Deluxe Corporation (DLX) Earnings Call Transcript & Summary

All right. Welcome, everybody. Welcome to our Analyst Day. So good morning. I'm Ed Merritt. I'm the Vice President of Corporate Finance and Treasurer for Deluxe Corporation. I run Investor Relations for us as well. I've been with the company a little over 6 years. Prior to joining Deluxe, I was at the J. C. Penney Company, spent time at Amoco Oil, spent some time at Digital River technology company. So quite a few different roles and responsibilities over my time, Human Resources, Finance, Operations, many other areas. I've had a chance to meet many of you. Many, many of you I know. For those of you I don't know, I look forward to meeting with you afterwards. Look me up, look the team up. We love to share more on the story when we're done with this event. As we get started today -- let me start and just -- losing my voice here. As we get started today, we intend that certain statements made are forward-looking statements and are covered by the Private Securities Litigation Reform Act of 1995. Today, we're going to make references to certain non-GAAP financial statements and measures, which are reconciled with the comparable financial measures as part of the presentation. Also, you're going to hear a lot about resegmentation, which was effective on January 1, 2020. Now it's important to note that these financials presented, they're presented in the new segment structure. They're unaudited. So once we finalize our segmentation process, we intend to provide fiscal years 2018 and 2019 in the new segment structure. These are going to be filed with Form 8-K with the SEC after our next earnings release. Now the process is not finalized yet. So it's possible that the reallocation of goodwill and between business units could result in an impairment unrelated to the changes in the operations. Now just a quick couple of comments on the venue today. As you walked into the room, you noticed that there was breakfast out there. We're going to have lunch out in the same area at the end of the day. We also have some time after the event set up to experience the product overviews. They're going to be outside. We've got some experts. Please take time. Please take time to talk to some of those experts and hear what we've got going on. We've got restrooms located out -- kind of down to the right. And we've got log-in information for the Wi-Fi on all of your tables. We've got copies of the investor presentations. They're going to be available on our website today at the end of the day. We've also filed these with the SEC. So you can log on to the SEC website today and find those. Lastly, we're going to have a Q&A session at the very end of the day. So please hold your questions until that point in time. Lastly, please silence your cellphones and enjoy the event. Thanks, guys. [Presentation]

Well, good morning, everyone, and thank you for joining us at our first Analyst Day in nearly a decade. I'm Barry McCarthy. I'm the President and CEO of Deluxe, and I'm pleased to be with you today to introduce you to the new Deluxe, a trusted business technology company. But before I get into this exciting transformation, I wanted to tell you about how I got to join Deluxe. The recruiter called me and said, "Deluxe." And honestly, I laughed. I said -- just think about this, imagine the conversation. The check printer? I've spent 14 years of my life trying to get rid of checks. Spent those at that time at First Data and electronic payments trying to get rid of checks. And honestly, I was pretty good at it. And at First Data, I was the only senior executive to survive and thrive from pre-IPO through the -- from the pre-LBO to the IPO and beyond. I worked for 7 different CEOs, and I ran most of the company's businesses around the world over that time. The recruiters said, "Just go do a little homework over this weekend." And so of course, I did. What I found was an incredible set of assets that needed to be better organized and reinvigorated for growth. And that got me really excited. You see that's what I'm very best at and what I've done throughout my career in every role I've had. I felt so strongly about it, I felt compelled to jump in and take this role. And over the past 7 years, Deluxe grew exclusively through acquisitions. We're doing a good job covering secular declines. But it was expensive, the company was spending about $200 million a year of your capital on these acquisitions. And the company completed over 50 of them in the last 7 years. Some are more successful than others, but none were ever fully integrated into the company. The company was operating as a company of companies in a series of silos not getting any leverage on its scale. Going forward, we'll operate as a company of products as one company, as one Deluxe. So instead of it being entirely dependent on acquisitions for our growth, we will be sales-driven, selling what we have to our millions of existing customers while also acquiring new customers. Now of course, we will supplement our sales-driven growth with acquisitions, but we'll no longer rely exclusively upon acquisitions to deliver growth. Before I tell you more, I do want to introduce our executive leadership team, which we call our ELT. Our team is a great combination of new leaders as well as tenured Deluxe leaders with newly expanded roles and responsibilities. Each has the grit and gravitas to lead our historic transformation. You will hear their excitement, passion and commitment to be part of this transformation. So ELT, please stand so our investors and guests can see the team. So throughout the morning, you'll hear what's new. You'll hear what's different and how it all comes together to form the new Deluxe. Our GMs will describe their plans to deliver sales-driven growth. And Chris Thomas, our new Chief Revenue Officer, will discuss what he's doing to scale our sales and go-to-market efforts. We'll provide you with insight on our technology and infrastructure and operations. Keith Bush, our Chief Financial Officer, will show you the new -- how the new Deluxe will deliver stronger financial performance and deliver what we believe will be exceptional shareholder returns. Now you haven't heard us talk about this before, but it's important. Our customers build their business upon our platforms, all of which are purpose-built to help our customers operate and grow. Today, Deluxe is so much more than a legacy check printer. We're a fintech company that operates at unparalleled scale. Approximately 4.5 million small businesses, 4,000 financial institutions and hundreds of the world's biggest brands build their business on our platforms and our technology. We add about 400,000 new small businesses every year, and we ship 150,000 packages every day. Our technology and operations support $2.8 trillion in payments volume annually. Yes, I did say trillions with a T. For perspective, that's about 13% of the U.S. economy. Even the Federal Reserve relies on Deluxe technology to manage item processing disputes. This is the new Deluxe. Now I bet some of those statistics surprised you. I think you'll also be surprised and pleased as you discover even more about how our services help customers succeed. A comment I hear often from our customers and partners is, "Wow! I didn't know Deluxe did all that. And what can Deluxe do to help my business succeed?" Founded by W.R. Hotchkiss more than a century ago, Deluxe created the modern payments ecosystem. We're proud of our heritage as an innovator and as the original payment company. Through a series of acquisitions over time, our platform of offerings has deepened into payments and far beyond payments, but all with the same purpose of helping businesses succeed. At the new Deluxe, a business can engage with us at any point in its life cycle. For a business at its inception, we can help it incorporate and get necessary licenses to start selling. Then we'll design a new logo and website. And then we'll host that website. We help businesses with payroll, promotional products and data-driven marketing solutions. And soon, we intend to help small businesses accept credit and debit cards. In short, we help our customers succeed at every stage of their life cycle. The new Deluxe is fundamentally different from the past. The old Deluxe operated in 3 business segments based on customer type, small business, financial services and direct-to-consumer checks. Now we have 4 segments: Payments, Cloud Solutions, Promotional Products (sic) [ Promotional Solutions ] and Checks, operated together as one company, as One Deluxe. All of that underpinned with sales-driven revenue growth as our primary go-to-market strategy. You'll be pleased to learn that each of our segments is a multi-hundred million-dollar business with attractive margins, with payments and cloud solutions well positioned in high-growth markets. We believe this new segmentation will make the company more efficient, easier to understand and much more transparent. It should also make it easier for investors to understand the tremendous value within our company and quantify the opportunities we see for growth. Now to accelerate our growth, we have fundamentally changed our go-to-market approach. Instead of being a company of companies, each with its own sales team, we're now a company of products bringing the best of Deluxe to every customer every day. Four easy-to-understand segments operating under one go-to-market approach requires change throughout our organization. But our team has done this before. I've led fundamental transformations at First Data, at VeriSign, at Wells Fargo and even P&G, and I even started a micropayments company in the Silicon Valley. And we have the right leadership team. As you hear from each of our new leaders and the folks that have been with us for some time, it will be clear that we have deliberately over-hired, not for the job they're in today, but to run the company we will be tomorrow. Our One Deluxe approach unlocks the opportunities that were buried deep within the silos of the old Deluxe, selling what we have to our existing customers while acquiring new customers all along the way. In April of last year, when I was brand new, I told you we would deliver sales-driven revenue growth without new acquisitions. And we told you at our most recent earnings call that we expected revenue in 2020 to have growth without acquisitions, without having to make acquisitions in 2019 or 2020. And I'm very proud to tell you, we have a clear path to deliver this growth in 2020. We've already sold 3 of the 10 largest deals of the last decade in Q4, just a few months after organizing ourselves better and hiring our first CRO perhaps ever. So for the first time in nearly a decade, we will offset our top line declines with sales-driven growth. As I said earlier, the company might have paid $200 million per year for acquisitions that delivered similar revenue growth. We believe the return on invested capital under our new sales-driven growth strategy is much higher and less costly, much better for you, our investors. I got to say, this is an impressive turnaround, given we're a new leadership team with a new strategy announced just 10 months ago. But we won't be satisfied just growing our top line, the new Deluxe is about profitable sales-driven growth. When we announced our strategy last year, we said we would deliver revenue growth while maintaining our adjusted EBITDA margins in the low to mid-20s. We told you on our earnings call that adjusted EBITDA margins in the first quarter would be below our long-term target as a result of some lost business and web services that led to the Q3 impairment that we discussed; the impact of new accounting rules on SaaS subscriptions; and more importantly and honestly exciting, the ramp of these exciting new sales wins that we've had. And we told you to expect -- we would expect it to deliver adjusted EBITDA margins and our longer-term target range beginning in the second quarter of this year. Again, in the second quarter and going forward, we expect normal adjusted EBITDA margins in the low to mid-20s. Now remember the silos I mentioned earlier? By using technology and changing our operating structure, we'll eliminate silos, standardize processes and deliver structural efficiencies. This will create the opportunity for adjusted EBITDA margin expansion and allow for further investment and growth. We told you we paused acquisitions to upgrade our infrastructure and integrate what we already own to become a sales-driven company. Now in the future, you should expect to see us make targeted acquisitions, particularly in the payments and cloud spaces to supplement our sales-driven growth model. One of the things that I think makes Deluxe such a special opportunity is our extraordinarily large customer base and low cost of new customer acquisition. Unlike some of our competitors who spend tens of millions of dollars on sponsorships or Super Bowl ads just to make their phones ring, we simply have to convert the millions of customers already contacting us every year to reorder a product. We're building our capability to convert these millions of annual contacts into new cross-selling opportunities. Chris will tell you more about our incredible early successes here. This is important. Our check customer becomes a lead for cloud. Promo generates leads for payments, payments for cloud, cloud and check for promo and so on and so on and so on. You see, our businesses complement each other, making the sum of the company far more valuable than its parts. Now moving on. Amanda Parrilli, our Chief Strategy Officer, and her team have established robust reviews of the assets we own and the products and services we offer to ensure we maximize performance. These are new processes that didn't exist in our company a year ago. As a result of this process, we recently determined our loyalty business, Deluxe Rewards, no longer fit our business model, and we intend to sell that business. Why is that important? I want you to know that you can count on us to be good stewards of your capital. Now I got to tell you, I'm very proud of our transformation. And I'm proud because we're not talking about delivering transformation, we are delivering it. So for example, our new go-to-market strategy and sales team have won 3 of the top 10 largest contracts in a decade. We signed new partnership agreements like cloud, including Salesforce, Vodafone India and Ingram Micro. We won major business processing outsourcing (sic) [ business process outsourcing ] contracts in the treasury management space. Our company has been in Canada for 47 years, but we never decided to chase banks. But by leveraging our assets, we were able to win CIBC from an entrenched competitor for our check business. And that's just the beginning. We made every North American employee a shareholder in Deluxe, and all new employees who become shareholders when they join. We executed our first phase of our transformation, in October 2019, reducing management layers from 7 to 4. Workday, our new HR system, went live January 1, on time and on budget. We also launched our new collaboration tool, Microsoft Teams, also on time and on budget. I'm very proud of the progress we've made in our transformation journey, all while delivering record revenue in 2019. In April last year, we outlined our plans to deliver $2.3 billion of revenue with low to mid-20s adjusted EBITDA margins in 2023. I am reaffirming those targets again today. We're more excited about our opportunities ahead of us now than any time since I joined Deluxe 15 short months ago. Our future truly has never been brighter. Now I'd like to introduce Chris Thomas, our Chief Revenue Officer, and give him an opportunity to tell you how his organization is already achieving sales-driven growth for Deluxe.

