Q4 2019 Earnings Call
Ladies and gentlemen, today's conference is scheduled to begin shortly please continue to stand by I think you'd be patients.
[music].
Ladies and gentlemen, thank you for standing by and welcome to the Deluxe Corporation like quite a 2019 endings conference call.
At this time all participants another spin on them out.
After the speaker presentation, they would be a question and answer session.
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They found the coffin speaker today admit vice president of corporate Finance and Treasury. Please go ahead Sir.
They could U.R.L. and welcome to the next corporations fourth quarter 2019 earnings call.
Merit, Vice President of corporate finance and treasure.
Joining me I today's call is very Mccarthy or President and Chief Executive Officer, If you push our chief Financial Officer.
At the end of today prepared remarks buried Keith and I will take questions.
Reminded that comics makes day regarding management's intentions projections, but actual estimates are expectations about the company's kicks your strategy or performance or forward looking in nature as defined in the credit Securities Litigation reform active 1995.
Piece comments are subject to risks that uncertainties, which could cause our actual results to different materially from our projections.
Some information about factors that might cause or actually folks to differ from projection is contained in the press release issue today.
As well and the companies for 10 K. for the year at December 31st 2018, other filing we make with P.L.P.C.
Portions of the financially statistical information that will be discussed during this call alright dressed in more detail in today's press release, which is post that are investor relations website at Dulles Dot com.
This information is also part as to the S.P.C. unimportant paid paid filed by the company. This afternoon.
Any references to not get financial measures are reconciled to the comfortable gap financial measures in the press release or as part of our presentation. During this call cattle trying to call it the berries.
Yeah.
Yeah. That's good afternoon every one.
Used to be with you today.
2009, P. recall.
Hi.
With the progress on team has made.
<unk> last year I was built trigger locks <unk>.
And our strategy on our plans to transform.
Hired two year old company into the do good luck.
Since that time.
<unk> progress.
You know fourth quarter alone.
Oh, It hot had largest built in the past decade.
Well.
Outsourcing wins.
May have qualified and the largest non check man ever.
<unk> when expanded our <unk>.
With the C.I.D.C.
In December we establish your all time sales record for a single mom for our shocked locks dot Com channel.
We've got a call crawl.
How old records in call centres with all time high average order values and number of products sold car or.
We boarded a few executive leadership team.
Each of these leaders have champion successful transformations throughout their careers.
How about these executive how brand new to the company and the dollar for work a lot, but now hold significantly expanded role.
I'm pleased to say all four segment general manager roles are now.
Additionally, brought it wrong class sales H.R.M. strategy leaders.
Oh of these new leaders.
<unk>.
Because they wanted to be part of our historic transformation.
We completed telemarketing technology applications Rolling at work Barry car solution at Microsoft team are collaboration cool.
<unk>.
Drink force, where we were mainstay speakers and captured hungry.
Sales and other leave.
Are award winning television program small business Revolution viewership record frame before.
In addition to being able to extreme programming due to that Hullo you can now stupid out an Amazon crime with you for this year and through the program will be feature <unk> airline.
Because like everything I, just mentioned well hang on a regular given and buying back nearly $120 million of our stock.
Thing on our technology platform <unk>.
I think investing in our business for transformed the locks into a trusted business technology company.
Got to say this is pretty incredible.
This is due to a lot.
We say well I'll do that we do what we think.
You can provide for detail shortly.
First let me take committed to reflect on our financial results.
We don't worry full year round, the new event beep.
Okay.
We kind of all time, rather new record for deluxe.
Think about that from that.
<unk> the five year old company with a brand new management team and for the first time it.
Rather do exceeded $2 billion.
Yes, I got accomplishment and proof our strategy is on the right track.
We also delivered adjusted earnings per share a $6.
Which beat from time to.
Celebrity cash flow from operations.
Our expectations unable I got paid out that level from the beginning of the year.
We're very proud to be a new team delivery, so well for shareholders.
