DELUXE CORP
For the period ended Dec 31, 2024. Filed Feb 21, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 21, 2025
DLX$25.93-2.4%Stored close · as of Nov 9, 2026
What changed in Risk Factors?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-22.
0000027996-24-000065
Item 1A. Risk FactorsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-21.
0000027996-25-000051
Item 1A. Risk FactorsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 120 previous paragraphs and 125 current paragraphs.
14 unchanged; 84 reworded; 23 added; 19 removed; 3 previous and 4 current paragraphs rearranged.
Tables are not compared: 0 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
Several factors could cause our strategic plan to fall short of our expectations, including but not limited to:
Current report
•Difficulties in operating, integrating, or leveraging acquired businesses;
Current report
•New products and services not achieving widespread customer acceptance;
Current report
Reports of rising check fraud and the associated publicity may also contribute to a decline in check usage. As awareness of these fraudulent activities grows, both consumers and businesses may become more cautious and opt for alternative payment methods. This shift could further accelerate the move away from traditional checks toward digital and electronic payment solutions, which some may perceive as a safer alternative.
Current report
Moreover, we may find that achieving business simplification and/or cost reduction goals could disrupt our business, negatively impact our efforts to grow, or reduce the effectiveness of our sustainability practices. As a result, we may choose to delay or forgo certain cost reductions as business conditions require. For instance, streamlining processes or standardizing technology applications might lead to temporary inefficiencies or disruptions that could affect our service delivery or customer satisfaction. Similarly, enhancing strategic supplier sourcing arrangements might involve renegotiating contracts or changing suppliers, which could lead to transitional challenges.
Current report
Failure to continue improving our operating efficiency and generating adequate savings to fund necessary investments could adversely affect our business if we are unable to remain competitive. If our cost reduction initiatives do not yield the expected benefits, we may face increased pressure on our profit margins, which could limit our ability to invest in growth opportunities and innovation. While cost reduction initiatives are essential for maintaining competitiveness, they come with inherent risks and challenges. It is crucial to balance these initiatives with the need to sustain business growth, customer satisfaction, and sustainability efforts. Failure to do so could have adverse effects on our results of operations and financial position.
Current report
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.
Current report
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.
Current report
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 providers, a failure by one or more of our service providers could cause a substantial disruption in our business while we seek alternative providers. Transitioning to substitute third-party providers could also lead to increased costs. Furthermore, we require that our partners comply with all relevant laws and regulations, including those encompassing anti-corruption, labor conditions, employment practices, safety and health standards, and environmental compliance. Although we have established policies and procedures to oversee these partnerships, the nature of these relationships inherently limits our direct control over their business operations. This limitation can potentially elevate our exposure to financial, legal, reputational, and operational risks.
Current report
Competition for employees is intense. We have introduced various human capital initiatives, such as employee wellness programs, employee resource groups, and an updated performance management process, to make our company an attractive workplace. However, with the increasing acceptance of remote work, maintaining and enhancing our corporate culture has become more challenging, as has managing the flexible working arrangements employees may seek. Our work environment might not meet the needs or expectations of our employees or could be perceived as less favorable compared to other companies' policies, which could hinder our ability to hire and retain qualified personnel.
Current report
We cannot guarantee that key personnel, including our executive officers, will remain with the company, or that replacing key employees will not lead to increased labor costs. The inability to retain or attract key personnel could have a significant adverse impact on our business, financial condition, and results of operations.
Current report
Rising prices and reduced availability of materials and services have negatively impacted, and may continue to negatively impact, our operating results.
Current report
The data sources that we depend on for our Data Solutions business could become unavailable due to changes in laws, regulations, or marketing industry practices. If access to these critical data sources is limited or prohibited, it would impair our ability to deliver targeted and effective marketing solutions, potentially impacting our business operations and revenue.
Current report
We face risks related to customer payments that could adversely affect our business and financial results.
Current report
If any changes to or interpretations of the network rules conflict with our current operations, we may be required to make costly or challenging adjustments to our business practices. Such adjustments could negatively impact our results of operations.
Current report
We may face challenges in protecting our intellectual property rights, which could negatively impact our business and competitive position.
Current report
Our strategy to safeguard our trademarks, software, and other intellectual property involves a combination of trademark and copyright laws, trade secret and patent protections, as well as confidentiality and license agreements. However, these measures provide only limited protection. Despite our efforts, third parties may still infringe upon or misappropriate our intellectual property, or independently develop products or services that are substantially similar and do not violate our intellectual property rights.
Current report
Enforcing our intellectual property rights and preventing unauthorized use is both complex and resource-intensive. We may need to dedicate substantial resources to protect our trade secrets and to monitor and enforce our intellectual property rights. If we fail to maintain intellectual property protection or cannot effectively secure or enforce it, we risk losing market share, experiencing reduced revenue, and seeing a decline in brand value. Such outcomes would ultimately harm our business and our ability to compete in the marketplace.
Current report
Existing or future leverage may adversely affect our financial condition and results of operations.
Current report
As of December 31, 2024, we had $1.52 billion in debt. Both we, and our subsidiaries, may incur significant additional indebtedness in the future. This level of indebtedness could have several negative impacts, including: reducing our ability to secure additional financing for working capital, capital expenditures, general corporate purposes, or other needs; limiting our flexibility to pursue acquisitions; increasing our cash requirements to cover interest payments; restricting our ability to plan for or respond to changes in our business and industry; and heightening our vulnerability to adverse shifts in general economic and industry conditions. Furthermore, our credit agreement includes a number of restrictive covenants that impose significant operating and financial restrictions. These covenants restrict our ability to engage in acts that may be in our long-term best interest, such as paying dividends or making other distributions, repurchasing or redeeming capital stock, making loans and investments, selling assets, entering into transactions with affiliates, altering the business we conduct, or incurring liens.