Thanks, Barry.

All right.

Good job. Good morning, everybody, and thank you for coming. We really appreciate it. We think we've got a few great hours with you this morning. And what I'd like to do is I'd like to tell you a little bit about why I joined Deluxe. And for me, it was really pretty simple. It was really about the untapped potential. And I'm going to tell you a little bit more about that untapped potential, but I want to tell you a little bit more about myself first. So real quick on me. I started my career at EDS, a Fortune 100 tech company that was later acquired by HP. And there, I created and built the company's first big deal and strategic sales capability. It truly changed the growth at EDS and became an industry standard. I went from EDS to Dell. And at Dell, I built a similar big deal capability, and I transformed that sales organization from a product sales organization to a services-led sales organization. And we had record sales our very first year as the Chief Sales Officer. So from Dell, I had the opportunity to go to Pegasus. At Pegasus, we had a declining business that we had to turn around into a growth business. We did exactly that. And by the second year, I was the CEO. From Pegasus, HP asked me to come back. The sales engine had started to not go the way we wanted it to. It started to decline. So I came back and -- by our last quarter at HP, before we merged with CSC to form DXC, we had HP services back in growth mode. I stayed at DXC for a year after the merger, and then I was fortunate enough to get the call to come to Deluxe. And so that brings me back to how I kick this off in terms of why did I join Deluxe, didn't have to join Deluxe. But it was really about that untapped potential, when I learned about the assets, when I learned about the client base, when I learned about the company's proud history, and I had the opportunity to meet with Barry and hear his vision for how we would unleash that untapped potential and that One Deluxe story, I got excited. Then I met with the executive leadership team and I saw how talented and committed they were to the business, I knew this was the place I wanted to be. And so I joined Deluxe 7 months ago. And I can tell you, I am more confident about our ability to grow this business today than I was 7 months ago. Now I'd like to spend the rest of my time here with you this morning telling you about our new sales driven strategy and why we are positioned to grow organically in 2020. So let me go back to when I joined. I joined in Q3 of last year. When I arrived, it was a pretty fragmented organization. I think we had 10 CRMs, though some of the teams elected not to use any CRM. We had 150 comp plans. But unfortunately, not one of them actually had any targets or incentive to cross-sell the portfolio. We had no knowledge management capability. We had no product management capability, no pricing capability. When I brought the sales leaders together for the very first time, I found out and realized that some of them had never met each other before. So you can start to see how when you put this together, you can start to really realize some of that untapped potential. So beginning in Q4, we started to build truly that world-class sales and marketing organization that we knew we could build. We released our first enterprise instance of Salesforce. We launched our first sales excellence program on our inside sales team so that we could start cross-selling, and we created a top deal focused program. We wanted to make sure that we brought the best of Deluxe to our most important opportunities. I'm starting to see the results. With our new focus, we saw record highs in average order value and products per order in our inside sales team. We had a record month with ShopDeluxe, which is a critical e-commerce channel for us. And I'm proud to say, and you heard Barry say it also, we signed 3 of the largest top 10 deals ever in Deluxe's history in Q4. We didn't stop there, there's more to do. We come into Q1 with a little bit of momentum, and we feel great about Q1. In Q1, we completed our first-ever enterprise-wide sales kickoff and brought the team together so they could learn about Agile, they could learn about our new brand mission. We could train them in our strategies and products so that they could effectively cross-sell. We implemented our first real -- what I would call our -- I'm sorry, our first what I would call a new comp plan. We took our 150 comp plans, significantly simplified them, and we put in place the incentives and targets that we needed to make sure that we cross-sold, and then we increased our top deal focused program from 10 deals to 25 deals. And again, we started to see the results. So I'm proud to say that we've seen our pipeline increase by 15% quarter-to-date. We're going to sign another top 10 deal in Q1, and we just renewed a multiyear extension of our largest client within Deluxe. So we got a lot of momentum. And we feel great that our transformation is working. So also in Q1, we held our first Deluxe Exchange event. It's the first time that we brought across the company all of our clients together. It was a fantastic event. We had over 400 clients attend, 20% more than any other event that we had ever held in Deluxe. In fact, the event was sold out. Now those 400 clients that attended represent about $800 million of revenue for Deluxe. That's pretty cool. But what's more exciting is that we believe that those clients, those 400 clients, that $800 million of revenue, we believe that the potential addressable wallet share for Deluxe is 10x that. It was our first opportunity to really showcase the new Deluxe and the executive leadership team to these clients. The feedback from our clients was fantastic. The energy those couple of days was truly fantastic. The pipeline activity is awesome. And now we're committed to make 2021 an even bigger event. We're going to show you a little bit -- I'm going to go to the next slide here on our brand. This is our new brand, and we're proud of our history. We're proud of the trust that we have built with our clients over the last 105 years. Our brand promise is really clear, we are champions for business so communities thrive. Because we know that when we help big companies and small companies, they create jobs in those communities that are critical for their success. And at the end of today's session, we're going to show you a video that really shows you how our new brand comes to life. Now let me start jumping into some of the changes that we've made and our new sales-driven strategy as part of our sales transformation. And when you're creating a world-class sales and marketing organization, to me, the most important thing that you have to have is a strong sales culture. And for us, it's everyone sells. That is our rallying cry across Deluxe. That is the slogan that energizes everybody in our company, and it gets everybody to actively participate in selling. We've made it very clear to all of the Deluxers that we expect you to rally around the client and help us drive growth. With the new referral and incentive program that we have in place, we've seen hundreds of new opportunities come into the pipeline, millions of dollars of incremental revenue, but the most important thing is to see the increased active engagement in selling of 6,500 Deluxers. I mentioned in the beginning about portfolio management, we didn't have any. Now we've got a portfolio management capability that actively works with our general managers and product managers to ensure that the sales organization has the right functionality in our offerings, differentiated value props, blueprints, demos. It makes it much easier for the salespeople to sell. We've talked about Agile. We trained our salespeople when they came to our first sales kickoff in Agile. It's still important because today, clients want to move faster. And shockingly, 90% of sales organizations still work in a legacy waterfall approach with their clients. We're leapfrogging the competition to ensure that our salespeople can move with sprint speed. They're co-creating and iterating with their clients. They work together as squads, so that we can truly bring differentiated outcomes and solutions to our clients. Let's talk about knowledge management. I'm sorry, you just can't have a world-class sales capability without a powerful knowledge management capability. We didn't have one. We've invested in new tools. So now that we've got a selling enablement learning library, we call it SELL, and now all of our sales people know where to go to get the latest IP and content. Service excellence. I mean probably on this list is maybe the one I'm most excited about. For the first time ever, under Pete Godich, our Chief of Operations you're going to hear from later, we've launched the company's first enterprise-wide service excellence program to drive outstanding customer service. When you want to cross-sell and increase wallet share, it's critical that you have customers that like you because it's a simple fact, happy clients buy more. And then demand generation, another big opportunity for us. We have our sales and marketing teams completely integrated, working at digital speed, driving demand gen programs to give our salespeople new opportunities and warm leads. And then lastly, of course, talent, right? You can't have a world-class sales organization without top talent. I'm not going to tell you we're perfect with talent, we're not. I don't know if we ever will be in the sales organization. But I will tell you, we're much better today than we were before. I'm going to tell you, it's easier to hire. I will tell you, no one has said no to me yet. And that's because when they hear the story, they hear about the opportunity, they hear about the sales culture, they want to be part of everyone sells, they want to be part of One Deluxe. Okay. So there's 3 key takeaways from this slide. Number one, we have built a robust and powerful sales culture called Everyone Sells at Deluxe. Number two, we are making it immensely easier for our salespeople to sell and be effective. And number three, we're adding world-class talent that wants to be a part of Deluxe. Okay? All right. Now let's take this, let's translate what I've just talked about into our go-to-market priorities for 2020. We think there's 4 key areas of focus that are going to drive 2020 value for our clients and revenue for Deluxe. Number one is our demand generation capability. I just mentioned the organizational alignment earlier on the last slide. Now our demand gen teams are working as squads across all 4 segments to drive new opportunities that we believe will drive an incremental revenue in the amount of $10 million to $20 million in 2020. We've added an enterprise account capability. It's designed to bring in-depth industry expertise to our top accounts. We want these industry-oriented enterprise account execs to leverage the broad portfolio that we have to increase wallet share with our top clients. We believe our enterprise account program will drive $5 million of incremental revenue in 2020 and much more in 2021 and beyond. Then I'm pretty excited about this, our strategic alliance program. I've been in a lot of tech companies, as you saw earlier on my first slide, most tech companies have an alliance program because they simply work. As an example of the strategic alliance program that we're building out, one alliance partner that we've brought onboard is Salesforce. Our relationship with Salesforce highlights the type of partners that we're looking for in Deluxe. Let me just give you an example of the value. With Salesforce, we can drive incremental revenue because we sell to Salesforce, and we sell with Salesforce. And in addition to that, we can strengthen our portfolio. Salesforce has rich assets that we can leverage, bring into our portfolio to strengthen the value we can bring to our clients. And then third, we can enhance our brand. There's tremendous opportunities to release joint press announcements and tremendous marketing events that Salesforce puts on like Dreamforce that we can actively participate in. From our alliance program 2020 with Salesforce and other partners, we think we can drive another $5 million of incremental revenue in 2020 and much more in 2021 and beyond. And then the last one is our small business advisory program. I want to deal with a little bit of a double-click on this one. You saw this slide from Barry earlier, and you're going to see it a few more times this morning from my colleagues. This is a really powerful slide. Now when you look at it, keep in mind, we have 4.5 million small and medium-sized businesses. This slide shows the depth and breadth of our portfolio. It's a rich portfolio, which has services designed to help you start your business, brand your business, grow your business and optimize your business. Now historically, at Deluxe, in our fragmented model, if you were a sales professional and you sold one of these offerings to a client, you would sell the offering to the client and then move on to the next client because there was no cross-sell program or incentive or any reason to try to do that. And as a result, our 4.5 million small- and medium-sized businesses average 1.1 offering per client. We have a tremendous opportunity to increase the number of offerings per client in a very, very material way. Our small business advisory capability and our cross-sell programs are designed to do exactly that. In 2020, we believe that we'll drive incremental revenue of $5 million to $15 million from this program. It's part of the demand generation numbers I showed to you earlier and then much, much more in 2021 and beyond. All of this adds up to our high degree of confidence for 2020 and our ability to grow organically. I want to show you 2 slides to help make this a little bit more real, okay? Now when I arrived back in Q3 of last year, I sit down with Barry, with Keith. We talked about, "All right, Chris, what's the right incremental revenue for you to drive in 2020?" And this excludes renewals, it has to be incremental new revenue. And we said, "$100 million." And I thought it was a little ambitious at the time, but we said, "Okay. $100 million." And as you can see on this slide, the target, that gets us to $100 million by the end of Q4. Start off in Q3, we're a little bit behind. But in Q4, when we had a record-breaking Q4 in sales, when those new programs started to take place that I just walked you through, you can see that we've put ourselves in a great position to have success in 2020. By the end of Q1, we're at $77 million of incremental new revenue today. By the end of Q1, we will conservatively be at $80 million. And you can see that we're roughly 6 months ahead of schedule. We only need another $20 million of incremental revenue to hit that $100 million target. Now you're looking at that and going, "Okay. That's interesting, but I don't really know what the $100 million means to revenue." So how do you translate that into revenue? So let me translate it back into revenue for you. So when you look at this slide, you can see that last year's revenue was $2.009 billion. We have typical churn, like most businesses do, of around 5%. That 5% churn brings us down to $1.91 billion. You add in the $80 million that I just walked you through, and we're at $1.99 billion of revenue. You then add in the $10 million of the sales excellence program revenue that we're already executing that I described for you earlier, and we're sitting at $2 billion, which is the low end of our revenue range. Then you add in the $20 million from go-to-market activities in our factored pipeline, and you can see that we have clear line of sight to the $2.04 billion, of which is the high end of the revenue range. Keith Bush, our CFO, will go through this in much more detail for you, okay? All right. So let me close. So in summary, I think you can hear, I'm incredibly optimistic. We've just finished a great Q4 where we signed 3 of the largest top 10 deals ever in Deluxe's history. We're going to sign another one in Q1. Our pipeline is stronger than ever and up 15% quarter-to-date. Our cross-selling programs that I've described for you multiple times are performing extremely well. We've hired the right talent. We've built the right team. We now have the tools and process in place. I personally have been involved in turning companies into growth companies many times in my career. And I've got to tell you, I'm convinced that we've got the right team, the right strategy and the right capabilities to be successful right here right now at One Deluxe. And so with that, I would like to introduce my good friend, Mike Reed. Thanks, Mike.