I'm, making some delivered changes the capital allocation of near term.
With our strategy, which we believe what kind of top for longer term growth.
People go into more detail on the shortly.
Looking ahead with 2020 to be another historic your friend.
This will be the first kind of nearly a decade.
The locks grows rather do without acquisition.
This will be a fantastic milestone for us.
[noise] achieving this much progress infantry short time.
More confidence in our 2023, rather new car.
Point $3 billion and we continue to expect 2023 margins will be a below what's the company twenties.
Now all turned over to chief.
[laughter].
Thanks, very good afternoon, everyone.
Already mentioned at the outset, we're all very proud of the financial performance, we delivered while simultaneously driving our business transformation forward.
Recall that we announced as part of one to watch strategy that we would re align the company into for new segments.
Payments cloud solutions.
Promotional solutions objects.
This realignment is effective January 1st 2020. So this will be the last quarter, we expect to report financial results in the current segment structure.
Total revenue in the quarter was $522 million.
Feeding consensus.
Small business services revenue was $324 million declining about three per cent year over year.
Financial services revenue was $168 million growing about 5% you over here.
Direct threats revenue with nearly $30 million declining about 3% year over year in line with our expectations.
For the quarter marketing solutions and other services or.
Expanded to nearly 46% the total revenue.
Jack's accounted for about 37 per cent of total revenue informs accessories accounted for 70% of total revenue.
Revenue, excluding acquisitions declined 2.3% for the year.
Which was in line with our expectations.
Provide more detail shortly but we believe 2000 night team will be the last year of organic rather than with declines.
Gap deluded E.P.S. for the quarter was one dollar and six cents.
Excluding after tax non gap adjustments of 88 cents per share adjusted diluted P.P.S. was $1.94 cents.
Beating consensus and growing about 3.2% over last year.
Recorded he adopted a quarter.
With nearly $99 million, excluding $32 million that expenses related to restructuring integration into other nongaap adjustments.
Adjusted <unk> was $130 million.
This compared to $134 million in the same period last year.
We delivered substantial adjusted EBITDA it free cash for for the year, which allowed us to reinvest earnings into the business entirely cell phones are ongoing transformation. While also funding our regular dividends in common stock purchase program.
This is yet another proof point about the financial strength of our company and our ability to increase shareholder value.
Moving to the balance sheet in casual statement at the end of the quarter, we're drawn about $884 million on the credit facility.
Which was a decrease of $26 million from the beginning of the year.
We pay down debt and returned over $170 million to investors also investing our transformation in enterprise wide technology, we fresh.
For the year cash provided by already activities was about $287 million. It ahead of our expectations.
Capital expenditures were $67 million it free cash flow they find is operating.
To find is operating activities, let's capital expenditures with $220 million.
Primary drivers up the declining free cash flow for higher spending on our business transformation, which we previously disclosed.
Certain legal related payments earlier in the air and revenue mix changes.
During the fourth quarter, we did not we purchased any common stock. So the four year share repurchase it ended at $118.5 million and we have $301 million a share buyback authorization remaining.
As we evaluated our capital allocation priorities to maximize returns.
He made the decision to suspend share repurchase is in the fourth quarter and it says instead invest that cash them back into our business.
We expect to continue this into 2028 or planning share repurchase is to be lower than previous years.
We will continue to opportunistically repurchase stock in the open market.
Moving lots of technology in early 2000 night team, we outline our plan to adopt a new technology solutions that would drive our business transformation forward.
Embarked on alternate last year to simultaneously implement multiple new platforms.
Work day went live January 1st as planned, allowing us to consolidate multiple H.R. systems into one platform.
Or Microsoft teams implementation launched in what Microsoft called quote the fastest corporate roll out of this technology like any company in North America and quote.
Regarding our technology refresh Barry said earlier and I'll say it again here. We told you what we're going to do and we did what we said we would we delivered on time it on budget.
Our sale for supplementation progress.