Current report
Our capacity to make principal and interest payments on our debt depends on our future performance, which is influenced by general economic conditions and various financial, business, and other factors affecting our consolidated operations, many of which are beyond our control.
Current report
If we are unable to generate sufficient cash flow from operations to service our debt and meet our other cash requirements, we may need to take several actions. These could include seeking additional financing in the debt or equity markets, refinancing or restructuring all or part of our debt, or reducing or delaying planned capital or operating expenditures. However, these measures may not be sufficient to enable us to service our debt and meet other cash requirements. Furthermore, such financing, refinancing, or asset sales may not be available at all or on terms that are economically favorable.
Current report
Borrowings under our credit facility, including our secured term loan facility, are subject to variable interest rates. As of December 31, 2024, $597 million of our outstanding debt was subject to variable interest rates. This exposure to variable rates means that any increase in interest rates would lead to higher interest expense. Consequently, this would negatively impact our earnings and reduce the cash flows available for essential activities such as working capital, capital expenditures, and other investments. Effective management of our interest rate exposure is crucial to maintaining our financial health and ensuring that we can continue to meet our operational and strategic objectives. This involves closely monitoring interest rate trends and considering various financial instruments or strategies to mitigate the impact of rising rates on our financial performance. Despite our best efforts, fluctuations in interest rates could still adversely affect our financial condition and results of operations.
Removed paragraphs (19)
Previous report
•our inability to effectively operate, integrate or leverage businesses we acquire;
Previous report
•the failure of new products and services to achieve widespread customer acceptance;
Previous report
•the inability to successfully combine the businesses in a manner that permits us to achieve the revenue synergies and cost savings anticipated, which would result in the anticipated benefits of the acquisition not being realized in the anticipated timeframe or at all;
Previous report
•difficulties and/or delays in assimilating operations and ensuring that a strong system of information security and controls is in place;
Previous report
•the complexities of integrating a company with different products, services, markets and customers;
Previous report
•lost sales and customers as a result of certain customers, retail partners, financial institutions or other third parties deciding not to do business with us;
Previous report
•complexities associated with implementing necessary controls for the acquired business activities to address our requirements as a public company;
Previous report
•difficulties in identifying and eliminating redundant and underperforming functions and assets;
Previous report
•the complexities of assimilating the acquired business into our corporate culture and management philosophies;
Previous report
•unidentified issues not discovered during our due diligence process, including product or service quality issues, intellectual property issues, and tax or legal contingencies;
Previous report
We rely on third parties and their systems for a variety of services, including significant information technology services, and the failure of these third parties to provide these services could disrupt our business.
Previous report
We have entered into agreements with third-party providers for information technology services, including telecommunications, network server, cloud computing and transaction processing services. In addition, we have agreements with companies to provide services related to our online payment solutions, including financial institutions that provide clearing services in connection with our merchant services settlement activities, and we have outsourced certain activities, including portions of our finance and procurement functions. A service provider's ability to provide services could be disrupted for a variety of reasons, including, among others, human error, software errors or design faults, security breaches, power loss, telecommunications failures, equipment failures, electrical disruptions, labor issues, vandalism, fire, flood, extreme weather, terrorism and other events beyond their control. In the event that one or more of our service providers is unable to provide adequate or timely services, our ability to deliver products and services to our customers could be adversely affected. Although we believe we have taken reasonable steps to protect our business through contractual arrangements with our service providers, we cannot completely eliminate the risk of disruption in service. Any significant disruption could harm our business, including damage to our brand and loss of customers. Additionally, although we believe that most of these services are available from numerous sources, a failure to perform by one or more of our service providers could cause a material disruption in our business while we obtain an alternative service provider. The use of substitute third-party providers could also result in increased expense. Additionally, while we have policies and procedures for managing these relationships, they inherently involve a lesser degree of control over business operations, governance and compliance, thereby potentially increasing our financial, legal, reputational and operational risk.
Previous report
Competition for employees is intense. We have implemented various human capital initiatives, including employee wellness initiatives, employee resource groups and a revised performance management process, to make Deluxe an attractive place to work. As remote working arrangements have become more widely accepted, it is more challenging for us to maintain and enhance our corporate culture and to navigate the flexible working arrangements that employees may demand. Our work environment may not meet the needs or expectations of our employees or may be perceived as less favorable compared to other companies' polices, which could negatively impact our ability to hire and retain qualified personnel. We can provide no assurance that key personnel, including our executive officers, will continue to be employed, or that in the event we have to replace key employees, that labor costs will not increase. Failure to retain or attract key personnel could have a material adverse effect on our business, financial condition and results of operations.
Previous report
Increases in prices and declines in the availability of materials and other services have adversely affected, and could continue to adversely affect, our operating results.
Previous report
We may be unable to protect our rights in intellectual property, which could harm our business and ability to compete.
Previous report
We rely on a combination of trademark and copyright laws, trade secret and patent protection, and confidentiality and license agreements to protect our trademarks, software and other intellectual property. These protective measures afford only limited protection. Despite our efforts to protect our intellectual property, third parties may infringe or misappropriate our intellectual property or otherwise independently develop substantially equivalent products or services that do not infringe on our intellectual property rights. Policing unauthorized use of our intellectual property is difficult. We may be required to spend significant resources to protect our trade secrets and to monitor and police our intellectual property rights. The loss of intellectual property protection or the inability to secure or enforce intellectual property protection could harm our business and ability to compete.