Thanks, Chris. Thank you, Chris, and good morning. My name is Michael Reed, and I'm the General Manager of Payments. First, let's begin with a bit about my background, why I joined Deluxe and where we're headed. I've spent more than 20 years in payments at some of the world's largest payment companies. I grew innovation in those companies by leading business transformation and innovation. When I took the call from Barry and learned about Deluxe, I knew it was special. In my tenure here, I've discovered Deluxe has a very strong foundation in digital payments, receivables and small business cash management. By focusing our efforts to build upon this foundation, I know we can innovate and grow because I've done it before. Back in the early 2000s, quick-service restaurants like McDonald's were ready to accept payments, but were concerned about slowing down service. The right technology existed, but no one had configured it for their specific needs. I saw the opportunity, led the development and sold the technology. I see the same opportunity with Deluxe. We can turn connect-the-dot innovation into tremendous business success. At First Data, I was asked to take on its largest customer, Walmart. Much like Deluxe, First Data had grown through acquisition and had multiple businesses calling on Walmart. Long story short, I began reporting to the CEO, relocated to Bentonville and ran all sales through a single team. By delivering the one company vision, revenue increased fivefold. Deluxe is at the same crossroads today. I'm so supportive of what Chris is doing to centralize our sales efforts because I've seen it work. As the Chief Operating Officer at Bank of America Merchant Services, I took on sales and client management as the portfolio was in decline. I engineered a business turnaround, and the growth in that segment laid the foundation for global expansion, which took me to the U.K. From London, I built BofA Merrill Lynch Merchant Services Europe from the ground up. From there, my success caught the attention of Barclays, the U.K.'s largest payment provider. Their [ ask ] was huge, stabilize payment acceptance and transform them into a digital payments platform. I leveraged the company's assets, implemented an Agile delivery model and focused on 2 key areas: first, digital onboarding and servicing; and second, expansion of U.K. capabilities into Europe. Within the first year, I delivered across the board. So why Deluxe? And why now? Deluxe has an -- has incredible near-term potential. With relevant solutions, loyal customers and a motivated team, the sky's the limit. My plan to support our sales-driven growth strategy is straightforward, just as I've done before, leverage the company's assets, implement an Agile delivery model and become laser-focused on innovation that matters. Deluxe operated several independent businesses. At their core, many of these businesses help companies make and receive payments with a substantial fraud and security offering, with 70 of the top 100 banks and 65% of all lockbox transactions, we have a strong foundation with considerable market share. For context, as Barry mentioned earlier, we facilitate $2.8 trillion of payments through our treasury management business. That is equivalent to about 13% of U.S. GDP. We also have some pretty incredible products that we'll continue to evolve. An example of this is the receivables business. As we grow lockbox, it allows us a foot in the door to automate the order-to-cash process for all payment types. Even though roughly 70% of receivables have transitioned to digital payments, the numerous payment options create a new problem. Each payment method operates differently and teams must manually reconcile and handle the many exceptions. By extending the software we developed for lockbox, we can apply that technology to all payments and use machine learning to automate the reconciliation process. But more on that later. In the new Deluxe, we've aligned business that -- we've aligned the businesses that focus on payments. In 2019, these businesses delivered $270 million of revenue and will grow to over $300 million in 2020. Our aim is to nearly double over the next 3 years. While we have a comprehensive offering, I'll talk to you about 3 key areas, all of which have considerable market opportunity. First, in receivables as a service, we automate the order-to-cash process for enterprise customers. The market size for receivables is about $3 billion. Second, in cash flow management for small businesses, we help businesses pay and get paid. In this space, we have a robust payroll business that extends beyond payments, offering an end-to-end employee life cycle solution. The market size for payroll is about $68 billion. Third, with digital payments, we're taking e-check to the next level, creating a digital payments platform disguised as a check. Since most ERP systems were designed to operate with checks, we've developed a platform that looks like a check but transitions to digital payouts for the recipient. The value of the checks written by companies today in our targeted vertical exceeds $7 trillion. Now that's a big number. And we're not trying to solve every problem, but I think you'll agree at that scale, it doesn't take much to grow. Given payments is a broad category, I thought it would be helpful to set the stage through the lens of our customers. We are laser-focused on solving specific problems for 2 key customer types. First, we have analytics-based services to meet the receivables and payables needs for enterprise customers. Second, small businesses continue to be underserved in managing their cash flow needs. Our cash management solutions help these businesses pay and get paid in a secure environment. Now back to our key areas of focus: first, being receivables as a service. As I mentioned earlier, reconciliation of receivables is a real challenge for enterprise business. Decentralization has made a mess of accounts payable -- of accounts receivable processes, which has only been exacerbated with more payment options. Multiple payment methods require separate manual processes, both costly and error-prone. This represents a $115 billion opportunity, of which 77% or $88 billion of expense is tied up in the cost of labor alone. To solve this problem, we have developed sophisticated software that intelligently matches all payment options into a single dashboard. Then with automation and intelligent matching, the system learns how to apply payments for easy reconciliation. Today, we have several enterprise and bank clients using the software. Let's look at how it works. [Presentation]

Now on to our second priority, cash management for small business. We have several tools available to help small business pay and get paid. After a business has used Deluxe's services to incorporate and get the necessary licenses, they may ask themselves, how will I get paid. We will be adding credit and debit services this year to help them do just that. We have digital payments that help them pay their suppliers and a payroll business that extends beyond payments, offering end-to-end employee life-cycle solutions. As we pull these and other businesses together, our aim is to offer an intelligent suite of business applications that helps them pay and get paid. Our third priority, digital payments. I'm excited to talk with you today about the Deluxe payment exchange, our new payment technology, unlike any other in the market. In the past, our eCheck allowed businesses to make digital payments quickly, but the recipient had limited options in deciding how they would like to receive their funds. By leveraging the API-enabled architecture of our eCheck platform and establishing the Deluxe payment exchange, we are able to integrate and scale with industry-specific platforms that: one, require minimal changes to the center's accounts payable process or the need for them to collect and maintain sensitive banking information; two, switches the check to digital and routes the payment and remittance together, ensuring the recipient can reconcile the payment; three, will provide the recipient choice in the way they receive the payment, debit, credit, check, PayPal and so on. We are well on our way and have already begun pilots in digital payments, with health care, insurance and payroll customers. Let me talk a bit about our entry into health care payments. Through our partnership with echo health, we solve key obstacles of migrating paper checks to digital payments. We have seen increasing volumes through our platform, and we have forecasted our volumes will grow significantly in 2020. Imagine this, you're at the beach playing volleyball and twist an ankle. You visit the local urgent care, which is out-of-network for your insurance provider. After you are all patched up, you present your insurance card, pay your copay, and you're on your way. For the urgent care and the insurance company, the reconciliation of your visit is just beginning. Let's fast-forward. The insurance company is ready to pay the urgent care for the moneys owed to settle the claim. But remember, the urgent care is out of the insurance company's provider network, so they don't normally send them payments. What do they do? They mail a paper check. After all, it's the only way to make a onetime payment with the explanation of benefits information the urgent care needs to reconcile. By leveraging our new capabilities, it's as easy as sending an email. You may be asking yourself, how often does this happen? Well, 40% of health care claim payments are still made with a paper check today, mainly for out-of-network payments, which presents a lot of opportunity. Let's take a look at what some of our health care clients had to say. [Presentation]

Now turning to our second payment application, property and casualty insurance. There are over 2,600 property and casualty insurance companies in the U.S., with over 1 billion claim payments paid out each year. It's common for an insurer to issue paper checks for all the same reasons as in my earlier example, only in this case, the recipient is often a consumer with a sense of urgency for payment. Imagine you've been in a car accident and the insurance company determined the automobile is a total loss. You need a car now. Today, your insurance adjuster would mail you a check, which takes time. There must be a better way. After all, the insurance company wants to provide a better experience to their customer, and their customer simply wants their money now. This is the perfect use case for the Deluxe payment exchange, where our platform converts conventional payment methods into digital payment choice. We currently have strong interest from insurance companies, and our first client has already signed and is in the process of onboarding. By making the switch to digital payments as easy as possible for businesses, we believe that more will migrate to our digital payment platform especially when they see the cost and time savings. Let's take another look at the Deluxe payment exchange. [Presentation]

Let's briefly shift gears. While I've spent the last few minutes discussing digital payments, later, you'll hear from Tracey, who will talk with you about checks. For the foreseeable future, checks will play an important role in payments. By supporting checks, we maintain customer relationships and gain insights that will help us digitize processes over time. In short, leads and learnings from checks help digital payments. In closing, my plan to support our sales-driven growth strategy is straightforward: leverage the company's assets; implement an Agile delivery model; and become laser-focused on innovation that matters, innovation like receivables as a service, cash flow management for small business and digital payments, where we're taking eCheck to the next level, creating a digital payments platform disguised as a check. Thank you. And with that, I'll turn it over to Garry Capers.