One when we expect to complete our limitations as originally scope yet this year.
The remaining technology implementation are on track and expected to be in service by the end of 2020 with the exception of the E.R.P. solution, which is currently in month five other 25 months implementation.
Consistent with what we told you last year, we continue to expect we worry about $60 million to $120 million.
Total on these new technologies.
For perspective in 2019, we invested about $30 million on the projects.
This year, we expect to invest about $70 million. The remainder this band will be in 2021 to close out the ear p.
Now, let's shift to the rest of our 2020 financial outlook.
For the first quarter, we expect to deliver total company robitaille in the range of $490 million to $505 million.
We expect four year toll property revenue to be in the range of 2 billion in $2.04 billion at the midpoint of this range, we're delivering a half percent revenue increase you over here.
This represents a significant achievement for us.
Because the revenue growth over last year, it's coming entirely from existing business and knew quite wins.
This will be the first year in nearly a decade that growth wasn't acquisition driven.
Recall that our new go to market strategy is to sell more products and services into our existing client base.
And then supplement that growth through acquisitions.
This is very different from the past when we grew rapidly primarily through acquiring companies not organically.
New strategy is far more capital efficient and importantly.
It's working.
We expect first quarter adjusted EBITDA could be between 85 $95 million.
First quarter easily the lowest margin quarter of the year, it's caring about 40% of the four year adjusted eat but Doc compression.
By the second quarter, we expect margins will return to our long term target range of low to mid twenties for the remainder of the year and beyond.
For the four year, we expect adjusted EBITDA to be between 410 million and $435 million at the mid point of this outlook, we expect adjusted EBITDA to compress by about $55 million and the adjusted deep down margin to decline about 300 basis points compared.
2000 night team.
We also expect to drop the deluded D.P. out to decline you're over here.
[noise] factors impacting profitability include.
No new business.
The three pan pen deals being out in the fourth quarter.
Declining cloud solutions profitability, we discussed in the third quarter.
Nick's changes primarily checks and rules.
And the change in our capital allocation strategy.
Let me explain.
We're investing in operating expense to drive organic growth.
Status capital expenditures for acquisitions.
We believe these investments build capabilities that return revenue at a very high are alive over the long term.
What's exciting about the progress we've already made is that it provides competence in our 2020 revenue outlook, we already have visibility into much of the revenue needed to grow the top line included in our outlook.
We're very pleased with our progress to sell a way to grill.
However to be clear, we will still be acquisitive over time. This is just not our primary growth driver.
Our success in 2019 in our growth planned for 2020 provide of competence that we can deliver $2.3 billion up rabbit edited adjusted eat but down margin in the low to mid twenties 2023.
Before I wrap up our animals day is about two weeks away on Tuesday.
February 25th.
During the event will provide more details regarding our revenue and earnings outlook for 2020.
Additionally, you'll hear more about our continuing sales momentum you'll meet before segment G.M.
You'll learn to each of the for segments is generating hundreds of millions of dollars of revenue with very healthy adjusted either <unk> consistent with our long term plans.
You will see our new go to market strategy.
Here exciting news around the deluxe brand in much more.
It's summary, we delivered a solid fourth quarter and full year, we're on track with our transformation and are making smart investments to drive future growth.
Team is working in unison with a sense of urgency to execute arbitrary information with a line of sight to achieve our 2023 growth plans.
Now I'll turn to call back the Barry.
Hi.
Thanks.
In 2019, we delivered solid financial results and make tremendous progress executing our transformation.
We've had a new all time, rather new record it and continue to our investment in our transformation, rather turning over $170 million back to shareholders through dividends and share price and share buybacks <unk> an impressive achievements.
I can stomach summarize 2019 adjust to work.
<unk> a lot.
Wobig leave operate as one company and the benefits are clear from all of the success.
We will continue this momentum into 2020.
The new to the boxes, taking shape, but I didn't do the aspect.
We continue to uncover.
