Deluxe (DLX) CL King’s 22nd Annual Best Ideas Conference 2024 summary

Transformation and strategy

• Underwent a major transformation from a legacy print company to a payments and data-driven business, now generating nearly half of revenue from digital businesses such as B2B payments, merchant processing, and data-driven marketing.

• North Star project aims to add $100 million in cash flow and $80 million in incremental adjusted EBITDA by 2026, focusing on both revenue growth and cost control.

• Portfolio streamlined to focus on three core growth areas: data-driven marketing, merchant services, and B2B payments.

• Value algorithm targets consistent low single-digit revenue growth, faster EBITDA growth, deleveraging, and at least 15% compound annual total shareholder return.

• Progress is on or ahead of plan, with organic growth offsetting declines in legacy print businesses.

Business segment performance and growth drivers

• Payments business, bolstered by the First American Payment Systems acquisition, now grows at mid to high single digits, with periods of double-digit growth, driven by cross-selling and platform investments.

• Data Solutions segment leverages a comprehensive consumer and business database with AI tools, serving major banks and insurers, and is expected to grow mid- to upper-single digits with margin expansion.

• B2B business is transitioning from on-premise software to a unified SaaS platform, streamlining customer experience and enabling easier cross-selling of modules.

• Legacy print business is managed for cash flow, with declines kept to low single digits, supporting investment in growth areas.

• Organic growth rate expected to accelerate from 1-2% to 2-4% as growth businesses become a larger share of revenue.

Market and customer focus

• Focuses on mid-market businesses for merchant services and B2B solutions, avoiding both mega-scale and micro-merchants.

• Data-driven marketing and B2B solutions target middle market and above, while print business serves the full spectrum from large banks to small businesses.

• Cross-selling across business lines is a key growth lever, leveraging long-standing relationships with banks and small businesses.