DELUXE CORP (DLX)

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

This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") provides a comprehensive overview of our financial condition, results of operations, and key factors affecting our performance. The following sections are included:

•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 accounting policies and estimates that require management to make complex judgments and assumptions and their application can have a material impact on our financial condition and results of operations.

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Forward-Looking Statements

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, 2025 (the "2025 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. Statements using terms such as “should result,” “believe,” “intend,” “plan,” “expect,” “anticipate,” “estimate,” “project,” “outlook,” “forecast,” and similar expressions are intended to indicate forward-looking statements under the Reform Act.

Use of Non-GAAP Financial Measures

This MD&A includes financial information prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP"). We also present certain non-GAAP financial measures, including 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 additional insight into our operating performance. Consequently, these measures are also used internally for management reporting. Our non-GAAP measures should not be considered substitutes 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. Reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the Consolidated Results of Operations section.

EXECUTIVE OVERVIEW

We empower businesses to build stronger customer relationships through a broad range of trusted, technology-enabled solutions designed to facilitate payments, drive growth, and improve operational efficiency. Our comprehensive portfolio includes merchant services solutions, marketing and data analytics, treasury management solutions, and promotional products, as well as customized checks and business forms tailored to our clients' needs.

We serve a diverse customer base, including small and medium-sized businesses, financial institutions, and some of the world’s leading consumer brands. In addition, we offer checks and related accessories directly to individual consumers. Our extensive reach, scale, and multi-channel distribution network enable us to deliver innovative solutions and reliable support, positioning us well as a valued partner to our customers.

Our Strategy

A comprehensive discussion of our strategy is provided in Part I, Item 1 of the 2025 Form 10-K. During the first half of 2026, we continued to execute on our strategic priorities of accelerating profitable growth, enhancing operational efficiency, and disciplined capital allocation.

Accelerating profitable growth – We continued to execute on our strategy of growing our payments and data businesses while optimizing our overall portfolio, delivering stronger revenue mix and profitability. In March 2026, we completed the divestiture of the Safeguard small business distributor channel within our Print segment, a strategic action enabling greater focus on our growth businesses and ongoing portfolio optimization objectives. The divestiture reduced first-half 2026 Print segment revenue by approximately $47.1 million and Print adjusted EBITDA by approximately $4.9 million compared to the first half of 2025. At the same time, our payments and data businesses demonstrated strong momentum, collectively delivering 11.1% year-over-year revenue growth and a 14.6% increase in adjusted EBITDA in the first half of 2026.

In June 2026, we entered into an equity purchase agreement and plan of merger to acquire Celero Commerce (“Celero”), a financial technology company that provides payment solutions to small and mid-sized businesses through a diversified distribution network. The transaction closed on July 31, 2026, with aggregate cash consideration of $625.0 million, plus payment of certain seller transaction expenses and other adjustments. The acquisition was financed through our amended credit agreement, via a combination of additional term loan financing and revolving credit facility borrowings. Further information regarding the amended credit facility agreement can be found in the Capital Resources section.

Celero's platform is complementary to our existing payments offerings and is expected to accelerate the modernization of our payments technology, expand our distribution capabilities through Celero's diversified, partner-led model, and strengthen our competitive position by increasing scale, expanding channel reach, and deepening the value we deliver to a broader set of customers.

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Enhancing operational efficiency – In the first half of 2026, we reduced selling, general and administrative (SG&A) expense by 6.4% year-over-year, reflecting the benefits of our ongoing cost management efforts. Additionally, despite revenue pressures in the Print segment, operational improvements resulted in adjusted EBITDA margin improvement for this segment. These results contributed to year-over-year increases in net income, consolidated adjusted EBITDA, and consolidated adjusted EBITDA margin in the first half of 2026.

Disciplined capital allocation – We continued to apply our capital allocation framework, working to ensure investments are aligned with our growth objectives and deliver optimal returns. In the first half of 2026, net cash provided by operating activities increased by $32.5 million year-over-year, and we reduced total debt by $77.2 million compared to year-end 2025. The Celero acquisition reflects our commitment to accelerating growth, and we remain focused on disciplined deleveraging. The strong cash generation of our business, combined with available capacity under our credit arrangements, positions us well to service our obligations, reduce leverage over time, and continue delivering value for shareholders.

2026 Financial Results

Highlights of our financial results for the first half of 2026 compared to the first half of 2025 include:

•Consolidated revenue – Decreased by $20.3 million to $1,037.4 million, primarily driven by the first quarter business exit, which reduced revenue by approximately $47.1 million. Additionally, the ongoing secular decline in order volumes for checks, business forms, and various business accessories in our Print segment contributed to the decrease. These unfavorable drivers were partially offset by growth in all three of our payments and data businesses.

•Net income – Increased by $18.5 million to $55.0 million, primarily reflecting the impact of our cost management and pricing initiatives, as well as lower restructuring and integration expense. Growth in our payments and data businesses further contributed to the improvement. Additionally, interest expense decreased $6.6 million year-over-year and we recognized a $5.1 million gain from the sale of the Safeguard small business distributor channel within the Print segment. These favorable factors were partially offset by the continuing demand softness and secular declines in the Print segment, inflationary pressures impacting material and delivery costs, and transaction costs related to the Celero acquisition of $5.6 million in the first half of 2026.