We are a very serious about improving our sales organization and driving organic revenue growth.
In January we have the company's first ever sales kick off meeting for our entire organization.
<unk> it with the first time many of our people have ever met each other.
During the event, we provided sales and product train it to the entire team, enabling higher cross say all of our solutions and helping further breakdown silos.
The most common phrases I heard surrounding of the of and work quote I didn't know we did all that and the second quote I'm. So proud and excited three part of the new to lock.
The organization is more energized Oh mind unprepared for wind than ever before.
Ready to deliver 2020.
Now, let's move onto our strategy and what's next.
In the first quarter of 2020, we will transition into our new management and reporting structure.
Greater transparency to investors, while making it easier for our customers to understand all that we have to offer.
The four new segments are payment.
Cloud solutions promotional solutions and checks.
The first scroll segment is payments a multibillion dollar market growing at 10% to 15% annually.
Mike Reed, who joined US about two months ago from Barclays on the U.K. and also spent time at bank of America earlier in his career.
Like is off to a fast start.
The payments business can be categorized into treasury management solutions.
Management for small businesses and digital payments.
We had a great year on Treasury management solution.
During the fourth quarter, we signed two of the top 10 largest deals in the past decade, and this was on top of what any more than it does a new contracts in the third quarter.
We also kind of news committee it will be getting using our treasury management solution.
One of the largest nationally recognized auto dealership group two major national charitable organizations and two major retail banks, who will use our lockbox ever been services.
We've established ourself as a leader and the receiver management space and our building out solution with long term growth potential.
In 2019, we initiate a campaign to expand payroll services inside new community bags as a reseller of our payroll platform.
Well encouraged by the opportunities we continue to uncover in the space.
And the digital payments, we'd watched eat checked for an insurance company and our building up plans for the next generation of digital payments, which will allow pays to have more control over how they get paid.
Will provide more or less exciting opportunity during our handle this day on February 25th.
The next go segment of cloud solutions and it has also a multibillion dollar market growing a double digits annually.
Very tape versus the G.M. This business enjoyed if most recently from 80 P. <unk> Equifax entertain earlier in his career.
Theory, it's been with US about 120 days and is making great progress.
<unk> can be categorized into software as a third of for sat solutions plowed based web hosting and clouded deliberate data analytics.
Sat solutions Incompetent Corporation services logo design unprofitability tool.
<unk> web designer web hosting we announce new contracts with the Ingram micro and Vodafone India during the year.
Broker 2020 will be challenged as a result of the customer attrition and apparently we discussed and the third quarter. We continue to be bullish about our growth prospects for 21 and beyond.
[noise] clouded deliberate data analytics, which includes offering some legacy F.N.C.G. and David mix continues to add new clients that are already strong portfolio of customers.
[noise] Oh promotional solution segment is led by Tom Ricchio, who joined to some office depot I'm. The same day that Gary joined.
Products in the segment include quick retail packaging banners business forms in all their promotional solution.
When rebel how the opportunities for girls in this space as Tom continues to uncover new revenue and profit opportunities, which will discuss in more detail during the upcoming analysts day.
[noise] moving on to check Tracy angle heart as a proven later with years of experience running checks and now with 100 per cent of our check business reporting to her.
She's transforming the business and bringing in new customers.
She recently signed our first check contracts with the Canadian Bank C.I.B.C.
What do the athletic regarding opportunities to expand our check business more broadly across Canada.
Moving onto our capital allocation strategy.
I want to emphasize what T. said a minute ago.
We are changing our capital allocation strategy.
We are in <unk> operating expense to drive organic growth instead of capital expense for acquisitions.
This is exactly what we told you we were going to do last April.
In 2019, we deliberately invested in the company well rather than acquiring businesses.
Clearly in alignment with our strategy.
We said, we will do this and we delivered.
We're already seeing your return on <unk>, particularly in the sales organization as I mentioned earlier.
Well acquisitions will be a part of our strategy, we will no longer allow ourselves to be fully beholden to acquisition.
