Company: DLX
Filing Date: 2025-02-21
Form Type: 10-K
Source: 0000027996-25-000051
Chunk: 2

Company: DELUXE CORP
Filing Date: 2025-02-21
Form: 10-K
Item: Item 1
Chunk 2
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 North Star initiatives and anticipate continued positive impacts on our results of operations throughout the coming year. 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.

SALES AND MARKETING

We utilize a "One Deluxe" go-to-market model, deploying dedicated sales teams across our business segments to ensure we leverage the expertise within each segment to meet our customers' needs. We prioritize listening to our customers and first understanding their needs. Then we bring the best of Deluxe to address their challenges, fostering deeper customer relationships. This approach transforms us from a transactional vendor into a trusted partner. As these relationships deepen, we uncover additional opportunities for growth, allowing us to offer more products and services. Our business segments collaborate to deliver greater value to our customers, enabling them to build their businesses on our platforms for the long-term.

We employ a multi-channel sales and marketing approach, selling directly to financial institutions, small and medium-sized businesses across multiple industries, and major global brands. We sell our products and services through scalable partnerships, which enable us to reach customers cost-effectively by leveraging our financial institution and other strategic partnerships. In addition, inbound customer contacts who are buying or reordering our products and services provide extensive cross-selling opportunities, enhancing our ability to meet a broader range of customer needs.

4

OUR BUSINESSES

Merchant Services

We offer a comprehensive suite of payment processing services tailored primarily to small and medium-sized retail and service businesses, including nonprofit organizations and government entities. Our services encompass credit card, debit card, and electronic benefit transaction processing, as well as check guarantee and conversion. The majority of our merchant services revenue is derived from fees structured either as a percentage of transaction value or as a fixed fee per transaction, depending on the payment type or market. We distribute our services through various sales channels, processing payments through multiple methods, both in-person and online, as well as via recurring payments.

The payment processing market is experiencing continuous growth and transformation, driven by the global increase in  digital payment methods and transaction volumes. The industry is characterized by rapid innovation and is subject to increasing regulatory scrutiny and oversight. Our challenge lies in consistently updating our technology to support new service offerings, identifying new revenue streams, and investing in digital technologies to meet evolving customer preferences. The competition in the merchant