reporting identified in connection with our evaluation during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We record provisions for identified claims or lawsuits when it is probable that a liability has been incurred and the loss amount can be reasonably estimated. Claims and lawsuits are reviewed on a quarterly basis, and provisions are taken or adjusted to reflect the current status of each matter. We believe that the reserves recorded in our consolidated financial statements are adequate, considering the probable and estimable outcomes. The recorded liabilities were not material to our financial position, results of operations, or liquidity, and we do not believe that any of the currently identified claims or litigation will have a material impact on our financial position, results of operations, or liquidity upon resolution. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. Should an unfavorable ruling occur, it may have a material adverse effect on our financial position, results of operations, or liquidity in the period the ruling is made or in future periods.

ITEM 1A. RISK FACTORS

The risk factors relevant to our business are detailed in Part I, Item 1A of our 2024 Form 10-K. Since the filing of the 2024 Form 10-K, there have been no significant changes to these risk factors.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In October 2018, our board of directors authorized the repurchase of up to $500 million of our common stock. This authorization has no expiration date. No shares were repurchased under this authorization during the first quarter of 2025 and $287 million remained available for repurchase as of March 31, 2025.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.
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ITEM 5. OTHER INFORMATION

During the three months ended March 31, 2025, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended), adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).

ITEM 6. EXHIBITS

Exhibit Number |  | Description
10.1 |  | Amendment No. 2 to Deluxe Corporation 2022 Stock Incentive Plan (incorporated by reference to Annex B of the definitive proxy statement filed with the Commission on March 10, 2025)*
31.1 |  | CEO Certification of Periodic Report pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 |  | CFO Certification of Periodic Report pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 |  | CEO and CFO Certification of Periodic Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished)
101.INS |  | XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH |  | XBRL Taxonomy Extension Schema Document
101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF |  | XBRL Taxonomy Extension Definition Linkbase Document
101.LAB |  | XBRL Taxonomy Extension Label Linkbase Document
101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document
104 |  | Cover page interactive data file (formatted as Inline XBRL and contained in Exhibit 101)

* | Denotes compensatory plan or management contract

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| DELUXE CORPORATION (Registrant)
Date: May 2, 2025 | /s/ Barry C. McCarthy
| Barry C. McCarthy President and Chief Executive Officer (Principal Executive Officer)
Date: May 2, 2025 | /s/ William C. Zint
| William C. Zint Senior Vice President, Chief Financial Officer (Principal Financial Officer)
Date: May 2, 2025 | /s/ L. Kelly Moyer
| L. Kelly Moyer Vice President, Chief Accounting Officer (Principal Accounting Officer)

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