While we ended that internally to drive grow for the long term is Keith described.
This will cause some near term margin compression.
We're confident this is the best use of our Capitol out these investments will enable us to deliver a future revenue growth breaking our dependency on acquisition.
While we covered much today I know many of you will want to hear more about or exciting transformation and meet our new executive leadership team, who will be presenting at our analysts day on February 25th.
You can register to attend on our Investor Relations website, and we look forward to meeting you.
Not chief Ed and I will open up the call for questions.
Thank you.
I don't mind to ask a question you will need to Palestine, one on your telephone.
Try your question pests Punky <unk> I first question <unk> S.C.G.S. headline is now okay.
[noise] hi, good afternoon.
Hey, Charlie.
If we can talk a little bit about yep going it's looking at this year being kind of the first year of organic rose on the top line Yeah, what are your assumptions.
Driving that and you know maybe talk a bit more about your confidence level behind that as well.
You know what Charlie.
Into the you're feeling really confident about our gear.
We had an extraordinary to four we sold three of the 10 largest deal in the last decade for our company and that's on top of the extraordinary success, we had an few three.
So we had line of sight into the rather knew that we needed to deliver the plan here and we feel great about where we are going forward in the year.
And we feel especially great about a Charlie because I'll just remind you.
We didn't have an organized sales team.
In July R.R.C.R.O. didn't start until July we really didn't start getting going to tell the fourth quarter and even though.
Just getting started a week close three of the top 10 deals over the last decade, just in the fourth quarter.
A lot the confidence about our ability to grow the company organically. That's what I said, we were going to go do in April and that's exactly what we're doing that.
And it's part of the to the to do a bank customers friends, as well or or about the signs that driving part of as well.
Yeah.
Part of the ones that we're talking about those are all in the queue that we can see the implementation plans on schedules and no one week, but rather to start writing.
See if they different place for this company to be where we have line of sight about undo revenue from selling to our customers Sally existing products. Some solutions that we have the other kind of gives us a lot of confidence you know I trolley honestly is we have all of the G.M. someplace, Mike Reed with the last one to join it he got here Thanksgiving week, but.
Got you know Tom running promotional products scary running cloud.
And Tracy Runny check so we have a full contenders we had an entire management team that's on fire to deliver and Oh by the way we had our first ever sales kick off meeting and it was amazing people were on fire. We got <unk> trained on all of our products and without them on the market.
<unk>, beating up beating up the bushes to get us some some do business.
Excellent shifting use a little bit to the incremental expenditures you expecting this year you maybe help clarify the at the magnitude of those in in any thoughts on on sharing wait what kind of returns you would expect you long term from those those investments. Thanks.
Yeah. So we you know we are making investments like if that'd be would we're building out our sales organization, but we also what makes this period, especially unique is that we are investing and bringing all this new business online right. We we have craig's fortune.
<unk> book of business that we need to spend some money to get online, which is exactly what I think you'd want us to do you know we think that the returns on that investment are many multiples of it just a traditional acquisition because not only they're going to help us get this business online, but as we grow our sales organization that.
Is going to pay dividends going forward, because we're building a company that's going to be self sustaining took a long time, so instead of having to be a company that would only growing sustain itself I acquisition.
Now going to be in a position, we're gonna grow and sustain ourself, because we're able to sell the products and services, we already have to existing customers and new customers that are they fundamentally different proposition than a company that's continuing to invest in.
In acquisitions as it's only pathway to corrupt.
Got it and then just Leslie in Q. for you mentioned in the in thinking that at least 18.4 million of you know queue for investments are those related to the I.T. refresher you spoke about.
[noise] for kids cigarette keeps going to give you that sure.
Fourth in the fourth quarter.
T investors might many of those are nongaap out that the the ice he could hold it you'll start to experience back in 2020 because of an accounting rule change. So we'll start to they'll start to see those show up.
Additional subscription expense.