Previous report
Borrowings under our credit facility, including our secured term loan facility, are subject to variable rates of interest and expose us to interest rate risk. If interest rates were to continue to increase, our interest expense would increase, negatively affecting earnings and reducing cash flows available for working capital, capital expenditures and other investments. To address the risk associated with variable-rate debt, we entered into interest rate swaps to convert a portion of our variable-rate debt to a fixed rate. As of December 31, 2023, $357.5 million of our outstanding debt was subject to variable interest rates.
Reworded paragraphs (84)
Previous wording
We routinely encounter and address risks, many of which could cause our future results to be materially different than we currently anticipate. These risks include, but are not limited to, the principal factors listed below and the other matters set forth in this Annual Report on Form 10-K. We place no priority or likelihood based on these descriptions or order of presentation. We are also subject to general risks and uncertainties that affect many other companies, including overall economic, industry and market conditions. Additional risks not presently known to us, or that we currently believe are immaterial, may also adversely affect us. You should carefully consider all of these risks and uncertainties before investing in our common stock.
Current wording
We regularly encounter and manage various risks, many of which could materially impact our future results in ways that differ from our current expectations. These risks include, but are not limited to, the key factors listed below and the other matters detailed in this Annual Report on Form 10-K. The order of presentation does not reflect any priority or likelihood. Additionally, we face general risks and uncertainties common to many other companies, such as overall economic, industry, and market conditions. There may also be additional risks that are currently unknown to us or that we currently believe are immaterial, which could negatively affect us. It is important to carefully consider all of these risks and uncertainties before making an investment in our common stock.
Previous wording
If our long-term growth strategy is not successful, our business and financial results would be adversely impacted.
Current wording
If our long-term growth strategy does not succeed, our business and financial results would be adversely impacted.
Previous wording
Our strategy is to utilize the cash flows, customer relationships and brand equity from our print businesses to drive profitable organic growth in our payments and data businesses. Further information about our strategy can be found under the caption "Our Strategy" appearing in Part I, Item 1 of this report. We may not achieve our long-term objectives, and investments in our business may fail to impact our financial results as anticipated. Our strategic plan could fall short of our expectations for many reasons, including, among others:
Current wording
Our strategy involves leveraging the cash flows, customer relationships, and brand equity from our Print segment to drive profitable organic growth in our other businesses. More details about our strategy can be found under the caption "Our Strategy," located in Part I, Item 1 of this report. We may not achieve our goals, and investments in our business may not yield the expected financial results.
Previous wording
•our failure to generate profitable revenue growth;
Previous wording
•our inability to acquire new customers, retain our current customers and sell more products and services to current and new customers;
Current wording
•Inability to acquire new customers, retain existing ones, and sell more products and services to both current and new customers;
Previous wording
•our inability to implement additional improvements to our technology infrastructure, our digital services offerings and other key assets to increase efficiency, enhance our competitive advantage and scale our operations;
Current wording
•Challenges in implementing further improvements to our technology infrastructure, digital services offerings, and other key assets to boost efficiency, enhance our competitive advantage, and scale our operations;
Previous wording
•our failure to develop new products and services;
Previous wording
•our failure to effectively manage the growth, expanding complexity and pace of change of our business and operations;
Current wording
•Inability to effectively manage the growth, increasing complexity, and rapid changes in our business and operations;
Previous wording
•our inability to promote, strengthen and protect our brand;
Current wording
•Inability to promote, strengthen, and protect our brand;
Previous wording
•an unexpected change in demand for checks or other products;
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•Unexpected changes in demand for checks or other products;
Previous wording
•our failure to attract and retain skilled talent to execute our strategy and sustain our growth;
Current wording
•Failure to attract and retain skilled talent necessary to execute our strategy and sustain growth;
Previous wording
•unanticipated changes in our business, markets, industry or the competitive landscape; and
Current wording
•Unanticipated changes in our business, markets, industry, or competitive landscape; and
Previous wording
We can provide no assurance that our strategy will be successful, either in the short term or in the long term, that it will generate a positive return on our investment or that it will not materially reduce our adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA") margins. If our strategy is not successful, or if there is market perception that our strategy is not successful, our reputation and brand may be damaged and our stock price may fall.
Current wording
We cannot guarantee that our strategy will be successful in the short term or long term, that it will generate a positive return on our investment, or that it will not materially reduce our adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margins. If our strategy fails, or if there is a perception in the market that our strategy is failing, our reputation and brand could be damaged, and our stock price may decline.
Previous wording
If we are unable to attract and retain customers in a cost-effective manner or effectively operate a multichannel customer experience, our business and results of operations would be adversely affected.
Current wording
If we are unable to attract and retain customers in a cost-effective manner or effectively manage a multichannel customer experience, our business and results of operations could be negatively impacted.
Previous wording
Our success depends on our ability to attract new and returning customers in a cost-effective manner. We use a variety of methods to promote our products and services, including a direct sales force, partner referrals, email marketing, purchased search results from online search engines, direct mail advertising, broadcast media, advertising banners, social media and other online links. Certain of these methods may become less effective or more expensive. For example, response rates for direct mail advertising have been decreasing for some time, internet search engines could modify their algorithms or increase prices for purchased search results, or certain partner referrals could decline. Because we offer a diverse portfolio of products and services, we may also face challenges in increasing customer awareness of all of our offerings. Efforts to expand customer awareness of our diverse range of products and services may result in increased marketing expense and may fail to generate additional revenue.