Thanks, and great job, Mike. Good morning. I'm Garry Capers, and I'm the general manager for Cloud Solutions. My unit operates within fast-growing multibillion-dollar markets. And we have the huge potential that's right in front of us, there for the taking, that we're poised to win. The time is right, right now for One Deluxe. I spent the first half of my career as a consultant. I began at Bain & Company, where I spent 8 years developing growth and turnaround strategies for financial services and retail companies. During my tenure, I developed an affinity for companies with strong brands in need of transformation. This led me to my next opportunity with Equifax. There, I created a new business unit, integrating the company's data, analytics and technology capabilities to address new client needs. The second half of my career has been spent in a general management capacity, focused on growing and turning around new and struggling business units. I was selected by Equifax' CEO to lead its North American B2B marketing services business. Under my leadership, this business showed profitable growth within 18 months, a sharp reversal after prior years of decline. I then transitioned to ADP, where I was overseeing multiple service regions serving large enterprise clients. There, my team and I improved Net Promoter Score, retention and revenue growth. All of this puts me in the perfect position to lead Cloud Solutions for Deluxe as we continue our transformation. Barry and the ELT have been working for over a year to accelerate the One Deluxe transformation, bringing together and realizing the value of our collective capabilities. I'm excited to work arm and arm with Barry and my peers, to continue taking this wonderful company to even greater levels of success as One Deluxe. Within cloud, we need 4 elements to achieve our success, and we have them all: scale; products; customers; and data. But what's been missing is really effective execution. Up to and including 2019, we had failed to capitalize on our strengths. But 2020 is our time to fire on all cylinders. Within Cloud Solutions, we are using our existing capabilities to develop solutions that address a broader set of customer needs. We are integrating the many capabilities of past acquisitions. As you may know, before my time at Deluxe, we reported a goodwill impairment to those past acquisitions that is noncash in nature. But taking a new and different approach to our business, my team and I are confident that cloud represents a great growth story that is not reliant upon acquisitions to deliver strong financial results. I've done this many times before, turning around an organization and putting it on a sustainable sales-driven growth path. But I've never had the fortune of the attractive product portfolio and the embedded customer base available to me like we have here at Deluxe. Let me share with you what I've learned and really discovered over the past 5 months. Cloud means a lot of different things to different people. I describe our Cloud Solutions unit as a $300-plus million portfolio of hosted offerings, consisting of data, insights, technology applications and services. We help businesses succeed across their life cycle, starting with business formation, then branding, growing and then optimizing the business. But before I dive deeper into our offerings, I would like to share with you one underlying differentiator, which might not be obvious at first glance. At Deluxe, we possess the ability to collect first-party data and insights at each step of the business life cycle. So think about this, by utilizing our Cloud Solutions, we know when a company starts, the type of business it is, when it creates a website, the amount of website that traffic receives (sic) [ the amount of traffic that website receives ], whether the company markets itself, who it targets and whether the marketing campaign is effective in winning new customers. All of this is possible with just a subset of Cloud Solutions. Furthermore, as the power of One Deluxe is unleashed, proprietary data that we have in other Deluxe segments allow me to see payment activity, such as whether a business is ordering more checks more rapidly, if payroll's increasing, if more supplies are ordered and shipped and where they're shipped. Using these insights, our data scientists determine if a business is growing and what it needs to succeed. Keep this in the back of your mind as this will serve as a primary growth driver for Cloud Solutions as we move forward. We sell our cloud SaaS solutions to build small businesses and financial institutions. We enable small business formation, branding and marketing, often establishing lifelong customers. Our SaaS solutions are complementary to other Deluxe offerings. For example, business incorporation with an employer identification number or tax ID is required to start payroll services or establish a business bank account and order checks. For smaller financial institutions that are seeking data, analytics and tools to manage their operations, we provide Banker's Dashboard, a comprehensive business reporting and intelligence tool. We operate and win as a trusted provider, with service and support that lead to successful outcomes. These smaller customers may not have the staff, experience or the wallets of the bigger players. But we help close that gap with simple do-it-yourself tools for the savvy customer and the option to have our team of experts guide and deliver the desired solution for those needing more assistance. We provide multiple web hosting service models to SMBs and their service providers, which can scale to meet the needs of the novice to most sophisticated users. Demand continues to increase as online commerce grows, and we know that small business owners don't want to become technology experts. Instead, we assume that operational servicing, so owners can focus on what matters most, the passion that got them started in the first place. Now turning to our web -- I'm sorry, turning to our data-driven marketing solutions, which are provided to financial institutions and enterprises. Our solutions improve new customer acquisition, cross-sell and engagement in B2B and B2C markets. We provide a full-suite solution, including a prospect list, creative and attribution. We deliver highly effective omnichannel solutions, including direct, email and digital targeting. Our current capabilities align nicely with customers' key areas of focus, delivering maximum performance. We offer pay-per-performance pricing for many of our marketing solutions, demonstrating our confidence to stand behind our results and operate as true partners alongside our customers. Our willingness to put skin in the game, to stand behind the performance of our cloud solutions has earned clients' trust for us to manage their marketing programs full-stop. Once we have fully implemented our enterprise data platform, which Mike Mathews will cover later, we'll have the full breadth of its capabilities at our fingertips. This includes access to data from other divisions across Deluxe. During Deluxe Exchange 2020, we engineered an activity to work collaboratively with our customers and partners to codevelop a solution prototype that meets their most critical needs to more effectively serve small business customers. Based on initial interviews prior to Deluxe Exchange, our product engineering team arrived with a new product concept and took on the daunting task of soliciting real-time feedback from our customers and partners to enhance the features, to enhance the design. Our team started with the concept of an online-guided experience, enabling small business formation. With customer input, we expanded the offerings to include digital marketing and payroll services. Our partners got involved, too. Two attendees from Dun & Bradstreet dropped in to our development pod and suggested that we should enable a business to obtain a Dun's number, a numeric identifier. Instantly, our engineering team integrated directly with Dun & Bradstreet via an API. Over the course of 2 days, our team created an online solution prototype our -- on our platform, which incorporated multiple Deluxe offerings and integrated external capabilities. This was all possible with our wide range of offerings within Cloud Solutions and our other Deluxe divisions, also, the expertise and creativity of our personnel and engaged customers and partners in the process. So you might be asking, what sets our Cloud Solutions offerings apart from others out there in the market. Well, first, our large base of customers represents a vast untapped market opportunity. As mentioned earlier, we serve 4.5 million small businesses or roughly 15% to 20% of the U.S. market. The majority of our customers have only purchased one cloud offering, resulting in a huge opportunity for us to meet more of their needs. But our growth isn't solely reliant on spending a significant amount to acquire new customers. Instead, we have the ability to educate our existing customers about our entire portfolio, which will spur buy. Second, we have the opportunity to benefit from the data and insights created by these customers. For example, our incorporation services register small businesses 2 weeks to 2 months before they appear within a published contact list or directories. Companies serving small businesses and those selling information about them have strong interest in these data. These are just 2 reasons we're uniquely positioned to deliver more effective solutions. So how do we make sure customers are more aware of the breadth of our Cloud Solution offerings? We utilize multiple channels to reach our customers. We did have these channels in the past, these same channels, but our sales strategy was very fragmented and we did not sell our products and services as One Deluxe. Now under Chris Thomas' leadership, we have an integrated go-to-market strategy that really brings it all together. We're confident we have the ability to reach an even wider market as we embed our products into platforms, ecosystems and marketplaces, where our customers are procuring the technology and services that they need to grow and operate their businesses. And those same partners recognize the mutual benefit of engaging our sizable customer base. Just yesterday, we announced our strategic partnership with Salesforce to distribute Salesforce Essentials, the world's #1 newest CRM product, purpose-built for small business owners. We're selling that to our base of 4.5 million customers and prospects. We look forward to achieving great success with Salesforce as we explore additional opportunities to jointly serve the small business market in the months and years to come. Cloud services or Cloud Solutions has a growth model, which when optimized has a compounding effect. I successfully implemented similar growth models during my prior roles. As we enhance our product efficacy and user experience, our offerings become stickier. As we're able to execute with greater speed and efficiency, our customers and our team realize mutual benefits. We are then able to reinvest to grow our share of wallets, retention and expand into new markets. Also, more interactions and transactions with those customers means more data and insights to enhance our current offerings, create new opportunities and [ derive ] new revenue streams. As a result, this compounding cycle continues and the growth becomes exponential. So let's look at 2 examples of value we created by using data that are unique to Deluxe. First, and a first example, we've used our proprietary data generated from our product to create a capability that drives higher usage, engagement and purchases, all while reducing churn. With our offering, right time engagement, we're able to track usage and initiate an automated marketing campaign to drive the next purchase of a Deluxe offering. For example, if the user has created a website but hasn't logged in after nearly a week, an automated email is sent to the owner urging her to take action and log in. From one indirect customer who markets our offerings to its subscribers, the benefits have been remarkable. Those who received our automated emails logged into the web portal 112% more than the group that didn't -- that did not receive emails. Subscribers who receive the automated emails access their websites more than 150% more often and added logos and other design elements 8 times more often. And service cancellations were significantly reduced compared to those who did not receive the automated emails. Now in the second example, using these same data, we're able to create an extract, a B2B marketing list for a marketing services provider. Our list added new records to its file and was used to validate data or other records already within its file. Obtaining new prospects to increase the marketable universe and information to confirm business activity is extremely valuable. We have a number of customers and partners seeking our unique data for these similar purposes. And I believe there are numerous other use cases that we haven't yet explored. In short, Cloud Solutions has a set of offerings that customers need to start, grow and optimize their businesses. And as a foundation, we have an immense base of customers who we can further serve. We have an unbelievable opportunity to deliver tremendous sales-driven growth and deliver upon the Deluxe promise to help businesses and their communities thrive. Now ladies and gentlemen, we will now take a 10-minute break. Thank you. [Break]

