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

Company: DELUXE CORP
Filing Date: 2025-02-21
Form: 10-K
Item: Item 1A
Chunk 25
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 our systems, especially those affecting our operations, could hinder our ability to manage our business effectively. Frequent or persistent interruptions could lead customers to perceive our products and services as unreliable, prompting them to switch to competitors or avoid our offerings.

A significant portion of our applications are hosted in a cloud-based environment. Although we maintain redundant systems and backup databases and applications to ensure continuous access to cloud services, interruptions are still possible, and our disaster recovery plans may not cover all scenarios. System failures could disrupt the delivery of products and services,  impede our customers' business operations, and result in the loss or corruption of critical data. Besides potentially losing customers, we might incur additional development costs, divert technical and other resources, and face negative publicity and liability claims.

If any of our major information technology systems suffer severe damage, disruption, or shutdown, and our disaster recovery and business continuity plans fail to resolve the issue promptly, our results of operations would be adversely affected. Our business interruption insurance may not fully compensate us for any losses incurred. Furthermore, if a system failure or similar event causes damage to our customers or contractual partners, they could seek compensation from us for their losses. Even if such claims are unsuccessful, they would likely be time-consuming and costly to address.

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We depend on third-party providers for various services, including critical information technology services, and any failure on their part could disrupt our business operations.

We have established agreements with third-party providers for information technology services such as telecommunications, network servers, cloud computing, and transaction processing. Additionally, we rely on third parties for services related to our online payment solutions, including financial institutions that provide clearing services for our merchant services settlement activities. We have also outsourced certain functions, including parts of our finance, marketing print fulfillment, and procurement operations. The ability of these service providers to deliver their services could be compromised by numerous factors, including human error, software issues, security breaches, power outages, telecommunications failures, equipment malfunctions, electrical disruptions, vandalism, natural disasters, terrorism, and other uncontrollable events. If one or more of our service providers fails to deliver adequate or timely services, our capacity to provide products and services to our customers could be negatively impacted.

While we believe we have taken reasonable measures to safeguard our business through contractual arrangements with our service providers, we cannot entirely eliminate the risk of service disruptions. Any significant interruption could harm our business, damage our brand, and result in the loss of customers. Although we believe that most of these services can be sourced from multiple