Current wording
Our success depends on our ability to draw in new customers and retain existing ones in a cost-efficient way. We employ various methods to promote our products and services, including a direct sales force, partner referrals, email marketing, purchased search results from online search engines, direct mail advertising, broadcast media, advertising banners, social media, and other online links. However, some of these methods may become less effective or more costly over time. For instance, response rates for direct mail advertising may decline, internet search engines might change their algorithms or increase prices for purchased search results, and partner referrals could decrease. Additionally, given our diverse portfolio of products and services, we may face challenges in raising customer awareness of all our offerings. Efforts to enhance customer awareness of our wide range of products and services could lead to increased marketing expenses without necessarily generating additional revenue.
Previous wording
We continually evaluate and modify our marketing and sales efforts to achieve the most effective mix of promotional methods. Competitive pressure may inhibit our ability to reflect increased costs in the prices of our products and services and/or new marketing strategies may not be successful. Either of these occurrences would have an adverse impact on our ability to compete and our results of operations would be adversely affected. In addition, when our check supply contracts expire, customers have the ability to renegotiate their contracts with us or to consider changing suppliers. Failure to achieve favorable contract renewals and/or to obtain new check supply customers would result in decreased revenue.
Current wording
We continuously assess and adjust our marketing and sales strategies to find the most effective mix of promotional methods. Competitive pressures may limit our ability to pass increased costs on to our customers through higher prices, and new marketing strategies may not succeed. Either scenario could impair our competitive position and adversely affect our results of operations. Furthermore, when our check supply contracts expire, customers have the option to renegotiate their contracts with us or consider switching suppliers. Failure to secure favorable contract renewals or to attract new check supply customers would lead to reduced revenue.
Previous wording
Additionally, we believe we must maintain a relevant, multichannel experience in order to attract and retain customers. Customers expect to have the ability to choose their method of ordering, whether via the mail, computer, phone or mobile device. Although we are constantly investing in our user experience, we cannot predict the success of these investments. Multichannel marketing is rapidly evolving and we must keep pace with the changing expectations of our customers and new developments by our competitors. If we are unable to implement improvements to our customer-facing technology in a timely manner, or if our customer-facing technology does not function as designed, we could find it increasingly difficult to attract new and returning visitors, which would result in decreased revenue.
Current wording
Moreover, we believe it is crucial to maintain a relevant, multichannel experience to attract and retain customers. Customers expect to have the flexibility to choose their preferred ordering method, whether by mail, computer, phone, or mobile device. Although we continually invest in enhancing our user experience, the success of these investments is uncertain. Multichannel marketing is rapidly evolving, and we must keep pace with changing customer expectations and new developments by our competitors. If we fail to implement improvements to our customer-facing technology in a timely manner, or if our technology does not perform as intended, we could struggle to attract new and returning customers, resulting in decreased revenue.
Previous wording
We face intense competition from other businesses, and we expect that competition will continue to increase.
Current wording
We face intense competition, and we anticipate that this competition will continue to escalate.
Previous wording
Competition in the payments industry is intense. We are competing against numerous financial technology ("Fintech") companies, including independent payment processors, credit card processing firms and treasury management service providers, as well as financial institution in-house capabilities. Volume is the key to remaining cost-competitive, and breadth of services is critical to staying relevant to customers. In addition, although we are a leading check printer in the U.S., we face considerable competition in the check printing portion of the payments industry from another large check printer in our traditional financial institution sales channel, from direct mail and internet-based sellers of personal and business checks, from check printing software vendors, and from certain significant retailers. Pricing continues to be competitive in our financial institution sales channel, as financial institutions seek to maintain their previous levels of profitability, even as check usage declines.
Current wording
In the payments industry, competition is intense. We compete against numerous financial technology companies, including independent payment processors, credit card processing firms, and treasury management service providers, as well as the in-house capabilities of financial institutions. Remaining cost-competitive requires high transaction volumes, and offering a broad range of services is essential to remaining relevant to customers. Although we are a leading check printer in the U.S., we face significant competition in the check printing portion of the payments industry from another large printer in our traditional financial institution sales channel, direct mail and internet-based sellers of personal and business checks, check printing software vendors, and certain major retailers. Pricing remains competitive in our financial institution sales channel, as these institutions strive to maintain profitability levels despite the decline in check usage.
Previous wording
Within our Data Solutions segment, our data-driven marketing services face competition from a wide variety of companies in the data solutions space, including advertising agencies, marketing technology firms, data aggregators and brokers, and source data providers. Adapting to new technology is a key challenge in this business, along with hiring and retaining the right people.
Current wording
In our Data Solutions segment, our data-driven marketing services compete with a wide array of companies in the data solutions space, including advertising agencies, marketing technology firms, marketing fulfillment providers, data aggregators and brokers, and source data providers. Adapting to new technology is a significant challenge in this business, along with hiring and retaining the right talent.
Previous wording
Within our Promotional Solutions segment, the markets for business forms and promotional products are intensely competitive and highly fragmented. Current and potential competitors include traditional storefront printing companies, office superstores, wholesale printers, online printing companies, small business product resellers, and providers of custom apparel and gifts. The competitive landscape for online suppliers continues to be challenging as new businesses enter the space.