Welcome back. I'm Tom Riccio, and I'm excited to have the opportunity to walk you through the great things we're doing in our Promotional Solutions division. I'm especially excited to share how our technology platform and shift to managed services are transforming our business to deliver sales-driven revenue growth. You'll hear me refer to this platform throughout my presentation as Deluxe Brand Center or DBC. First, I feel it's important that I provide you with a brief overview on my experience and share why I joined Deluxe. I got my start just over 25 years ago with R.H. Donnelley, a printing and publishing company. For most of my career though, I've been in the office supply industry. In 2001, I joined Boise Cascade as a sales manager. In 2003, we acquired OfficeMax, and I continued to expand my leadership experience. In 2013, when OfficeMax and Office Depot merged, where I was the Vice President of Sales and Strategic Initiatives in their B2B organization. In that role, I helped lead the migration and integration of over $1.5 billion worth of customer accounts. See at the time, my business unit, we serviced over 50% of Fortune 500 companies. Just prior to joining Deluxe, I was Office Depot's Senior Vice President for their business solutions division, with P&L responsibility of $1.7 billion in annual revenue. I'm confident that I have the right background and relevant expertise to lead the Deluxe Promotional division. So why did I choose Deluxe? For me, this is a company I grew up knowing. I've always trusted the brand and its history of innovation and success. I saw this as an opportunity to be part of a historic transformation and to work with an exceptionally talented team. I believe we have a tremendous opportunity to not only capture untapped potential within our massive customer base, but also to expand into emerging products and service categories. I'm especially excited about the opportunity to transform Promotional Solutions into a more profitable growth business for Deluxe. So what is Promotional Solutions? And why is Deluxe in this space? Simply put, Promotional Solutions are a natural cross-sell that provides an opportunity to deepen our client relationships. As you can see, there are multiple intersections where we engage with clients in their journey, and every business needs the products we sell regardless of where they are in this life cycle. Our products range from business essentials, like forms, business cards and letterhead, to marketing print, such as direct mail and other marketing collateral, to promotional items like drinkware and apparel. See, Promotional Solutions fit in perfectly with our sales strategy and provide a seamless cross-sell opportunity for each of our other 3 business segments. Promo provides us a unique opportunity to deepen our relationships with our clients and create an experience that will keep them coming back to Deluxe. All of our 4.5 million customers have a need for the products in my business. In fact, we already sell to about 40% of those customers. So the opportunity we have is to upsell the 40% of the customers we already serve and to cross-sell the other 60%. To enhance our sales-driven strategy, we leverage the technology and data we already own from the other business segments. By combining our existing capabilities with that data in new and innovative ways, we can help our customers strengthen their brand. And based on what we're seeing, companies on the forefront of technology are seeing the greatest return. Promotional Solution is a $50 billion market and growing. The market is highly competitive and fragmented, with only a few key players, such as Deluxe, having strong brand recognition. For Deluxe, in 2019, our Promotional Solutions business was about $642 million in annual revenue, with ample opportunity for growth within that addressable market. As I said previously, we already sell our products and services to over 2 million customers annually. And we have an opportunity to sell the other 2.5 million customers that Deluxe already knows. Our success lies in our ability to demonstrate to customers why we are different. And we demonstrate this to them daily. Our platform, DBC, delivers tremendous value to our clients. A great example is how Deluxe offers Raymond James advisers the ability to proactively manage the fulfillment of goods, print-on-demand, promotional items to a single-user experience through our online platform. This allows their financial advisers to focus on what they do best, providing financial advice to their clients. Our technology platform provides them with operational efficiencies and reduces risk by minimizing vendor counts and enabling their corporate office to [ maintain ] controls in a heavily regulated industry. Our vision of transforming to a technology platform provider of products and services is critical to our success. Customers are no longer just interested in buying print or promotional items. They're using technology to manage and protect their business brand. And Deluxe has the right solutions to help businesses advance this goal. In order to better position us for growth, we're focused on 5 key strategic enablers. First, we are now operating with a merchant mindset, which means owning Promotional Solutions processes from beginning to end, enhancing the curation of our products and services that our customers need. Second, we're delivering a best-in-class pricing experience. We will do this by understanding market trends, providing competitive intelligence, building bundled solutions and delivering managed services. Note, I did not say low price. Third, understanding our customers and how we can best service them. To do so, we are investing in sales and expanding customer relationships with a tailored go-to-market approach. We're focused on higher-margin defendable business. Fourth, we're enhancing our world-class supply chain. Pete Godich will provide additional insight on this in a few minutes. And finally, we will maximize the utilization of our capacity. Investing in new production technology is critical to our future. A perfect example of this is last year, we installed new print technology and equipment from HP. This equipment is now the #1 producing piece of HP equipment in the world. You heard me right. We are HP's top partner on this platform worldwide. Through these strategic enablers, I'm confident that we can transform Promotional Solutions from a maintained business to a growth business. Let me explain more how our sales-driven strategy is reaching our market. So because we service customers of all sizes and types, we have built an organization with multiple touch points. Today, we service some of the largest companies across North America. Here's an example. Several years ago, Mazda embarked on an initiative to enhance their brand image. We worked with Mazda's brand champions, outside agency, franchise owners and internal purchasing team to ensure that we all had the offerings to align with this strategy. We configured our technology platform that provides Mazda and their franchise owners with all the marketing and promotional items to deliver on their strategy. In addition, we also provided a customer care response environment for the 30th anniversary of the Mazda Miata. In addition, as they look to expand their customer brand loyalty, we provide retail pop-up stores for key Mazda events across the country. Our breadth of product, go-to-market strategy, production capability and technology platforms truly differentiate Deluxe in this space. We have a heightened focus around key verticals, such as financial, hospitality, real estate and health care. Our ability to serve customers with highly distributed workforces through our one-to-many model is critical. For example, our platform is crucial to the success of one of the nation's largest real estate agencies. Using our robust data and insights, we connect their agents with buyers and sellers at the right time, which leads to selling more homes at higher prices faster. The Deluxe Brand Center platform is truly a major competitive differentiator. Our platform allows our clients to offer a streamlined solution in a one-to-many environment. Our technology platform can handle any product, elegantly providing customized solutions. Helping our clients manage their brand is one thing, but Deluxe can deliver valuable data insights, business performance intelligence and targeted analytics with a just-in-time delivery model direct to the end user. We do what others do and so much more. We are no longer strictly tethered to a product-based commodity type of purchase. We now provide managed services which can generate recurring revenue, leading to higher margins. An example of a customer maximizing their benefit from our offerings is LPL Financial. Initially, LPL only bought a few products from us. They were buying mostly business essentials and other various types of print. We quickly expanded into marketing print, promo and apparel. As you can see from this chart, our revenue with this client has grown steadily over the past several years. Importantly, we have significantly grown technology managed services portion of the revenue, and the mix has changed over the past 3 years. Here's the key takeaway from this slide. In just over 3 years, we have pivoted from a product-based provider to a services provider. See in 2017, over 60% of what we sold to LPL was product on a transactional basis. This year, over 75% of what we provide to them is from platform fees and creative services. And over the next 2 years, we expect to expand even more into the creative services portion of our business. This creative services growth is important because margins are higher, significantly higher than that of products. Now of course, LPL is just one customer. We have millions more which we believe can benefit from the solutions similar to what we delivered to LPL. And that's what excites me about what's ahead for Promotional Solutions. So in closing, as we put the swag in swagger, I would like to share 4 key takeaways. First, the upside for this segment is significant. While we currently are selling promotional products to about 40% of our customer base, we have an opportunity to cross-sell more to those same customers as we begin selling to the other 60% of Deluxe customers not currently buying promotional products from us. Second, our technology platform, creative services and reporting insights, utilizing our proprietary information and technologies that deliver very differentiated experiences to our customers. Third, we are investing in our strategic enablers to build a sales-driven growth business. And finally, we are pivoting from a product-based offering to managed services offering, which we believe will generate sustainable recurring revenue streams, returning higher-profit margins. And with that, I'll turn it over to Tracey Engelhardt, who will talk to you about our Check business. Tracey?

Thanks, Tom, and good morning. I'm Tracey Engelhardt, and I'm here today to talk to you about our entire Check story. And I use the word "entire" because prior to our transformation, I would have been able to talk to you about only parts of our Check business. See, we used to manage our Check business in 3 separate segments, and those segments were siloed from each other. That siloed organization is a thing of the past. We've transformed what was 3 into 1, one of the 4 business units of One Deluxe. I now have responsibility for all of Checks: wholesale; retail; distributor; and third-party markets, which in total is expected to generate between $750 million and $760 million of revenue in 2020. I'm approaching 25 years at Deluxe, and I've worked in many areas of the company. But my true passion is still checks. I love checks. Checks are still relevant. They're relevant to businesses. They're relevant to consumers and they're relevant to Deluxe. I know earlier, you heard Mike talk about digital payments. And as he mentioned, payment choice continues to evolve. But our digital payments platform and our paper checks are closely linked. We expect paper checks will remain relevant, especially to businesses because of how they are embedded in their accounting systems. They are integral to the way they conduct business. Imagine you're a delivery truck driver and you pull up to the back of a restaurant with today's seafood for tonight's menu. You're not going to drop-off that food without getting payment. That restaurant owner is going to write a check. The day laborer who's expecting payment at the end of his shift or the nail salon who says they would rather have cash or check to completely avoid credit card fees. Checks are still the only universally understood payment besides cash. And I'm here today because my product remains vitally important. Deluxe invented the checkbook in 1915, founding the modern payment system. And since then, we've been recognized as a leader in the industry. Our North American footprint of websites, manufacturing, call centers and field sales allows us to serve our customers both efficiently and effectively. Each year, we receive approximately 3.5 million inbound phone calls from customers. And as Chris said, these customers have their wallets out. They're ready to buy and they're calling us to place an order or a reorder for checks. Then we have the opportunity to cross-sell them a form, a website or one of the many other products or services we have at Deluxe. Checks make our phones ring. And as I noted, we expect to see revenues of $750 million to $760 million from Checks in 2020. Now I get to work with some of the most dedicated and tenured employees that will do anything to make us successful. And since Barry joined, we've begun to operate as one company, with greater focus on the customer and organic revenue growth. This renewed focus serves to inspire, motivate and energize the many long-term Deluxers on my team. Now operating as one team, we adapt more quickly, we deliver a better customer experience, and we can share best practices more easily. I'm super excited that I get to lead this new way of operating our business. Now the printed check industry has many competitors but only 2 major players. We estimate that our market share is about 40%, plus or minus a few points. And it's no surprise to anyone that the check market continues to decline and it has been declining since about the mid-'90s. The first year Deluxe saw a year-over-year decline in Checks was in 1997. Now despite that, checks play an integral part to the financial operations of most small businesses. And according to a study done by PYMNTS/Mastercard, 61% of small businesses are very or extremely satisfied using checks as a method of payment. Over 50% say checks are convenient and 42% say they are widely accepted. Now in 2018, we still saw 16 billion checks were written. And while the industry says that checks are declining at about 7%, we continue to outperform the market. And we do this by extensions of longer-term check contracts, by signing new financial institutions, and effectively acquiring direct customers. Checks serve the small business customer at a critical time in their life cycle when they're first starting out, but they continue to be integral to the ongoing operations of the business. The examples that I shared earlier demonstrate this. Access to small businesses are made possible by our FI relationships. New financial institutions, known as new logos, are important for the Checks business. They're also important to Deluxe as a whole. Each new logo gives us the opportunity to introduce additional products and services not only to the institutions themselves, but to their small businesses as well. Checks are an important entry point for us with a very low cost of customer acquisition. And as I said, checks make our phones ring. In Q4, we successfully signed 6 new logos. And at the end of 2019, we entered into the Canadian FI market by signing CIBC, another clear example of our sales driven growth strategy. We've now successfully onboarded CIBC, and we're excited to expand our Canadian market presence wherever possible. So why would a financial institution choose Deluxe as their check partner? And how are we different? We start with a trusted brand that has delivered a quality product to the market for over 100 years. We commission industry and tailored studies to understand small businesses. We then share that information with our financial institutions so that they can better serve small businesses. Financial institutions are concerned with cost management. We optimized the ordering process to be easy and seamless, thereby improving their customers' shopping experience while reducing costs for the financial institution. Checks are a sticky product for the bank, and our robust and timely retention programs help maintain that stickiness. Our proprietary research says that new business checking account customers are 40% more likely to be retained 90 days after opening an account, provided they're offered checks at account opening. Throughout the day, we've talked about innovation at Deluxe. And while you might not think we're doing this in the check area, I assure you that we are. Let me share with you some examples. Our internal teams developed a patented new check package that we just introduced to the market. Yes, we are responsibly innovating and seeking patents for our check business still. This design was done in collaboration between our product team and our customers who were looking for a portable, environmentally-friendly storage container for their checks. This package meets both the consumers' demands for environmental sustainability and demonstrates our continued commitment to innovation and enhanced technology. Speaking of technology, we've partnered with Salesforce to make converting check printing for our customers easier to Deluxe. We know that today's consumer expects a secure, integrated online experience when purchasing checks. So we're making our APIs available to our clients, so that ordering checks from a mobile device is easier than dropping off a reorder form at a bank branch. A senior executive shared with me that he thought all check ordering should be done through -- outside of the branch, on an online mobile app. We're working with that FI and others to make that happen. Another differentiator for us is our superior reporting platform. According to a check industry consultant, Deluxe's platform delivers a greater level of detail, allowing financial institutions to make real-time program decisions that both enhance customer satisfaction and program profitability. Now our ability to differentiate in a commoditized market is best demonstrated by a e-mail I recently received from a top 10 financial institution. And in that email, he shared with me that, "It was great to spend time with the Deluxe team. You guys know how to do partnerships in every sense of the word." Now this type of partnership is made possible by the One Deluxe transformation. Our ability to reach across and show up to our clients as one company, as One Deluxe, is making it easier for our customers to do business with us. We help our guest customers gain efficiencies through reducing the number of vendors that they partner with, saving them both time and money. Saving time and money is also an objective of our check business as well. We take pride in maximizing our margins to fuel the growth for Deluxe. Our newly formed one check team is looking at everything we do holistically, utilizing our collective knowledge, experience and economies of scale to optimize our business unit. Our robust check business is poised to continue to win market share at healthy profit margins. We're an outperformer, and we aren't content to decline at market rates. We have a proven track record of delivering strong cash flow and margin, and our new organizational structure facilitates the continuation of this trend. While the decline of checks is expected to be steady, I'm happy to report that we do not have a concentration of large check contracts up for renewal over the next few years. And what does that mean for us? It means that we can focus on market share. With the new Deluxe, we have the momentum and the team in place to build on our 100-year history of being a trusted partner to help businesses of all sizes succeed so their local communities thrive. I have never been more thrilled to be part of Deluxe. And with that, I'll introduce you to my colleague, Pete Godich.

