ITEM 1A. RISK FACTORS
We are subject to a variety of risks and uncertainties that could materially affect our business, financial condition, and future results of operations. Many of these risks are beyond our control and may cause actual outcomes to differ significantly from our current expectations. The following section, together with other information included in this Annual Report on Form 10-K, describes the material risks known to us at this time. The risks are not listed in order of significance or likelihood.
In addition to the specific risks described below, we are also exposed to general risks and uncertainties that affect many companies, including changes in overall economic, industry, or market conditions. Furthermore, there may be additional risks
that we are not currently aware of, or that we currently consider immaterial, which could also adversely impact our business and financial results.
You should carefully review and consider all of these risks and uncertainties, as well as the other information contained in this Annual Report on Form 10-K, before making an investment decision regarding our common stock.
STRATEGIC RISKS
If our long-term growth strategy does not succeed, our business, financial condition, and results of operations would be adversely impacted.
Our strategy is to leverage the cash flows, customer relationships, and brand equity from our Print segment to drive profitable organic growth in our other businesses. Details about our strategy can be found under the caption " Our Strategy ," located in Part I, Item 1 of this report. There is no assurance that we will achieve our strategic objectives or that our investments will yield the anticipated financial returns.
A number of factors could cause our strategy to fall short of expectations, including, but not limited to:
• Failure to generate profitable revenue growth;
• Inability to acquire new customers, retain existing customers, or expand sales to our customers;
• Challenges in enhancing our technology infrastructure, digital services, or other key assets to improve efficiency, strengthen our competitive advantage, and scale operations;
• Failure to develop and successfully launch new products and services;
• Difficulties in managing the growth, complexity, and rapid changes in our business and operations;
• Inability to effectively operate, integrate, or realize the expected benefits from acquired businesses;
• Lack of market acceptance for new products and services;
• Failure to maintain, strengthen, and protect our brand;
• Unexpected changes in demand for checks or other products;
• Inability to attract and retain the talent necessary to execute our strategy;
• Unanticipated changes in our business, markets, industry, or competitive landscape; and
• Adverse general economic conditions.
We cannot guarantee that our strategy will be successful or that it will generate positive returns on our investments or maintain our current margins. If our strategy fails, or if the market perceives our strategy as unsuccessful, our reputation and brand could be harmed, and our stock price could decline.
If we are unable to attract and retain customers in a cost-effective manner or effectively deliver a seamless multichannel customer experience, our business and results of operations could be negatively impacted.
Our ability to achieve and sustain growth is closely tied to our effectiveness in attracting new customers and retaining existing ones in a cost-effective manner. We utilize a variety of marketing and promotional strategies, such as a direct sales force, partner referrals, email campaigns, paid search engine placements, direct mail, broadcast media, online advertising banners, social media engagement, and other digital channels. The efficiency and cost of these methods may fluctuate over time, and certain approaches may become less impactful or more expensive. For example, direct mail campaigns may yield lower response rates, search engine providers may alter their algorithms or increase the cost of paid placements, or the volume of partner referrals may diminish.
Furthermore, the increasing adoption of generative artificial intelligence (AI) tools and agentic search technologies, including conversational search engines, autonomous shopping assistants, and AI-driven product recommendations, may change how customers discover, compare, and purchase products and services. As these technologies become more integrated into customer decision-making processes, our visibility within digital platforms that we do not control may decrease, potentially impacting our ability to reach prospective customers.
Additionally, our broad range of products and services presents challenges in ensuring that customers are aware of our full portfolio. Initiatives aimed at increasing awareness of our diverse offerings may result in higher marketing expenditures, which may not necessarily translate into increased revenue.
We regularly review and adjust our marketing and sales approach to optimize our promotional mix. However, competitive pressures may prevent us from passing increased costs on to customers, and new marketing initiatives may not deliver the expected results, which could weaken our competitive position and negatively impact our financial performance. In addition, as our check supply contracts expire, customers may renegotiate terms or choose alternative suppliers. If we are unable to secure favorable renewals or attract new check supply customers, our revenue could decline.
Maintaining a relevant and flexible multichannel experience is essential for customer acquisition and retention. Customers expect to interact with us through their preferred channels, whether by mail, online, phone, or mobile device. While we invest in improving our user experience, there is no guarantee these investments will be successful. The landscape of multichannel marketing is rapidly evolving, and we must keep pace with shifting customer preferences and competitive innovations. If we fail to update our customer-facing technology promptly or if our technology does not function as intended, we may lose the ability to attract and retain customers, which could result in lower revenue.
We operate in highly competitive markets, and we expect competitive pressures will continue to intensify.