Current wording
The markets for business forms and promotional products are highly competitive and fragmented. Our current and potential competitors include traditional storefront printing companies, office superstores, wholesale printers, online printing companies, small business product resellers, and providers of custom apparel and gifts. The competitive landscape for online suppliers remains challenging as new businesses continue to enter the market.
Previous wording
We can provide no assurance that we will be able to compete effectively against current and future competitors. Our competitors may develop better products or technologies and may be able to adapt more quickly to new or emerging technologies and changes in customer requirements. Continued competition could result in price reductions, reduced profit margins and/or loss of customers, all of which would have an adverse effect on our results of operations and cash flows.
Current wording
We cannot guarantee that we will be able to compete effectively against current and future competitors. Our competitors may develop superior products or technologies and may be able to adapt more quickly to new or emerging technologies and changes in customer requirements. Ongoing competition could lead to price reductions, reduced profit margins, and/or loss of customers, all of which would adversely affect our results of operations and cash flows.
Previous wording
If we do not adapt to changes in technology in a timely and cost-effective manner, we could lose clients or have trouble attracting new clients, and our ability to grow may be limited.
Current wording
If we do not adapt to changes in technology in a timely and cost-effective manner, we could lose clients or face difficulties in attracting new ones, thereby limiting our growth potential.
Previous wording
Rapid, significant, and disruptive technological changes impact the markets for our products and services, including changes in payment and internet browser technologies and the use of artificial intelligence and machine learning, as well as developments in technologies supporting our regulatory and compliance obligations and in-store, digital, mobile and social commerce. The introduction of competing products and services using new technologies, the evolution of industry standards or the introduction of more attractive products or services, including continued increases in the digitization of payments, could make some of our products and services less desirable, or even obsolete. Our ability to enhance our current products and services and to develop and introduce innovative products and services will significantly affect our future success. The impact is magnified by the intense competition we face. To be successful, our technology-based products and services must keep pace with technological developments and evolving industry standards, address the ever-changing and increasingly sophisticated needs of our customers, and achieve market acceptance. Additionally, we must differentiate our service offerings from those of our competitors and from the in-house capabilities of our customers. We could lose current and potential customers if we are unable to develop products and services that meet changing demands in a timely manner. Additionally, we must continue to develop our skills, tools and capabilities to capitalize on existing and emerging technologies, and this requires significant investment, takes considerable time and ultimately, may not be successful. Any of the foregoing risks could result in harm to our business, results of operations and growth prospects.
Current wording
The impact of technological changes is magnified by the intense competition we face. To succeed, our technology-based products and services must keep pace with technological advancements and evolving industry standards, address the ever-changing and increasingly sophisticated needs of our customers, and achieve market acceptance. Additionally, we must differentiate our product and service offerings from those of our competitors and from the in-house capabilities of our clients. Failure to develop products and services that adapt to changing demands in a timely manner may lead to the loss of existing customers and hinder our ability to attract new ones. Moreover, we must continue to develop our skills, tools, and capabilities to capitalize on existing and emerging technologies. This requires significant investment, takes considerable time, and ultimately, may not be successful. Any of these risks could harm our business, results of operations, and growth prospects.
Previous wording
The use of checks and business forms is declining and we may be unable to offset the decline with profitable revenue growth.
Current wording
The use of checks and business forms is declining, and we may be unable to offset this decline with profitable revenue growth.
Previous wording
Checks continue to be a significant portion of our business, accounting for 32.9% of our consolidated revenue in 2023, and providing a significant amount of the cash flows we invest in our growth businesses. We sell checks for personal and business use and believe that there will continue to be demand for personal and business checks for the foreseeable future, although the total number of checks written in the U.S. has been in decline since the 1990s. We expect that the number of checks written will continue to decline due to the digitization of payments, including debit cards, credit cards, direct deposit, wire transfers, and other payment solutions, such as PayPal®, Apple Pay®, Square®, Zelle®, and Venmo®, as well as cryptocurrencies. In addition, the RTP®system run by The Clearing House Payments Company, LLC is a real-time payments system that currently reaches approximately 65% of U.S. bank accounts, and the U.S. Federal Reserve's real-time payments system, FedNow®, went live in July 2023.
Current wording
Checks remain a significant portion of our business, accounting for 33.1% of our consolidated revenue in 2024, and they provide a significant amount of the cash flows we invest in our growth businesses. We sell checks for both personal and business use and believe that there will continue to be demand for these checks for the foreseeable future. However, the total number of checks written in the U.S. has been declining since the 1990s, and we expect this trend to continue due to the increasing digitization of payments. This includes debit cards, credit cards, direct deposits, wire transfers, and other payment methods utilized by brands such as PayPal®, Apple Pay®, Square®, Zelle®, and Venmo®, as well as cryptocurrencies. Further contributing to this shift is the RTP®network run by The Clearing House Payments Company, LLC and the U.S. Federal Reserve's real-time payments system, FedNow®.
Previous wording
The rate and the extent to which digital payments will replace checks, whether as a result of legislative developments, changing payment systems, personal preference or otherwise, cannot be predicted with certainty. Increased use of alternative payment methods, or our inability to successfully offset the secular decline in checks with new check supply clients or other sources of revenue, would have an adverse effect on our business, cash flows and results of operations.
Current wording
The rate and extent to which digital payments will replace checks, whether due to legislative developments, changing payment systems, personal preferences, or other factors, cannot be predicted with certainty. Increased use of alternative payment methods, or our inability to successfully offset the secular decline in checks with new check supply clients or other sources of revenue, would adversely affect our business, cash flows, and results of operations.