All right. Thank you, Tracey. Good morning, everyone. I am Pete Godich, and I'm the Chief of Operations here at Deluxe. I've had the honor of working with the company for more than 30 years, leading nearly every aspect of operations including IT, manufacturing, logistics, sales and marketing operations, call centers and more. Now prior to leading up all of operations, I was a member of the executive leadership team leading the fulfillment organization. While leading the fulfillment team, we consolidated many systems onto a common platform that seamlessly moves orders from the customer through our manufacturing process with limited touch points. This unified platform allowed us to simplify our operations, more than double our productivity and shrink our footprint dramatically while driving nearly $250 million in cumulative cost savings. What energizes me the most about this transformation is that we're removing silos to better serve our customers while making key technology investments to operate as a sales-driven growth company. And now that we've consolidated all of our operators onto one team, I am certain we will guarantee even greater efficiencies. So with that in mind, let's talk about 2 focus areas: the structure and role of our new operations team; and the key initiatives we're focused on delivering. We consolidated what was many fragmented teams and folded them all into our new ops team, which as you can now see includes client data operations, supply chain operations, warehousing, remittance processing, customer care, professional services, engineering and process improvement. I have to say, I've been through several transformations at Deluxe. This is fundamentally different. Let me explain. When we operated as a company of company, we missed the opportunity to show up as One Deluxe with our customers. We ran the business as independent of one another in terms of sales and marketing, real estate, operations and more. This also meant that our cost savings were conducted in silos, leaving money on the table as we missed the broader opportunity to capture efficiencies. With that in mind, we designed the ops team around 2 key principles. First, the customer is at the center of everything we do. We all win when our customers win. The GMs, they determine what jobs need to be done for our customers. And Chris and team bring those solutions to market. Then our ops team fulfills the products or services on their behalf. We make it our mission to serve them. Second, we operate as One Deluxe. We have one ops team serving customers across all of our solutions. For instance, we now have one warehouse and distribution team rather than many. We have one professional services team serving all of our customers. And we have one customer care team instead of one for each solution. You get the theme here. So let me walk you through a quick example. A large financial institution supported our request to onboard their customers to our treasury platform. The cutover date for them was quickly approaching and they needed immediate assistance. Our customer care leader put her new enterprise team to work. She cross-trained agents and rerouted calls across North America to serve this client. In our old structure, this would not have been possible. Next, I'd like to highlight a few key areas of focus for the ops team. One area is migrating multiple technologies to a single platform. Similar to the common manufacturing platform we developed, onboarding to one technology solution in the following 3 key areas will drive significant value. First, in Mike's Payments business, we will drive all remittance processing volume through a unified platform, which will enable margin expansion. Second, with the single contact center platform, we will create one experience for our customers and drive down labor and real estate expenses. And third, in our warehouse operations, migrating to one ERP will enable us to reduce inventory levels, increase turns and consolidate our footprint. Now speaking of footprint, another focus area is in real estate. We're evaluating our overall real estate portfolio, to make sure we have the right facilities in the right locations to best serve all of our customers. Just last year, we reduced our footprint by 20%, and we have more work to do here and it remains a priority. One last initiative I want to touch base on is our service excellence program I'm launching. Every Deluxe employee, no matter the role, has a duty to create excellent experiences for all of our customers. We have come a very long way since our founding, and the expectation of great customer service remains the same today. In the new Deluxe, everyone sells, including operations. In closing, I am proud to be part of leading this historic transformation of the company I grew up in. I have a track record of capturing significant operational efficiencies, been doing this my whole life. And I'm confident that we will deliver even more as One Deluxe. Our operations team is filled with talented Deluxers who are excited to be here and energized to serve our customers across all of our products. And personally, I am thrilled to be part of this team. We have come a very long way in less than a year, and I believe the best is yet to come. Thank you for your time. And now I'll turn it over to my friend and colleague, Mike Mathews.

Thanks, Pete. Good morning. My name is Mike Mathews, and I am the Senior Vice President and Chief Information Officer for Deluxe. I lead our global technology and product development teams, which are powered by some incredibly talented technologists. Prior to joining Deluxe, I gained 20 years of consulting and management technology experience at the likes of ATKearney, Unilever, Merrill Lynch, Bank of America, UnitedHealth Group. I've been the CIO since 2013, and like many of my colleagues have already shared, I'm incredibly optimistic about our future. Under Barry's leadership and with our Board's support, we're making the necessary investments in talent, product development and technologies that are going to drive our One Deluxe transformation forward. Let's be clear, Deluxe is a trusted business technology company. In late 2018, Deluxe was recognized as the runner-up for the Global Transformation of the Year award by Hitachi for our cloud and core infrastructure developments. And in 2019, I was named the Twin Cities Global CIO of the Year, a reflection of our experienced technology team and all that we've accomplished. Like Pete's operations team, we're here to enable sales-driven growth as outlined by Chris, our Chief Revenue Officer and our general managers. And we do this by creating scale and operating with a fundamental belief in the power of platforms, data, analytics and collaboration. We architect our solutions within cloud-based secure frameworks that are dynamic and flexible, enabled by APIs and modern configuration capabilities. And just like every leading technology company, we develop and deliver using Agile methods providing for continuous integration and delivery of our services. And all of this comes together to support our sales-driven growth strategy. I want to leave you with 3 messages today: First, we are successfully delivering best-in-class technology platforms to further transform the company and drive sales; two, that we innovate, create and deliver world-class scalable platform solutions for our customers; and three, technology is at the core of everything we do. To put a fine point on it, we operate and deliver a wide array of technologies, fintech, insuretech, martech and so much more. And we bring this collection of technologies together, now known as One Deluxe, because we are a trusted business technology company. As you've heard earlier, Deluxe acquired dozens of companies over the years. And missing from those acquisitions were the necessary investments to properly integrate these entities or keep their technologies current. And as a result, we endured significant duplication of technologies, non-integrated data and aging technology stacks, all running independently. Today, our One Deluxe transformation is changing all of that. So let me share some success stories with you. Let's talk about collaboration. The first step to operating as One Deluxe is ensuring that our 6,500 employees across the world could easily and quickly communicate. We deployed Microsoft Teams across the entire company in 2 weeks, the fastest deployment in North America to date according to Microsoft. Now we can connect anywhere anytime with anyone sharing content in real time. This is an absolute game changer for us, and this allows us to operate as One Deluxe. Next, let's talk about people. We needed a way to share information about our employees, our skills, our capabilities and the like, so that we could ensure that we the right people and the right teams and the best way to support our businesses. And to that end, we deployed a human capital management platform called Workday. It went live across the entire organization on January 1. And for the first time in our history, we have one team supported by one common cloud-based solution, yet another game changer for Deluxe. One of our greatest strengths is our broad base of loyal customers. And after more than 100 years in business, we have accumulated tens of billions of data records. And now we've taken some of those key records and merged them together, and we've created for the first time, a real-time consolidated view of our customer. And we are now harnessing the full potential of our customer data to help enable our sales team. And by leveraging Salesforce's platform, we've taken our proprietary data, turned it into actionable information, made it available in real time to help drive customer intimacy, cross-sell, up-sell and improve our overall customer support. Further supported by our CRM, we are now deploying and scaling world-class e-commerce, marketing, analytics and data capabilities that give us the ultimate platform to enrich our customer experiences and interactions. So we are well on our way. And finally, let's talk about financials, operations and planning. We are currently implementing SAP S4/HANA to consolidate our 52 disparate ERP platforms into a single platform. This is a 24-month project. We are currently a quarter of the way through, and we are on track and on budget. But before I leave the stage, I would be remiss if I didn't touch on product development technology. So whether it is a paper check produced on our state-of-the-art digital printing platforms, or a branded promotional apparel product sold through our e-commerce platform, or whether it's a list of potential customers that we provide to a financial institution driven by our data platforms, it's all driven by our proprietary technology. Our products and services enable customers of all sizes to succeed, and our software operates some of the most complicated business processes. Our reputation, our technology and our security make us truly unique. We are positioned as one of the few companies where mission-critical customer data and vital customer interactions are entrusted to our solutions, our software and our technologies, and more importantly, our team. Deluxe is a trusted business technology company. So trusted, in fact, that did you know we host millions of small business websites and emails? Our eCheck platform is fully API-enabled and embedded in the leading platforms like QuickBooks, Microsoft Dynamics and Guidewire. That our treasury management platform captures more than 2 billion check images, valued at $2.8 trillion annually. That the Federal Reserve's reconciliation process is done using our adjudication software. That we process 570 million transactions annually through our lockbox processing platform. That our data platforms process more than 1 billion credit bureau records each month. And finally, that our commercial-grade check ordering platform, OrderPro, is now fully API-enabled and available in the Salesforce App Exchange. In conclusion, I'll leave you with these 3 thoughts: One, we are delivering best-in-class technology to enable sales-driven organic growth; two, we are constantly innovating and creating new solutions and services for our customers; and three, technology is what has given life to Deluxe and now is most certainly fueling our future. I thank you for your time this morning, and I'd like to welcome to the stage, my colleague, Keith Bush.

