Deluxe Corp. announced its financial results for the second quarter ended June 30, 2014. Both revenue and adjusted diluted EPS exceeded the high end of the range in the prior outlook. The earnings results were driven by strong revenue performance in all segments, each of which met or exceeded revenue expectations, and better than expected cost reductions partially offset by a slightly higher effective tax rate.
“Deluxe delivered another very strong quarter beating our revenue and earnings outlook,” said Lee Schram, CEO of Deluxe. “Our focus on Marketing Solutions and Services continues to deliver strong results and revenue increased 20% over last year’s level, now accounting for 23% of total revenue in the quarter. In April, we announced a 20% dividend increase and have repurchased $52 million of stock year-to-date. As we look ahead, we are well positioned to deliver a fifth consecutive year of revenue growth in 2014.”
Revenue increased 6.3% year-over-year, with the strongest performance in the Small Business Services segment, which grew 8.7%, followed by Financial Services, which grew 6.5%. Revenue from marketing solutions and other services increased 19.7% year-over-year and accounted for 23.1% of total revenue in the quarter.
Gross margin was 64.0% of revenue, down from 65.0% in the second quarter of 2013. The decline was primarily driven by a higher services revenue mix and higher delivery and material costs.