Previous wording
The use of business forms has also been declining. Continual technological improvements, including the lower price and higher performance capabilities of personal computers, printers and mobile devices, have provided small business customers with alternative means to execute and record business transactions. Additionally, electronic transaction systems, off-the-shelf business software applications, web-based solutions and mobile applications have been designed to replace preprinted business forms. Greater acceptance of electronic signatures also has contributed to the overall secular decline in printed products. It is difficult to predict the pace at which these alternative products and services will replace standardized business forms. If small business preferences change rapidly and we are unable to develop new products and services with comparable operating margins, our results of operations would be adversely affected.
Current wording
Similarly, the use of business forms has been declining. Continuous technological improvements, including the lower price and higher performance capabilities of personal computers, printers, and mobile devices, have provided small business customers with alternative means to execute and record business transactions. Additionally, electronic transaction systems, off-the-shelf business software applications, web-based solutions, and mobile applications have been designed to replace preprinted business forms. Greater acceptance of electronic signatures has also contributed to the overall secular decline in printed products. It is difficult to predict the pace at which these alternative products and services will replace standardized business forms. If small business preferences change rapidly and we are unable to develop new products and services with comparable operating margins, our results of operations would be adversely affected.
Previous wording
Our business depends on our strong and trusted brand, and any failure to maintain, protect and enhance our brand would hurt our business.
Current wording
Our business relies on our strong and trusted brand, and any failure to maintain, protect, and enhance our brand would negatively impact our business.
Previous wording
We have developed a strong and trusted brand that has contributed significantly to the success of our business. We believe that maintaining and promoting our brand in a cost-effective manner is critical to achieving widespread acceptance of our products and services, expanding our base of customers, and attracting and retaining top talent. We believe that the importance of brand recognition and trust is particularly essential for the success of our various service offerings because of the level of competition for these services. Customer awareness of our brand, as well as the perceived value of our brand, depends largely on the success of our marketing efforts, our ability to continue to provide useful, reliable, secure and innovative products and services, and our ability to maintain trust and be a technology leader. If we fail to successfully promote and maintain our brand or if we incur excessive expenses in this effort, our business could be materially and adversely affected. There is also the risk that adverse publicity, whether or not justified, could adversely affect our business. If our business partners or key employees are the subject of adverse news reports or negative publicity, our reputation may be tarnished and our results of operations could be adversely affected.
Current wording
We have cultivated a strong and trusted brand that has contributed significantly to our business success. Maintaining and promoting our brand in a cost-effective manner is crucial for achieving widespread acceptance of our products and services, expanding our customer base, and attracting and retaining top talent. Brand recognition and trust are particularly important for the success of our various service offerings due to the high level of competition in these markets. Customer awareness and the perceived value of our brand largely depend on the success of our marketing efforts, our ability to consistently provide useful, reliable, secure, and innovative products and services, and our ability to maintain trust and be seen as a technology leader. If we fail to successfully promote and maintain our brand or if we incur excessive expenses in this effort, our business could be materially and adversely affected. Additionally, adverse publicity, whether justified or not, could harm our business. If our business partners or key employees are the subject of negative news reports or publicity, our reputation may suffer, and our results of operations could be adversely affected.
Previous wording
A component of our brand promotion strategy is building on our relationship of trust with our customers, which we believe can be achieved by providing a high-quality customer experience. We have invested, and will continue to invest, in website development, design and technology, and customer service and production operations. Our ability to provide a high-quality customer experience is also dependent on external factors, including the reliability and performance of our suppliers, telecommunications providers and third-party carriers. Our brand value also depends on our ability to protect and use our customers' data in a manner that meets expectations. The failure of our brand promotion activities to meet our expectations or the failure to provide a high-quality customer experience for any reason could adversely affect our ability to attract new customers and maintain customer relationships, which would adversely harm our business and results of operations.
Current wording
A key component of our brand promotion strategy is building on our relationship of trust with our customers, which we believe can be achieved by providing a high-quality customer experience. We have invested, and will continue to invest, in website development, design and technology, and customer service and production operations. Our ability to provide a high-quality customer experience also depends on external factors, including the reliability and performance of our suppliers, telecommunications providers, and third-party carriers. Our brand value also hinges on our ability to protect and use our customers' data in a manner that meets their expectations. If our brand promotion activities do not achieve the desired outcome or if we fail to provide a high-quality customer experience for any reason, our ability to attract new customers and maintain customer relationships could be adversely affected, which would harm our business and results of operations.
Previous wording
Intense competition and secular declines in the use of checks and business forms compels us to continually improve our operating efficiency in order to maintain or improve profitability. Cost reduction initiatives have required, and will continue to require, up-front expenditures related to various actions, such as redesigning and streamlining processes, standardizing technology applications, further enhancing our strategic supplier sourcing arrangements, improving real estate utilization and funding employee severance benefits. We can provide no assurance that we will achieve future cost reductions or that we will do so without incurring unexpected or greater than anticipated expenditures. Moreover, we may find that we are unable to achieve business simplification and/or cost reduction goals without disrupting our business, negatively impacting efforts to grow our business or reducing the effectiveness of our sustainability practices. As a result, we may choose to delay or forgo certain cost reductions as business conditions require. Failure to continue to improve our operating efficiency and to generate adequate savings to fund necessary investments could adversely affect our business if we are unable to remain competitive.