Those are counted for part of the compression we're feeling here I'll tell you, though those are all going to be paid for through value capture. So we expect that these systems color like we'd get a get out of the bubble cost of running the legacy platforms in the new platforms. Those those all pay that goes back and sit there.
<unk>.
Great. Thanks, I'll jump back in the queue.
Thank you next question comes from Jamie comment, let's Buckingham, Yeah, I know some open hey, a gentleman good afternoon. Thanks, a lot for checking my questions.
Hi, Jane Hey, I keep I I you know you you went through this and I I wish I was I was behind on my notes V.I.D.
The three year I.T. expense you laid out can you just run back how much was would spend 2019 and then the projection for 2020 and 2021 do you mind just give me those numbers again.
Sure It 20, $19000 $30 million, Okay. Once you're in 2020, that'd be off $70 million and <unk> three major will be in 2021 and the the remaining portion will be exclusively on a yorkie.
Close by the call. It this year, we will we will all those other systems will be functional. So so it's 30 17 70 is that right.
So I was Oh 20 fish, we said the total total span was going to be somewhere between 60 at 120.
Yeah, we <unk> that'll be into higher end up what we said, but that's the way we thought that authority in 1970 this year.
Up to spend the in in 21.
As you know and I I wish I, you know kind of what's your you'll multiply your guidance kind of in mind.
How should we how should we think about.
Those are investments.
I want to make over this kind of both high period of time to get to that 2.3 billion a revenue.
You know do you want to.
Add to the sales force are there other kinds of.
Capabilities that you want to add overtime can you can be kind of give us a 20000 foot view about how you think the next couple of years going to play out from that perspective.
Yeah, Yeah same here, let me start by just talking about.
Jobs into our capital allocation approaching strategy.
You know this company for each of the three years before I got here. So 2018, 17 and 16 on average the company was investing about $200 million of your capital.
Hi revenue to cover for secular declines and provide some girl.
In 2019, we spent zero, but to say it again.
<unk> $200 million a year on acquisitions to fill secular decline and provide some growth in 2019, we spent zero and we are going to the lever revenue growth in Twentytwenty anyway, and we're doing it because we're building a self sustaining organization a sales organization that can sell the price.
Service that we have.
So if you just think about but the other point on that to think about is it in 2018 that roughly $200 million. We spent on buying about 150 hundred 50 million or that became debt, but you could still see a carry on the books today.
Positions in 2019, and we actually reduce debt and 2019, we're going to grow anyway. So what we especially like about the approach. It went teases already alluded to value capture we think we're going to be able to tell largely I'm not going to say perfectly but largely in was asked for bro within the within.
The company produces from cash flow in income going forward at protecting there were times, we've always been able to provide a margins like they've been saying in the low to mid twenties.
So I think that what's your what's about to see US do is that you'll see continue to make investments and failed to continue via make new investments in product development. What we think that largely we're going to be able to sell thought of that so we're very optimistic that we can deliver great shareholder returns over this period of time.
Okay, I I appreciate that and and Keith.
I don't know what what you're you know what you're able to say before you actually do it but in terms of the do segment reporting we're going to be seeing what do you anticipate having on on allocated corporate cost line item, where do you did I just allocate everything to four seconds.
That's that's a great question, we will spend more time talking about that in animal an outbreak that yes, we do in just a happier corporate I was pregnant on for a couple of reasons. First is we are still working on building out. These organizations someone mentioned to you that.
Prevention few that there is redundancy in our in our business. So that's a great place where those costs can be that we can you should be able to expect to see us continue to to <unk>, but the reality is that this business.
As an infrastructure that infrastructure is Sheridan supports the whole business, well well they'll share more about that on the plate.
Okay, Alright, and then I.
Yeah.
I think you you or you're not you you're not giving an operating cash flow guidance I don't think I think there's enough to work you have a rough expectation of white.
Restructuring spending my work for somebody who wants to kind of looking into just a little bit di number and then bill Bill to an operating cash flow for projection give a rough number in mind for 2020.