The payments industry is characterized by significant competition. In our Merchant Services and B2B Payments segments, we compete against a wide range of financial technology companies, including independent payment processors, credit card processors, and treasury management service providers. In addition, we face competition from the internal payment processing and treasury management capabilities of financial institutions. To remain competitive and cost effective, we must maintain high transaction volumes and continuously enhance our service offerings to meet evolving customers needs. Within the check printing portion of the payments industry, we are recognized as a leading check printer in the U.S. Nevertheless, we face substantial competition from another major check printer serving financial institutions, as well as from direct mail and online sellers of personal and business checks, check printing software providers, and certain major retailers. In addition, the ongoing shift toward digital payment solutions continues to exert downward pressure on the demand for traditional check products, resulting in persistent pricing challenges within our financial institution sales channel.
Within our Data Solutions segment, our data-driven marketing services compete with a diverse group of companies, including advertising agencies, marketing technology firms, marketing fulfillment providers, data aggregators and brokers, and source data providers. Keeping pace with technological advancements and attracting and retaining skilled personnel are ongoing challenges in this segment.
The business forms and promotional products markets are also highly competitive and fragmented. Our competitors include traditional print shops, office supply superstores, wholesale printers, online printing platforms, small business product resellers, and suppliers of custom apparel and gifts. The online marketplace, in particular, remains dynamic, with new entrants continually emerging.
There is no assurance that we will be able to compete successfully against current or future competitors. Our competitors may introduce superior products or technologies and may be more agile in responding to technological changes and evolving customer needs. Sustained competitive pressures could result in lower prices, reduced profit margins, or loss of customers, any of which could negatively impact our operating results and cash flows.
If we do not adapt to technological changes in a timely and cost-effective manner, we could lose clients or face challenges in attracting new ones, which could limit our growth and negatively impact our business and results of operations.
The markets for many of our products and services are characterized by rapid and disruptive technological change, including advancements in payment technologies, internet and mobile platforms, AI, machine learning, and digital commerce. The introduction of new or improved products and services by competitors, changes in industry standards, or the emergence of alternative technologies, such as the continued digitization of payments, cryptocurrency, and blockchain, could make our offerings less competitive or obsolete.
Our ability to remain competitive depends on our capacity to enhance existing products and services, develop innovative solutions, and respond to evolving customer needs and regulatory requirements. This requires ongoing investment in technology, talent, and infrastructure. If we fail to keep pace with technological advancements, differentiate our offerings, or achieve market acceptance, we may lose market share, experience reduced demand, or be unable to achieve anticipated growth. These risks could materially and adversely affect our business, financial condition, and prospects.
The use of checks and business forms is declining, and we may be unable to offset this decline with profitable revenue growth.
Checks remain a significant portion of our business, accounting for 32.4% of our consolidated revenue in 2025 and generating cash flows that support investments in our growth businesses. We continue to supply checks for both personal and business use and believe that there will continue to be demand for these checks for the foreseeable future. However, the overall volume of checks written in the U.S. has been declining since the 1990s, a trend we expect to continue as payment methods become increasingly digital. The widespread adoption of debit and credit cards, direct deposits, wire transfers, and digital payment platforms, including PayPal ® , Apple Pay ® , Square ® , Zelle ® , Venmo ® , and cryptocurrencies, has accelerated this shift. The expansion of real-time payment networks, such as the RTP ® network and the Federal Reserve’s FedNow ® service, is also contributing to the move away from traditional checks.
Additionally, increased reports of check fraud and related publicity may further discourage the use of checks, as consumers and businesses seek alternative payment methods perceived as more secure. This could hasten the transition to digital and electronic payment solutions.
The pace and extent of the shift from checks to digital payments is uncertain and may be influenced by a variety of factors, including regulatory developments, changes in how the Federal Reserve operates or processes payments, advancements in payment technologies, shifts in consumer behavior, and other market dynamics. If we are unable to offset the continuing decline in check usage by acquiring new clients or generating revenue from other sources, our business, cash flows, and financial results could be negatively impacted.
Similarly, demand for business forms has been declining due to ongoing technological advancements. The increasing affordability and capability of computers, printers, and mobile devices has enabled small businesses to manage transactions and recordkeeping without relying on preprinted forms. The proliferation of electronic transaction systems, business software, web-based solutions, mobile applications, and the growing acceptance of electronic signatures have all contributed to the secular decline in printed business forms. The rate at which these alternatives will replace traditional forms is difficult to predict. If small business preferences shift more rapidly than anticipated, and we are unable to develop new products and services with comparable profitability, our operating results may be adversely affected.