Current wording
Given the intense competition faced by all our businesses and the ongoing secular decline in the use of checks and business forms, we are compelled to continually improve our operating efficiency to maintain and improve our profitability. Our cost reduction initiatives have required, and will continue to require, up-front expenditures related to various actions, including redesigning and streamlining processes, standardizing technology applications, further enhancing our strategic supplier sourcing arrangements, improving real estate utilization, and funding employee severance benefits. However, we cannot guarantee that we will achieve future cost reductions or that we will do so without incurring unexpected or greater-than-anticipated expenditures.
Previous wording
We have completed many acquisitions, including the acquisition of First American Payment Systems, L.P. in June 2021, which was the largest acquisition in our history. In addition, we have, at times, purchased the operations of small business distributors with the intention of growing revenue in our dealer channels. We have devoted significant management attention and resources to integrating the business practices and operations of our acquisitions.
Current wording
We have completed numerous acquisitions, including the acquisition of First American Payment Systems, L.P. in June 2021, which was the largest acquisition in our history. Additionally, we have occasionally purchased the operations of small business distributors with the intention of growing revenue in our dealer channels. Integrating these acquisitions has required significant management attention and resources.
Previous wording
The integration of any acquisition involves numerous risks, including, among others:
Current wording
The integration of any acquisition involves numerous risks, including, but not limited to the following: failure to achieve anticipated synergies and cost savings, complexities associated with the integration process, potential distractions for management, loss of customers and partners, unforeseen expenses, unidentified issues, and the potential departure of key employees. Any one or a combination of these factors could hinder our ability to successfully operate, integrate, or leverage an acquisition, which could, in turn, have a material and adverse effect on our business operations and financial performance.
Previous wording
We may supplement sales-driven revenue growth with strategically targeted acquisitions over time. The time and expense associated with finding suitable businesses, technologies or services to acquire can be disruptive to our ongoing business and may divert management’s attention. We cannot predict whether suitable acquisition candidates can be identified or acquired on acceptable terms or whether any acquired products, technologies or businesses will contribute to our revenue or earnings to any material extent. We may need to seek additional financing for larger acquisitions, which would increase our debt obligations, and such financing may not be available on terms that are favorable to us. Additionally, acquisitions may result in additional contingent liabilities, additional amortization expense, and/or future non-cash asset impairment charges related to acquired intangible assets and goodwill, and thus, could adversely affect our business, results of operations and financial condition.
Current wording
We may supplement sales-driven revenue growth with strategically targeted acquisitions over time. The time and expense associated with finding suitable businesses, technologies, or services to acquire can be disruptive to our ongoing business and may divert management’s attention. We cannot predict whether suitable acquisition candidates can be identified or acquired on acceptable terms or whether any acquired products, technologies, or businesses will contribute to our revenue or earnings to any material extent. We may need to seek additional financing for larger acquisitions, which would increase our debt obligations, and such financing may not be available on favorable terms. Additionally, acquisitions may result in additional contingent liabilities, increased amortization expense, and/or future non-cash asset impairment charges related to acquired intangible assets and goodwill, which could adversely affect our business, results of operations, and financial condition.
Previous wording
From time to time, we may divest businesses that do not meet our strategic objectives. For instance, we recently completed the exit from our web hosting business, and we are in the process of exiting our payroll and human resources services business. We may not be able to complete desired divestitures on favorable terms. Losses on the sales of, or lost earnings from, those businesses could negatively affect our profitability and margins. Additionally, we may incur asset impairment charges related to potential divestitures that reduce our profitability.
Current wording
From time to time, we may divest businesses that do not meet our strategic objectives. For instance, in 2023, we completed the exit from our web hosting business, and in 2024, we substantially completed the exit from our payroll and human resources services business. However, we may not always be able to complete desired divestitures on favorable terms. Losses on the sales of, or lost earnings from, these businesses could negatively affect our profitability and margins. Additionally, we may incur asset impairment charges related to potential divestitures, which could further reduce our profitability.
Previous wording
•performance shortfalls due to the diversion of management's attention from other business concerns;
Current wording
Our divestiture activities may also present operational risks, including: the diversion of management's attention from our other businesses; difficulties separating personnel and systems; the need to provide transition services to buyers; adverse effects on existing business relationships with suppliers and customers; indemnities and potential disputes with the buyers; a decline in employee morale; and regulatory and compliance issues. Any of these factors could adversely affect our business, results of operations, and financial condition. It is crucial to carefully manage divestiture activities to minimize disruptions and ensure that the remaining businesses continue to operate effectively. Additionally, we must strategically evaluate potential divestitures to ensure they align with our long-term objectives and do not unduly harm our financial performance or market position. While divestitures can be a strategic tool to streamline operations and focus on core business areas, they come with inherent risks and challenges. Effective planning, execution, and management of divestiture activities are essential to mitigate these risks and ensure the continued success and stability of our business.
Previous wording
Security breaches, computer malware or other cyberattacks involving the confidential information of our customers, employees or business partners could substantially damage our reputation, subject us to litigation and enforcement actions, and substantially harm our business and results of operations.
Current wording
Security breaches, computer malware, or other cyberattacks involving the confidential information we maintain could significantly damage our reputation, expose us to litigation and enforcement actions, and substantially harm our business and results of operations.
