Company: DLX
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0000027996-25-000189
Chunk: 92

Company: DELUXE CORP
Filing Date: 2025-11-06
Form: 10-Q
Item: Item 8
Chunk 92
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 payroll and related expenses, information technology costs, depreciation and amortization of assets used in production and in support of digital service offerings, residuals paid to independent sales organizations (ISOs), and related overhead.

In the third quarter of 2025, total cost of revenue increased compared to the third quarter of 2024, and for first nine months of the year, total cost of revenue was virtually flat compared to the prior year. The same factors impacted the results for each period. Costs increased as a result of the revenue growth in data-driven marketing, as well as inflationary pressures affecting materials and delivery costs. These increases in total cost of revenue were offset by the soft demand for certain promotional products and the ongoing secular decline in checks, business forms, and various business accessories in our Print segment. Additionally, our cost management initiatives contributed to lower cost of revenue, including volume-based rebates in our Data Solutions segment. The impact of business exits reduced costs by approximately $2 million in the third quarter and $10 million in the first nine months of the year, including the impact of accelerated amortization expense in 2024. 

Total cost of revenue as a percentage of total revenue for each period benefited from our pricing and cost management actions and the prior year's accelerated amortization expense. Offsetting these positive factors were the inflationary impacts on our cost structure and a shift in revenue mix toward our lower-margin growth businesses.

Selling, General and Administrative (SG&A) Expense

 Quarter Ended September 30,Nine Months Ended September 30,(in thousands)20252024Change20252024ChangeSG&A expense$212,364 $227,764 (6.8%)$652,102 $695,677 (6.3%)SG&A expense as a percentage of total revenue39.3%43.1%(3.8) pts.40.8%43.4%(2.6) pts.

In the third quarter and first nine months of 2025, SG&A expense decreased compared to the same periods in 2024. This decrease was largely driven by various cost management actions, including workforce adjustments across functional areas and 

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the optimization of our marketing and sourcing strategies. Additionally, there was a reduction in amortization expense, stemming from accelerated amortization in 2024 related to a trade name intangible asset, as well as lower acquisition-related amortization expense in 2025. Bad debt expense decreased $2 million in the third quarter and $7 million in the first nine months of