Our business relies on our strong and trusted brand, and any failure to maintain, protect, and promote our brand would negatively impact our business.
We have cultivated a strong and trusted brand that has played a significant role in our business success. The continued strength, recognition, and trust associated with our brand are essential for driving customer adoption of our products and services, expanding our market presence, and attracting and retaining skilled employees. In highly competitive markets, brand reputation is a key differentiator, and our ability to maintain and enhance our brand is closely tied to the effectiveness of our marketing initiatives, the consistent delivery of high-quality, secure, and innovative offerings, and our reputation as a trusted technology provider.
If we are unable to effectively maintain, protect, and promote our brand, or if the costs associated with these efforts become excessive, our business, financial condition, and results of operations could be materially and adversely impacted. Negative publicity, regardless of its accuracy, about our company, our business partners, or our employees could damage our reputation and erode customer trust, potentially resulting in the loss of business opportunities and adverse effects on our financial results.
A central element of our brand strategy is fostering trust with our customers by providing a superior customer experience. We have made, and expect to continue making, significant investments in our digital platforms, technology infrastructure, customer service, and operational capabilities to support this objective. However, our ability to deliver a positive customer experience also depends on the performance and reliability of our third-party suppliers, telecommunications providers, and logistics partners. Furthermore, our brand value is closely linked to our ability to safeguard customer data and meet evolving privacy expectations.
Should our brand-building efforts fail to achieve their intended results, or if we are unable to consistently deliver a high-quality customer experience, our ability to attract new customers and retain existing ones could be compromised, which would negatively affect our business, reputation, and financial performance.
Our cost management initiatives may not achieve their intended results and could adversely affect our business.
In response to significant competitive pressures and the ongoing decline in demand for checks and business forms, we have implemented, and expect to continue implementing, various cost management actions to improve our operating efficiency and maintain profitability. These actions often require upfront investments, such as redesigning and streamlining business processes, standardizing technology platforms, optimizing supplier relationships, improving real estate utilization, and providing severance benefits to affected employees. Despite these efforts, there is no assurance that we will realize the anticipated cost savings or that such savings will be achieved without incurring unforeseen or higher-than-expected costs.
Additionally, the pursuit of cost reductions and business simplification may disrupt our operations, hinder our growth strategies, or impact the effectiveness of our sustainability initiatives. For example, process changes or technology standardization could result in temporary inefficiencies or service disruptions, potentially affecting customer satisfaction. Changes to supplier arrangements may also introduce transitional risks or operational challenges.
If we are unable to achieve targeted cost reductions or if the savings generated are insufficient to support necessary investments in our business, our ability to remain competitive could be compromised. Failure to realize expected benefits from these actions may result in increased pressure on our profit margins and limit our capacity to invest in growth and innovation.
Furthermore, an imbalance between cost management efforts and the need to sustain business growth, customer satisfaction, and sustainability could negatively impact our operating results and financial condition.
We may not successfully identify, complete, or integrate acquisitions, or realize their anticipated benefits.
We may, at times, pursue acquisitions. Successfully identifying, completing, and integrating acquisitions involves significant risks and challenges, including the potential failure to achieve expected synergies, integration difficulties, management distraction, loss of customers or key employees, unforeseen costs, and other operational disruptions.
There is no guarantee that we will be able to identify suitable acquisition targets, complete transactions on favorable terms, or realize the anticipated benefits from acquired businesses. Acquisitions may also require additional financing or result in contingent liabilities, increased amortization expense, or asset impairment charges. Any of these outcomes could negatively impact our business, financial condition, and results of operations.
Risks related to divestitures may adversely affect our business and financial results.
We periodically divest businesses that do not align with our strategic objectives, such as the exit from our web hosting business in 2023 and the exit from our payroll and human resources services business in 2024. However, we may not always be able to complete desired divestitures on favorable terms, and losses from sales or lost earnings could negatively impact our profitability. Divestitures may also result in asset impairment charges and other financial impacts.
In addition, divestiture activities can create operational risks, including management distraction, challenges in separating personnel and systems, transition service obligations, potential disputes with buyers, adverse effects on supplier and customer relationships, and regulatory issues. These factors could disrupt our operations and harm our financial condition and results of operations.
OPERATIONAL RISKS
Security breaches, computer malware, or other cyberattacks involving the confidential information we maintain could significantly damage our reputation, expose us to litigation and regulatory actions, and materially harm our business, financial condition, and results of operations.