Thanks, Mike. So I've met many of you before, but for those that I've not met, I'm Keith Bush, Chief Financial Officer for Deluxe. I've been with the company now about 3 years. Today, the team has been talking about transformation. Let me tell you, I know transformation. I joined Deluxe from the airline industry, where I played key roles in financial restructuring, M&A, financial planning and capital markets activities. I've led business integrations, implemented new processes and built exceptional teams. At each step across these varied roles and at multiple companies in my career, it was all rooted in one common theme, you guessed it, transformation. After 22 years, I was ready to take those experiences to the next level. And I found the right fit with Deluxe. I saw an opportunity to be part of leading a transformation of a company that does so much more than print checks. My goal is that you will leave today sharing of my confidence that we're on the right path. 2019 was a great year. Revenue was at an all-time high. We signed 3 of the largest deals, funded our transformation initiatives, and we returned $170 million to shareholders, all while paying down debt. We also met our guidance, it increased the visibility of Deluxe in the marketplace, including our main stage presence at Dreamforce. And looking ahead, our expectations for 2020 are equally strong. As Chris walked you through earlier today, we expect to grow top line revenue. But before we get into the new segments and projections, I want to dive a little bit deeper into the comments that we made on our earnings call regarding near-term margins and the accounting treatment of SaaS subscriptions. I'll discuss SaaS subscriptions first. As you know, new accounting standards went into effect this year for SaaS implementation. But before I get into Deluxe, I'll discuss the effects of adopting cloud computing arrangements, or CCA, that went into effect on January 1. It's important to understand that CCA allows the capitalization of the implementation costs for SaaS solutions. These capitalized amounts are recorded on the balance sheet as an out -- they're reflected as an outflow in the operating section of the cash flow statement, not the investing section. As such, these capitalized amount -- these capitalized setup costs are not treated as CapEx. Now how does this pertain to Deluxe? In 2019, we spent $30 million on implementation of these new day investments we've been talking about. Those were all SaaS platforms, all of which was recorded as GAAP expense and adjusted out as restructuring and integration costs. In 2020, we guided $70 million of spend. Under the old rules, we would have expensed the full amount. The difference is we're now operating under CCA, so we'll capitalize about $50 million of this spend and expense the remainder. The expense portion will be adjusted out as restructuring and integration costs, just as we had in 2019. So as we place the SaaS platforms into service in 2020, we will begin to recognize the ongoing costs associated with these programs. So for 2020, we'll see about $10 million of increased operating costs, of which $10 million is the subscription cost, and the remaining portion is the amortization of those capitalized costs. So importantly, while we're recognizing these costs in 2020, we've not yet decommissioned the legacy systems. As a result, we have duplicate costs in 2020, and we will address those through efficiency improvements going forward. So turning to margins. In 2019, we paused acquisitions. We focused on establishing an enterprise model that's sales-driven, product-focused and funded through efficiency. This was a significant departure from our historical practices of acquiring companies. And in 2019, our adjusted EBITDA margin contracted about 150 basis points without the benefit from these acquisitions. Let's call this our legacy mix challenge. In prior years, this was solved entirely by investing hundreds of millions of dollars to acquire companies. So for 2020, we see a similar mix shift. It's about the same 150 basis points. Now we're focused on addressing this challenge with sales-driven growth to achieve our long-term EBITDA projections. Those were in the low to mid-20s by 2023. And in a moment, we'll cover how we will achieve this. The second group pertains to work being performed to advance our transformation, and this is about 100 basis points of the change. This includes transformation investments, implementation resources, rebranding, things like the ongoing costs of those SaaS subscriptions. The third group includes the in-year impact of growth from the new wins. So Chris highlighted new growth revenue, a portion of which has a limit -- has limited profitability in year 1. Now margins on these wins will improve in year 2. This third category is about 50 basis points of the overall change. So beyond 2020, we expect our sales-driven model will allow us to expand margins to the low to mid-20s, our long term guide. In 2020, we do see improvement in the low end of this guidance. So let me explain. While we guided first quarter adjusted EBITDA margin of approximately 18%, we also guided the full year to 21% at the midpoint of the range. So this result occurs with 22% EBITDA margins for the remainder of the year. We will achieve this result in the second quarter of 2020. That's right, the second quarter of 2020. This is certainly in line with our overall guidance to achieve low to mid-20s adjusted EBITDA margins through 2023. And as I move through the financial section of this discussion, I will lay out how we expect to outpace the secular decline in check with revenue growth in the other segments. Now having covered our margin expectations, it's important to understand that we will now be growing the company using a more efficient capital approach. You heard Barry talked about this. This allocation of capital is focused to enable sales-driven growth, and we believe this approach will provide you with much better returns. So looking back from 2015 to 2018, the company invested about $200 million a year on acquisitions. At the same time, we invested about $50 million in CapEx each year. In 2019, we essentially spent nothing on acquisitions and about $67 million on CapEx. In 2020, our guidance includes approximately $70 million of CapEx and does not include any acquisition spend. Beyond 2020, we expect CapEx will be between $75 million to $100 million a year. This capital allocation is focused to enable sales-driven growth. That's our strategy. You heard from our GMs, you heard from Chris on how we will achieve this result. And as we move in to the following charts, you'll see how this translates into our financial outlook. So let's take a look at the new segment structure and review how we will achieve our 2023 guidance. We begin with 2019. We've recast the business in the new segments to provide you with greater visibility into each of the -- into the intrinsic value of each of our businesses. You'll note that each segment is a multi-hundred million dollar business with attractive margins. The Payments and Cloud growth businesses have about a 25% EBITDA margin. Promo carries a respectable 15%. And as you would expect, Checks carries our highest margin of about 50%. And as mentioned earlier, for the full year 2020, we expect the total company revenue to be in the range of $2 billion to $2.04 billion. At the midpoint of this range, we're delivering about 50 basis points of revenue increases year-over-year without the benefit of acquisitions of any scale in 2019 or 2020. We expect adjusted EBITDA dollars to be between $410 million and $435 million. And then looking at the new segment views allows you to see how we're scaling the revenue and the earnings. This creates visibility on how value creation is unlocked from these segments. You can now measure our market performance. You can measure our performance against market comps rather on revenue growth and earnings. So with that understanding of our starting point, let's talk about how this translates into achieving our 2023 revenue and margin expectation. So looking at a mix profile of the business on both revenue and margin expansion from 2020 is an easy way to understand how we gain operating leverage to achieve our growth results. Payments revenue nearly doubles by 2023 from 2019 as a percentage of our total revenue mix. This CAGR is in the upper teens to mid-20s, and we will expand margins to the mid- to high-20s. Cloud is expected to grow at about our average CAGR and maintain its overall mix of our total revenue. Cloud revenue growth expectations do include a slower ramp as Garry will operationalize those growth plans that he shared with you earlier. And we expect Cloud margins to expand to the low- to mid-20s. Promotional revenue grows over this period, but below the company average at low single digits. And we will improve Promotional margins to mid- to high teens. And as you would expect, check revenue continues to represent a smaller portion of our overall revenue mix by 2023. Margins are expected to contract some to the mid-40s. As Tracey had mentioned, while, the check business is anticipating unit declines, we expect we can hold revenue declines in line or better with these changes and manage the cost structure to maintain these margins. We also created a corporate cost center. We've done this to consolidate all of the support services within a shared services model. This is very different from the past when many of these costs were decentralized and they were fully allocated out to the P&Ls. In 2019, corporate costs represented about 8.7% of our revenue. And we expect to realize efficiencies resulting from the standardization and scaling of our business models, using common enterprise processes, addressing organizational redundancies and consolidating our real estate footprint. These actions are expected to further reduce overall expenses throughout the organization, the entire organization. Our expectation is that the corporate cost center will also reduce to the mid-single digits as a percentage of revenue by 2023. And as you leave the meeting today, I'm confident that you'll share in my optimism, that we are on the right path. I have several key takeaways for you to consider when you assess our business in this new view. First, each segment produces hundreds of millions of dollars in revenue, each with healthy margins. Payments, Cloud and Promotions are expected to produce scalable revenue and profit expansion. We have a large existing customer base. This equates to a low cost to acquire quality revenue growth. Payments, Cloud and Promotions are all positioned to outpace check declines. Our change in the capital allocation is driving the opportunity to ignite transformation, create scalable platforms. And finally, value capture will fuel the reinvestment of both our growth and margin expansion. You see, the new Deluxe is healthy. It's positioned for success, and it's already delivering results. Our financial health is strong. We pay a quarterly dividend. We bought back $320 million of equity in the past 2 years. We're funding our initiatives while paying down debt in 2019. The new Deluxe is positioned for success with clear prospects for growth in growth markets and all the financial stability and benefits of a mature dividend-paying company. The organization is delivering results. While our transformation will not be complete overnight, we're well on the way. We have the right strategy and the team to deliver. And in only a few months, we've demonstrated momentum and trajectory consistent with our commitments. We look forward to providing you with continued updates as we move along through this journey. So with that, I say thank you. And Barry, back to you.

Great job. Thank you. Well, thank you, Keith. And thanks again to all of you for joining us today. As you've heard this morning from our team, we're all very proud of the historic transformation that's underway, and we're confident and excited about our incredible future. I believe the words you heard most often from our leaders this morning were sales-driven growth and opportunity. The new Deluxe has moved from a company of companies to become a company of products operating as One Deluxe. Our primary pathway for growth is sales-driven growth, but that will be supplemented by meaningful strategic acquisitions. And while our products and services are each strong on their own, what makes Deluxe so unique is how our products work together to help customers succeed at every stage of their life cycle. Deluxe is so much more than the sum of its parts. Our customers use our platforms to build and grow their business, to incorporate, to build a logo, a website; to promote their brand, acquire new customers, and even help -- we even help them pay and get paid. Our most important differentiators are: First, our trusted brand and the relationships we have forged with our customers; second, our unparalleled reach and scale; third, our incredible customer base of approximately 4.5 million small businesses. Over 4,000 financial institutions and hundreds of the world's largest consumer brands trust us. And perhaps most importantly, our financial strength. In 2019, we set an all-time revenue record. We invested in our growth plan. We paid our regular dividend. We bought back $120 million of stock. And we paid down debt for the first time in 3 years. While most of our competitors are out there spending tens of millions of dollars trying to get customers to just engage with them, every year we have millions of customers contacting us to reorder products and services. This connection provides us with the perfect opportunity to expand our relationship by upselling or cross-selling additional products and services. Chris shared with you some of our early successes, which are impressive on their own, but they're especially impressive after just a few months of deploying our new strategy and bringing on and building a new team. We shared with you the success of our sold out Deluxe Exchange and that our customers trust us and want to do more business with us. But we're not stopping there. We've launched our new brand to introduce the new Deluxe. In addition to building out our sales team, we've launched the Everyone Sales (sic) [ Everyone Sells ] program to over 6,500 employees, which will help us further accelerate our success. Our past growth in payments is truly nothing less than stellar, and our future opportunities are even greater. Mike Reed told you about digital payment solutions that enable customers to make payments and to any payee including employees. And he told you about incredible scale, over $2.8 trillion a year in transactions. Garry talked about cloud solutions where we're using artificial intelligence at both public and proprietary data to provide differentiated SaaS applications. And we're just beginning to incorporate proprietary data from 4.5 million small businesses into our algorithms to create even more targeted marketing solutions based on data analytics. Tom highlighted many new opportunities ahead for Promotional Solutions that we've previously weren't taking full advantage of. And you know what? He's not content with merely maintaining this business, he has plans to grow it. This is the value of having great leadership in every role. Now of course, we're optimistic and pragmatic about Checks. And Tracey's great work enables us to continue the investment, to invest that ongoing strong cash flow from Checks into our growth areas. I think you'll agree, the future for Deluxe is exceptional. Think of us as a trusted fintech company, but a fintech company that has millions of customers, incredible scale and a recurring revenue model. And we have more opportunity. We've announced key partnerships with some of the most tech companies on the planet, including Salesforce or Fiserv. We're winning market share in key markets. We have 4 new segments, all supported by integrated sales and product development teams for the first time ever. And in 2020, we're going to deliver sales-driven revenue growth without investing hundreds of millions of dollars of shareholder capital into dozens of acquisitions. As we progress through our transformation with our sales-driven growth strategy, the true value of our business will become apparent. That the value of Deluxe is far greater than you've seen before today. We'll increase value all along our journey to 2023, all while materially improving our ROIC performance. And I got to tell you, we're proud because we've only just begun. Now before we take questions, I trust you feel the passion and commitment of our teams. Our momentum is undeniable. Our future has never been brighter. Our time is now. So we're ready to take your questions. Keith's going to come up and we're ready to take questions and fill in any blanks for you. So Ed's going to walk around with there's some mics around. And we're ready to take questions.