•Adjusted EBITDA – Increased $20.1 million to $226.7 million, driven by the benefits of our cost management and pricing initiatives and growth in our payments and data businesses. These favorable impacts were partially offset by demand softness and the ongoing secular declines in the Print segment and inflationary cost pressures. In addition, our first quarter business exit resulted in a decrease in adjusted EBITDA of approximately $4.9 million.

Adjusted EBITDA margin increased to 21.9% for the first half of 2026, compared to 19.5% for the first half of 2025. The margin improvement was primarily driven by our cost management and pricing initiatives, partially offset by inflationary pressures and the shift in mix toward our growth businesses. 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 $32.5 million to $133.9 million. The increase was primarily driven by the benefits of our cost management and pricing actions, lower income tax payments due to the impact of federal tax law changes enacted in July 2025, favorable changes in working capital, and lower cash expenditures for restructuring and integration activities.

These benefits were partially offset by higher payouts for performance-based employee cash bonuses related to our 2025 performance, demand softness and continuing secular declines in the Print segment, and inflationary cost pressures.

•Free cash flow – Increased by $33.8 million to $85.9 million, reflecting the same factors that drove the increase in net cash provided by operating activities. We continue to reinvest the free cash flow generated by our Print business into our other businesses. Free cash flow is defined as net cash provided by operating activities less purchases of capital assets. A reconciliation of free cash flow to its most directly related GAAP financial measure can be found in the Consolidated Results of Operations section.

Recent Market Conditions

We continually monitor macroeconomic conditions and other external factors that may affect our business, including interest rates, inflation, small business sentiment, consumer spending trends, and global economic conditions. As of June 30, 2026, 68% of our debt had a weighted-average fixed interest rate of 8.1%, which provides partial insulation from changes in market interest rates. This capital structure helps moderate our exposure to interest rate volatility in a higher‑rate environment, although future changes in rates could still affect our borrowing costs due to our variable-rate debt.

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Macroeconomic conditions, including inflation, energy price volatility, and fluctuations in logistics and certain raw material costs, continue to influence our cost structure, pricing dynamics, and customer demand. In response, we implemented targeted price adjustments, particularly within our Merchant Services and Print segments, to help offset increased costs while remaining mindful of customer price sensitivity. We continu

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") provides a comprehensive overview of our financial condition, results of operations, and key factors affecting our performance. The following sections are included:

•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

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•Critical Accounting Estimates that discusses the accounting policies and estimates that require management to make complex judgments and assumptions and their application can have a material impact on our financial condition and results of operations.

Forward-Looking Statements

This MD&A discussion contains forward-looking statements that involve risks and uncertainties. Please refer to Part I, Item 1A, Risk Factors, for a detailed discussion of known material risks and important information to consider when evaluating our forward-looking statements. 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. Statements using terms such as “should result,” “believe,” “intend,” “plan,” “expect,” ”anticipate,” “estimate,” “project,” “outlook,” "forecast," and similar expressions are intended to indicate forward-looking statements under the Reform Act.

Use of Non-GAAP Financial Measures

This MD&A includes financial information prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP"). We also present certain non-GAAP financial measures, including 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 additional insight into our operating performance. Consequently, these measures are also used internally for management reporting. Non-GAAP measures should be considered alongside, but not as substitutes 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. Reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the Consolidated Results of Operations section.

Scope of Discussion

The following discussion and analysis focuses on our consolidated financial results for the years ended December 31, 2025 and December 31, 2024. For a comparison of results for the years ended December 31, 2024 and December 31, 2023, please refer to Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the Securities and Exchange Commission (SEC) on February 21, 2025, and is incorporated by reference herein.

We encourage you to read this discussion in conjunction with our consolidated financial statements and related notes in Part II, Item 8 of this report, to gain a full understanding of our financial performance and the factors influencing our results.

EXECUTIVE OVERVIEW

We empower businesses to build stronger customer relationships through a broad range of trusted, technology-enabled solutions designed to facilitate payments, drive growth, and improve operational efficiency. Our comprehensive portfolio includes merchant services solutions, marketing and data analytics, treasury management solutions, and promotional products, as well as customized checks and business forms tailored to our clients’ needs.

We serve a diverse customer base, including small and medium-sized businesses, financial institutions, and some of the world’s leading consumer brands. In addition, we offer checks and related accessories directly to individual consumers. Our extensive reach, scale, and multi-channel distribution network enable us to deliver innovative solutions and reliable support, positioning us as a valued partner to our customers.

Our Strategy

A comprehensive discussion of our strategy is provided in Part I, Item 1 of this report. With our infrastructure modernization largely complete and non-strategic businesses divested, our attention is on growth investments that drive scale and accelerate profit growth ahead of revenue. Our disciplined pricing strategies and rigorous cost management continue to support operational excellence.