No we're not we're not providing that guy. This at this time, you're <unk>, let's get the analysts say well okay. Okay. What we're capable of providing nope nope no problem. Thanks, very much free time.
I think yeah.
Hi, My name to ask a question you will need to Palestine, one on your telephone.
Next question comes from Christmas <unk> kind of <unk>.
Good afternoon, and thanks to take my question.
Hi, maybe smart you mentioned about the cross selling it obviously that's been.
Part of the story, that's starting to come come around as well as organic growth just maybe they get into maybe where that grosses coming in terms of customer base and then maybe.
The rate of acceleration. Your C., you know is that continuing to pick up is.
That gets more integrated into the solar system. Thanks.
Absolutely, we're really proud of the I got to pay for we.
It is inspired and to be able to do cross out for a long time.
But we really worked hard to address this last year and we are fundamentally changed the way our sales people in our sales call centres for compensated we gave them training, we allow them to sell multiple products rather than just one so instead of having to do transfers people could sell more products from there.
I'm their desk at themselves and as a result, we had all time record high rather new per quarter, and we had all time record high well, we call lines per order, which is the number of products being shipped in in an order and we've just started right. We're just on that we've just for the process of rolling that auto across all of our sales.
And call centre operations, and we're very optimistic but that won't deliver sustained growth for us.
I feel like that obviously is.
A lot of those calls come to us without offending any marketing dollars at all and those that do college as a result of marketing dollars. We can sell the next product that is always on the promise of our company ever I'm laughing, yet and we you know we have an organization. That's on fire. That's the Liberal again and you can start to see it showing at the us start to see it showing up.
A number.
Right.
And then maybe just a big a little bit more it's about 70 million. So what's your T.V., maybe keys teachers, maybe talk a little better about the buckets adapt on them too I don't know if you can get in the numbers.
But.
Don't mind, just elaborating a little bit on that 70 by thanks.
So of course, you were a little jumbled there would be out of curiosity to something about 2000 twenties plan, but we we didn't hear what you specifically rafting.
Oh, sorry about that Oh, who's better just around the 70 million of the investments Bank you just maybe put that in the buckets of of where that's going to I don't know if you break it down by dollars, but you just maybe a little bit more granularity around that thank you.
Sure Yeah, a big chunk of that is going to be fast subscriptions that are flowing through I'm going to here as well as <unk>, it's excuse me as well as declines in the.
It'd be part of a business related to check in the new new is big contract extensions that are happening there.
Those carry a big portion of what we're experiencing it and then in addition to that you're talking about the investments that we're making the on board.
That are happening in in the fourth quarter.
Okay.
And then lastly, I think you you you may have said this on the call already but just on the <unk> I think you mentioned that you largely have that already in in line. So it was you know I'm just thinking that that's an easier targets. It. This year I don't want to see it's easy, but you know you feel really concerned about that number for the four year.
Oh.
Yep.
Thanks.
We are these these winds were very significant for us and they give us a line of sight to deliver what we need to do to get to 22.
<unk>.
40 this year.
Right.
Great. Thanks for taking my questions and she's a couple of weeks.
Yeah.
Thank you.
Next question comes from Chinese Strauss I would see Jackass you align the south then.
He just one quick follow up if you have the numbers handy you for Keith This one just the the segments organic good numbers for small business and financial services. Thanks.
[noise] sure <unk>.
2000 in 19 for the full year, we had to cry for about 2.3% small business with down about.
Oh, well financial services with down 1.3%.
Checks were down about 7.1%.
What we what we really liked.
We saw in the fourth quarter is it that way to decline.
It's slow substantially so when the fourth quarter are organic decline with down 0.8%.
F.B. with down 0.9%.
Walk financial services group about 0.5%.
In checks were down 6.3%.
Right. That's helpful. Thank you and it sounded like.