Great.

We got one right here.

Charlie Strauzer from CJS. So cross-selling, upselling has been the holy grail for a long time at Deluxe. Realistically, give us a sense of how long you think it takes to get you to the point where you can truly cross-sell across the platform.

Yes. So I think that's right, Charlie. I think that the company has always had the opportunity or the potential to deliver cross-selling. What I think is so fundamentally different now is that we are actually investing resource to help that business to actually truly deliver cross-selling results. Chris told you that after just a few months of changing the way we train the salespeople in our contact centers, we changed their compensation plan, we're seeing double-digit increases in average order value, what we call lines to order, the number of products per order. And we just started and we're seeing double-digit increases. In the third quarter of last year, Chris just got here. And between the third quarter, by the time we get to the fourth quarter, the machine is already moving so quickly that we sold 3 of the top 10 deals of the decade. So we feel really great about the pace at which we can bring this along, and we think we've got the evidence to show that we're actually doing it. We're not talking about doing it. We're not talking to you about the promise of doing it. We're actually doing it. And we're putting points on the board and we're so proud of the fact that we can show you the evidence after just an incredibly short amount of time.

Can you expand a little bit on where you expect the high-teens to low-20s growth from payments coming from? You guys talked about the payment exchange and you've talked about treasury management in the past, but sort of specifically where you think you see that growth coming?

Yes. So Mike, you want to help me on that? But I mean, Mike walked through sort of the 3 places where we think that there are significant growth: so digital payments, small business and integrated receivables. And we think we have opportunity in all 3 of them. And the reason we think there's so much opportunity is, for example, we are just sort of bringing some of these integrated receivables programs to market. We bring those to our existing customers that are interested in them. We absolutely build on top of the revenue we already have. The solutions we have for small business integrated cash flow, we have pieces of it already. And Mike already told you we're going to be adding more pieces later this year. When you have 4.5 million small business customers and 3 million customers, 3.5 million customers calling in to talk to us every year, we have a perfect natural opportunity to sell the next product. And with that kind of inbound volume, we don't have to like go rule the world, we just need to have a decent close rate on those contacts and we can deliver that kind of growth.

[ Could you talk as well on kind of ] these very large customers on the digital.

So I'll tell you, I think we have the opportunity for both. And so I wouldn't point you to say just on small business or just on big business. I think most of the people in this room, in the third quarter, would never have believed me if I said we even had the opportunity to sell 3 of the top 10 deals of the decade. And not only did we uncover the opportunity, we accelerated, got it sold. And we are implementing them and they're going live right now. So I think we have all of those opportunities. I think Mike talked about health care payments. He talked about the payment exchange, all the things that we can do on digital. I think each of them have tremendous growth potential.

And with respect to scaling margins, even our traditional treasury management platform has capacity to expand margin profile there. So part of what we talked about with the new wins is bringing in some very large client wins. That year 1 is at a very, very low margin, but we also have excess capacity that comes with that. So as we scale those businesses, we can utilize that capacity for better efficiency and grow those margins. So it's really across the board, I think, when you look at all of the categories.

I know you can't control the stock market but are the... That's for sure.

I wish we could.

However, looking at the history before this recent drop in '19, in 2017, '18, the price was in the low $70s and then it went down to the $40s in -- this year. Are there any major events which might have caused this drop?

You know what, our company has been fundamentally sound and robust through that whole period of time. We paid our dividend on time. On that window, we also bought back $320 million of our stock. I think in 2018, the company had been, as had been for the previous year, so focused on this acquisition strategy. When you can't make acquisitions fast enough, you disappoint. And as a result, in 2018, which was before my time with the company, the company reduced guidance 4 times. And you understand the impact of that. And so we are rebuilding confidence. And what I'd tell you in the 5 quarters that I've been here, we've delivered exactly what we said we would do every quarter.

The other question, are there any hopes for a larger dividend since you have a good cash flow?

You know what, we look at the dividend all the time. But I would tell you, we think we've got such great opportunities to invest to grow the business that, that's our first priority.

I was wondering if you could talk about Synchrony and Fiserv. It seems like you're actually taking business from them. I'm just wondering if you could give kind of why this made a lot of sense for you and why it also made sense for them to potentially kind of outsource this to you all.

Absolutely. Maybe I just start by telling everyone what the nature of those deals. And what those deals are is that Synchrony, everyone knows, is primarily a retail private label credit card issuer. They've got lots of other things, but that's their core business. And every month, they send out a statement electronically or in paper. And the consumer says, here is your balance and here is your minimum payment. Then you rip off half of the thing. You put it in an envelope with your check and mail it in or you send a payment electronically from your bank account. Somebody has to unzip that envelope and do the payment matching. And Mike was talking about that, how important that is, that you're matching this payment for $100 goes with this account for this balance. Someone has to do all of that reconciliation so that, that $100 can get posted to their GL. That is the entire process of what we do in our lockbox operation. So Synchrony ran a sizable lockbox, as you would expect, with the nature of their business. They were running our proprietary software in their lockbox operation as are the significant majority of people that run lockboxes on their own. We're certainly not the only ones, but we probably have a significant majority of that operation. And Synchrony went through, I think, a pretty detailed analysis saying, should we continue to run our own lockbox or should we have someone else operate it on our behalf, someone who's good at it, can get scale advantage and deliver great quality service to us and probably can do it more efficiently. And that was the conclusion. And so we took on or took over their lockbox operation so they no longer have to do that. So we get paid for delivering the service they were trying to provide to themselves. And along the way, we picked up 2 additional facilities that, honestly, complete our footprint. So we had gaps in the Southeast United States. We didn't have a facility in Atlanta or in Florida, which you all know are mega-growth markets. And it completed our footprint, which we think gives us a much more big opportunity to go chase some of our competitors because they're strong where we didn't have anything. And all of a sudden, we have not only a marquee customer in Synchrony, but we also now have a footprint in the Southeast United States, we think, gives us a huge opportunity to go win more business. Fiserv is a similar story. Fiserv actually sells. They used to have a lockbox operation that they would sell it to customers. They would resell the solution and say to many of their core banking customers, if you want to accept a payment for your credit card, your mortgages, whomever, give it to us and we'll manage it on your behalf. And so not only did we take on that operation so they don't have to do that anymore and they're paying us to provide that service, but they're also reselling our product along with their core. So whenever they have a need within their thousands of financial institutions that need a lockbox operation, we are their referral partner. And we go with them and they carry a solution that they talk about as a Fiserv solution, it just happens to be delivered by us. We love that model. We do that in many parts of our business where we're providing the infrastructure, someone else puts their brand on the front of it, but we answer the phone, hello, whomever we are, whomever we're white labeling for. It's great. Everyone wins in that model because we have massive scale that we can extend on behalf of a customer. Customer wins because they get fantastic solution. We can give them some of that economic savings out of our scale. Everybody wins.

Could I maybe elaborate on that, Barry?

Absolutely.

So part of what you described is really taking a relationship beyond the transactional nature of the relationship. And that is really an extension of a long ongoing partnership that we've had with those customers. And one of the things you've been encouraging us to do is really go beyond the transactional nature. This is only one example of what we were talking about, how we can scale revenue growth. And another example of that is what we did with Salesforce. And I was just notified that we have a guest.

We do.

If you would like to introduce Polly and...

Yes. Absolutely. So you heard, I think, throughout our conversation that we've built a really important strategic relationship with Salesforce. So most people think about when they have a relationship with Salesforce, you're buying their software, using their software to help you build your business. We've gone way beyond that. And so we've built a strategic alliance with our partner at Salesforce. So not only are we using their software to integrate multiple -- I think we said we had 15 different CRM platforms. And if you include Excel and all the variations, probably 20, probably 30 of them, right?

It goes beyond, right.

Not only we're doing that, but we also are going to be a key reseller of the Salesforce Essentials solutions.

Exactly.

And so Polly Sumner, who is a member of the Salesforce C-suite is here. And we'd love to invite you up, Polly, to tell everybody a little bit about all the great stuff we're doing together. Thank you for being here.

Thank you. A pleasure. So I'm Polly Sumner. I'm the Chief Adoption Officer at Salesforce. And I really don't recognize any faces in the room, but I imagine that some of you know who we are. Anyway, Barry and I met right after he joined the company. I've been the sponsor of Deluxe through the previous years, probably for about 4.5 years now and really have been amazed at the leadership and the speed with which they're moving. Obviously, as Chief Adoption Officer at Salesforce, I kind of oversee teams and have expertise around our customers and can kind of benchmark where they fit, how fast they go, et cetera. But it's not really about that in a partnership, as Barry said. What it's really about is value alignment. And I think that, well, I know that our values are trust and customer success. And the keys to our business are, can we make our customers successful first and do they trust us. And when we have that success and trust, how long do they continue in a subscription revenue model to be delighted with Salesforce? And then second, how many products do they buy? So we think about trust and customer success every day, and that's what aligns us so well with Deluxe. Now many of you know that we started in small business. And small business is big business. It's the roots of our company. And we couldn't think of a better partner for our new Essentials product, which is frictionless, buy it yourself, grow as you grow, no upgrade fee kind of thing, no barriers to upgrading onto the core Salesforce as a small business grows. And that's been a cornerstone of our strategy for a really long time, but now we're partnering with Deluxe. And we think that, that is a really great opportunity for small business. They can start with a trusted company with one or more of the broad portfolio that Deluxe offers. And now they can also get the world's leading CRM at the same time and grow their business. But there's one other part that I think is super important, and that is that every small business doesn't necessarily want to grow for growth's sake. As a matter of fact, many small business owners are perfectly happy with the 5 or 10 or 20 employees that they have and they don't want to go to that next stage. But one thing they do want is longevity. They want that business to survive for generations. And so that piece of it, I think, is also a very big piece of the relationship and the value that we see ourselves and Deluxe delivering together. So from a company that started in small business, I actually am a person who started in small business. I started in small business in the 1970s, working for IBM in their first attempt at minicomputers. It was quite a journey. But I think that small business for me is the cornerstone of America. I'm actually a small business owner myself. It's my husband's business. So I really deeply understand the issues associated with it. We don't really want to grow, but what we want to do is leave a legacy of a small family farm and an independent winery in the northern part of California in the mountains that nobody knows about. So I'm going to become a Deluxe customer. I think that's the very best way to understand how to improve your relationship with your partners is to be customers of each other. And I can't think of a better way to make my husband, the small business owner, happier with the marketing services, payment services and the other things that we need to make our business go than joining the Deluxe fold. So that's kind of my personal story, Barry.

Fantastic. Wonderful. Thank you.

Yes. Absolutely. There's one other couple of other things. And I think I heard some questions about cross-selling and the rest of it. And quite frankly, that's one of the things that we teach our customers to adopt. So I guess that's kind of an order for me to make sure that we continue down that path as well. So point well taken. It was somebody over here. I saw the back of their head. There you are. Hello, thanks for asking that question. It kind of made me say, hey, wait a second, are we measuring that? Am I helping these folks do that, that kind of way to think about are you getting value from your CRM. So thank you very much for listening, and I'll be around at lunchtime if anybody wants to talk some more.

Fantastic. Thank you. How about other questions from anyone about our model, about our future, our customers?

Can you just maybe talk another new big customer win in Q1. It sounds like you're taking a little bit of added cost, I guess, to support the growth from Q4 that you announced. Is this going to be a recurring theme or can you maybe just talk a little bit about how the new customer wins will impact maybe profits going forward?