Previous wording
Information security risks have increased in recent years, in part because of the proliferation of new technologies and an increase in remote work arrangements, as well as the increased sophistication and activities of hackers, terrorists and activists. We use internet-based channels that collect customers’ financial account and payment information, as well as other sensitive information, including proprietary business information and personally identifiable information of our customers, employees, contractors, suppliers and business partners. Each year, we process hundreds of millions of records containing data related to individuals and businesses. We also provide services that are instrumental in supporting our customers and their businesses, such as merchant services and remittance processing. Cybersecurity is one of the top risks identified by our Enterprise Risk Management Committee, as technology-based organizations such as ours are vulnerable to targeted attacks aimed at exploiting network and system weaknesses.
Current wording
In recent years, information security risks have escalated due to several factors, including the proliferation of new technologies, particularly emerging artificial intelligence systems, an increase in remote work arrangements, and the growing sophistication and activities of hackers, terrorists, and activists. We utilize internet-based channels that collect, manage, transmit, and process a wide array of sensitive information. This includes customers' financial account and payment details, proprietary business information, and personally identifiable information of consumers, employees, contractors, suppliers, and other business partners. Additionally, we provide essential services such as merchant services and remittance processing, which are integral to supporting our customers and their business operations. Cybersecurity is a top risk identified by our Enterprise Risk Management (ERM) Committee, as technology-based organizations like ours are particularly vulnerable to targeted attacks aimed at exploiting network and system weaknesses. Further information regarding our ERM Committee can be found in Part I, Item 1C of this report.
Previous wording
The secure and uninterrupted operation of our networks and systems, as well as the processing, maintenance and confidentiality of the sensitive information that resides on our systems, is critical to our business operations and strategy. We have a risk-based information/cybersecurity program dedicated to protecting our data and solutions. We employ a defense-in-depth strategy, utilizing the concept of security layers and the CIA (confidential, integrity and availability) triad model. Computer systems and networks are, by nature, vulnerable to unauthorized access. An accidental or willful security breach could result in unauthorized access and/or use of customer information, including consumers' personally identifiable information or, in some cases, the protected health information of certain individuals. Our security measures could be breached by third-party action, computer viruses, accidents, employee or contractor error, or malfeasance by rogue employees. Individuals or third parties may be able to circumvent controls and/or exploit vulnerabilities that may exist, resulting in the disclosure or misuse of sensitive business and personal customer or employee information and data.
Current wording
The secure and uninterrupted operation of our networks and systems, as well as the processing, maintenance, and confidentiality of the sensitive information they contain, is critical to our business operations and strategy. We have implemented a risk-based information/cybersecurity program dedicated to protecting our data and solutions. Our defense-in-depth strategy employs multiple security layers and adheres to the CIA (confidential, integrity, and availability) triad model. Despite these measures, computer systems and networks are inherently vulnerable to unauthorized access. A security breach, whether accidental or intentional, could result in unauthorized access and/or misuse of our information, including personally identifiable information or, in some cases, protected health information. Our security measures could be compromised by third-party actions, computer viruses, accidents, employee or contractor error, or malicious actions by rogue employees. Individuals or third parties may circumvent controls and exploit vulnerabilities, leading to the disclosure or misuse of sensitive business and personal information.
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Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
The markets for our products and services are subject to rapid, significant, and disruptive technological changes. These include advancements in payment and internet browser technologies, the use of artificial intelligence and machine learning, and developments in technologies supporting our regulatory and compliance obligations, as well as in-store, digital, mobile, and social commerce. The introduction of competing products and services using new technologies, the evolution of industry standards, or the emergence of more attractive products or services, including the continued digitization of payments, could render some of our products and services less desirable or even obsolete. Our future success depends on our ability to enhance our current products and services and to develop and introduce innovative offerings.
Current report — wording carried from elsewhere
Moreover, we could face time-consuming and costly litigation, government inquiries, and enforcement actions. If we are unsuccessful in defending a claim regarding information security breaches, we may be forced to pay damages, penalties, and fines, and our insurance coverage may not fully compensate us for any losses incurred. Contractual provisions with third parties, including cloud service providers, may limit our ability to recover losses resulting from a security breach by a business partner. Additionally, some of our data, including consumer credit profiles, is highly regulated, which adds another layer of complexity and potential liability in the event of a data breach.
Current report — wording carried from elsewhere
These claims, regardless of their merit, could divert management's attention and result in costly and time-consuming litigation. We establish accruals for identified claims or lawsuits based on our best estimate of the probable liability. However, due to the inherent uncertainties of litigation and other dispute resolution processes, we cannot accurately predict the ultimate outcomes. An unfavorable resolution of a material claim or litigation could necessitate the payment of monetary damages, fines, or attorneys' fees, or force us to make costly and undesirable changes to our products, features, or business practices. Such outcomes would adversely affect our business, financial condition, and results of operations.
Current report — wording carried from elsewhere
In the past, we have encountered situations where it was necessary to write down the value of certain assets. It is possible that similar circumstances may arise in the future, requiring us to reassess and potentially reduce the recorded value of our assets once again. These write-downs have been, and could continue to be, material to our results of operations. If we are required to record additional asset impairment charges for any reason, our consolidated results of operations would be adversely affected.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
•failure to address legacy distributor account protection rights; and
Previous report — wording carried elsewhere
One or more of these factors could impact our ability to successfully operate, integrate or leverage an acquisition and could materially and adversely affect our business and financial results.
Previous report — wording carried elsewhere
Our divestiture activities may also present operational risks, including the diversion of management's attention from our other businesses, difficulties separating personnel and systems, the need to provide transition services to buyers, adverse effects on existing business relationships with suppliers and customers, and indemnities and potential disputes with the buyers. Any of these factors could adversely affect our business, results of operations and financial condition.