Charlie that's all about another one of the reasons, we feel feel confident going into the year that we're we're getting lift off we said we were going to try to to to shrink that and that's exactly what happened then queue for that line of sight on the revenue going into the new year and that's why we're you know we feel confident about getting this to be you know there's this it's no longer dependent on.
Acquisition for growth so.
Big files don't for us.
Great. Thank you very much.
Thank you I'm next question got some Jamie comment was Buckingham Yeah <unk>.
Hey, guys in terms of data driven marketing I in the fourth quarter and then the way it's mentioned in the 2020 outlook eat it seems like.
Was was data driven marketing pretty good in the fourth quarter, but then what's the I don't I don't quite get the mixture of the data driven marketing, let's discuss another 2020 I what.
Yeah, but we're we're very proud and pleased with the progress of are making and that segments. We.
Had a number of the client client Windsor expansion of relationships that helped us and to four we expect us to continue into the new year and we think that's really helpful and that gives us a lot of reason optimism for the data businesses going forward.
And the other opponent about with.
In contrast, yeah.
The lots of business that happened last year that will continue into 2020, but well experienced the full and pocket that that's what that's what resulted in the impairment what feeling not affecting 2020.
So all the fourth quarter was.
Very happy with that outcome that is that it's below where we expected to be for the for the quarter earlier on the here.
Okay. So when you say adjust C.D.B. below is expected to decline for 2900, primarily from revenue exchanged web posting a data driven marking.
You're talking about with that comment.
Yeah, Yeah, okay, great. Thanks, very much I appreciate it.
Thank you I'm not showing any further questions at this time I have another to tend to call back over to Dan Mccarthy Fannie close talking mikes.
Well. Thank you all her participating on the call and for your question.
Summary.
First Oh I'll momentum is real.
Recently signed a three of the top 10 largest deals in the past decade.
History in 2019 delivery revenue of over $2 billion and expect to set a new revenue record at 2020.
What's exciting about 2020 revenue is that we will grow revenue excluding acquisitions for the first time and nearly a decade.
Makes our target of $2.3 billion or revenue in 2023 seem to very achievable.
And we've only done.
Second.
New segments payments cloud solutions promotional food solutions and checks all led by senior executive with proven transformation track Records and Nicorette <unk> to deliver.
Third it we continue to be on track it on budget Rolling out our new technology solutions, having already completed our work day and Microsoft teams implementation.
Fourth we delivered an all time record, rather new and 2019, while investing in our transformation.
Honey over $170 million back to shareholders, a holders through dividends and share buybacks and we even paid down debt.
We've proven to be faithful stewards out of your company out of built a solid foundation for 2020 revenue growth.
And finally, we're a team that says what we're going to do and we do what we say.
Before we conclude I want to recognize the extraordinary contributions up my fellow deluxe verse.
They're on wavering commitment to our clients success is incredible.
Their dedication to our transformation setting aside for the next hundred years is inspiring.
Without their passion for when we would not be delivery. These breakthrough results.
We live our ownership culture every day.
We're all shareholders too.
Finally in April of last year, we asked you to take a leap of faith and trust our management team as we outlined our new strategy to transform deluxe.
And these past few months, we compiled unimpressive list of tangible examples of our success and concrete evidence that new strategy is working.
And we've only just begun.
Growling.
<unk> exceeding a week.
I ran team we are then do deluxe.
Not all trying to call back to add for some final comment.
Thank you very before we concluded days call just where your mind view of the following conferences in the in the <unk> coming up in the next month here.
Hi February channel 13.
Management will be claim that the delays exchange in Phoenix, Arizona on February 24th our entire executive leadership team will be in New York is we bring the New York start exchange close your belt.
25th will be at the Grand High in New York as we hold our very first scandalous day in recent memory.
On March 12th will be in New York at the night annual assessment on a technology conference.
For joining us and that includes the deluxe fourth quarter pretty next year, it's cool.
Ladies and gentlemen, complexities conference call. Thank you for participating you may not.
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