Over the past three years, we successfully executed our North Star program, a comprehensive, multi-year initiative designed to enhance shareholder value by accelerating adjusted EBITDA growth, increasing cash flow, reducing debt, and improving our leverage ratio. The positive impact of the North Star program is reflected in our 2025 results, with both adjusted EBITDA and adjusted EBITDA margin increasing year-over-year. These improvements were driven in part by a 3.9% reduction in selling, general and administrative (SG&A) expense. Within our Print segment, our continued focus on driving efficiencies contributed to adjusted EBITDA margin improvement in 2025, despite continued revenue pressures in that business. We also

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achieved a $76.3 million year-over-year increase in net cash provided by operating activities and reduced total debt by $73.7 million from the previous year-end. These results underscore our commitment to disciplined execution and the creation of long-term shareholder value.

In August 2025, we acquired certain assets of JPMorgan Chase Bank's CheckMatch electronic check conveyance service business for cash payments totalling $24.6 million, approximately half of which was paid at closing and the remainder due in the first quarter of 2026. This acquisition is expected to enhance our market position and extend the scale of our B2B Payments segment.

In February 2026, we entered into an agreement to sell certain assets and liabilities related to the small business distributor channel in our Print segment for approximately $25.0 million, with approximately half paid at closing and the remainder due over the next three years. The sale is expected to close in the first quarter of 2026.

2025 Financial Results

Below are highlights of our financial performance for 2025, compared to the prior year.

•Consolidated revenue – Increased by $11.4 million to $2.13 billion, including a decrease of $10.8 million attributable to business exits. The increase in revenue was mainly due to growth in our data-driven marketing and merchant services businesses. This growth was partially offset by weaker demand for certain of our promotional products, the ongoing secular decline in order volumes for checks, business forms, and various business accessories, as well as the impact of business exits.

•Net income – Increased by $29.3 million to $82.2 million, reflecting the benefits of our pricing strategies and cost management initiatives. The increase also resulted from lower amortization expense, due to accelerated amortization associated with business exits and a trade name intangible asset in 2024, as well as lower acquisition-related amortization in 2025. Restructuring and integration expense also declined, and our data-driven marketing business delivered year-over-year growth, further contributing to the improvement.

These positive factors were partially offset by weaker demand for certain promotional products and the continuing secular declines in the Print segment, inflationary pressures on materials and delivery costs, and the loss of earnings from exited businesses. Additionally, in 2024, we recognized a $31.2 million gain from the sale of businesses and long-lived assets, which did not recur in 2025.

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•Adjusted EBITDA – Increased $19.4 million to $431.5 million, including the impact of business exits, which drove a $5.6 million decrease year-over-year. The increase in adjusted EBITDA was primarily driven by the benefits of our pricing strategies and cost management initiatives, and growth in data-driven marketing. These positive impacts were partially offset by the weaker demand for certain promotional products, ongoing secular declines in the Print segment, and inflationary cost pressures.

Adjusted EBITDA margin increased to 20.2% in 2025, compared to 19.4% in 2024. The margin improvement was primarily driven by our pricing strategies and cost management initiatives, partially offset by 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 $76.3 million to $270.6 million. Key contributors included the positive impacts of our pricing and cost management actions, lower income tax payments, mainly from foreign operations, reduced performance-based employee bonus payouts, and lower restructuring and integration expenditures. Additional positive impacts came from growth and volume-based rebates in our data-driven marketing business.

These benefits were partially offset by softer demand for certain promotional products, the continuing secular declines in the Print segment, timing variations in accounts receivable and payable, inflationary cost pressures, and the impact of business exits.

•Free cash flow – Increased by $75.3 million to $175.3 million, reflecting the same factors that drove the increase in net cash provided by operating activities. We continue to reinvest the free cash flow generated by our Print business into our other businesses. Free cash flow is defined as net cash provided by operating activities less purchases of capital assets. A reconciliation of free cash flow to its comparable GAAP financial measure can be found in the Consolidated Results of Operations section.

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Recent Market Conditions

We continuously monitor macroeconomic factors that may affect our business, including interest rates, inflation, and global economic trends. As of December 31, 2025, 64% of our debt had a weighted-average fixed interest rate of 8.1%, which provides partial insulation against future interest rate volatility. This approach helps us manage exposure to rising borrowing costs and supports our long-term financial stability.

Inflationary pressures have persisted throughout the year, impacting key components of our cost structure such as labor, logistics, and raw materials. In response, we have implemented targeted price adjustments, particularly within our Print and Merchant Services segments, to help offset increased costs. We remain vigilant as we navigate ongoing global uncertainties, including geopolitical unrest and changes in trade policies, treaties, and tariffs, which have the potential to disrupt supply chains and further elevate costs. To mitigate these risks, we actively manage our supplier relationships, monitor inventory levels, and leverage our purchasing power to minimize potential disruptions. Additionally, ongoing geopolitical unrest has heightened cybersecurity and technology risks, reinforcing our commitment to continued investment in cybersecurity measures and technology infrastructure to safeguard our operations.

We also closely track trends in small business sentiment and consumer discretionary spending, as these factors directly influence demand across our portfolio. Our analys

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