Information security risks have escalated in recent years due to factors such as the proliferation of new technologies, including emerging AI systems, remote work arrangements, and the growing sophistication of cyber threat actors. We rely on internet-based channels to collect, manage, transmit, and process sensitive information, including customers' financial account and payment details, proprietary business data, and personally identifiable information of consumers, employees, contractors, suppliers, and other business partners. Additionally, our technology-driven services, such as merchant services and remittance processing, are essential to our customers’ business operations. Cybersecurity is a top risk identified by our Enterprise Risk Management (ERM) Committee, as technology-based organizations like ours are particularly vulnerable to targeted attacks seeking to exploit network and system weaknesses. Additional information regarding our ERM Committee is provided in Part I, Item 1C of this report.
The secure and uninterrupted operation of our networks and systems and the protection of the sensitive information they contain is vital to our business operations and strategy. We have implemented a risk-based cybersecurity program, utilizing a defense-in-depth approach with multiple security layers and adherence to the CIA (confidentiality, integrity, and availability) triad model. Despite these measures, our systems and networks remain inherently vulnerable to unauthorized access. A security breach, whether accidental or intentional, could result in unauthorized access to, or misuse of, sensitive information, including personally identifiable or protected health information. Our security measures may be compromised by third-party actions, computer viruses, accidents, or errors by employees or contractors, as well as malicious actions by insiders. Threat actors may circumvent controls and exploit vulnerabilities, leading to the disclosure or misuse of sensitive information.
We depend on numerous third parties, including vendors, developers, and partners, who may have access to our customer or employee data. We have established a vendor security program to assess and manage these risks, and certain third-party relationships are governed by contractual security requirements. However, we cannot fully control the actions of third-party providers, and any cyberattacks or breaches they experience could adversely affect our ability to serve customers or conduct business.
Techniques used to gain unauthorized access, disrupt service, or sabotage systems are constantly evolving, often difficult to detect, and may not be recognized until after an attack occurs. As a result, we may be unable to implement adequate preventive measures. Threat actors may attempt to access our systems through hacking, fraud, social engineering, or other deceptive methods targeting employees and contractors. Our customers and employees have been, and may continue to be, targeted by phishing and other social engineering attacks. To date, these threats have not materially impacted our business or
financial results. However, given the increasing threat landscape, our technologies, systems, and networks are likely to be targeted in future attacks, and we cannot guarantee that future incidents will not be material.
Despite our robust cybersecurity systems and processes, there remains a risk that unauthorized parties could bypass our security measures. Such a breach could result in the misappropriation of personal or proprietary information, operational disruptions, damage to our systems or those of our users, and reputational harm. Such events could deter clients and consumers from purchasing our products and services, result in contract terminations, and have widespread impacts if vulnerabilities affect large segments of technology infrastructure. Any of these outcomes would negatively affect our business, financial condition, and results of operations.
In the event of a material information security breach, we may need to devote significant management time and financial resources to respond, remediate, and mitigate the effects. We may not be able to resolve the situation promptly, or at all. Under payment card association rules and our contracts with payment processors, a breach involving payment card information could make us liable for costs associated with issuing new cards and other related expenses. We could also lose our ability to process card payments, resulting in customer loss and difficulty attracting new business.
We may also face costly and time-consuming litigation, government investigations, and enforcement actions. If we are unsuccessful in defending claims related to information security breaches, we may be required to pay damages, penalties, or fines, and our insurance coverage may not fully compensate us for our losses. Contractual provisions with third parties, including cloud service providers, may limit our ability to recover losses resulting from a partner's security breach. Additionally, some of our data, such as consumer credit profiles, is highly regulated, increasing complexity and potential liability in the event of a breach.
International, federal, and state laws and regulations require notification of individuals affected by information security breaches involving personal data, which could be costly. Mandatory disclosure of a breach often leads to negative publicity, potentially eroding client and consumer confidence in our security measures. Publicity about breaches at other companies may also create a perception that e-commerce is not secure, reducing our website traffic, negatively affecting our financial results, and limiting future business opportunities.
Disruptions to our information technology systems or those of key third parties could adversely affect our business and reputation.
Our operations rely on the continuous performance and availability of our information technology systems and those of our third-party service providers. Any disruption, failure, or security breach affecting our websites, transaction and payment processing, network infrastructure, printing production, or customer service operations could result in reputational harm, customer loss, and negative financial impacts. These disruptions may be caused by human error, software or hardware failures, cyberattacks, power outages, telecommunications issues, natural disasters, or other unforeseen events.
Additionally, our ability to deliver products and services depends on the interconnected operations of participants in the global financial system. Disruptions affecting any participant in this system, such as banks, payment processors, or communication networks, could prevent us from completing transactions or providing information, regardless of our own systems’ performance. While we collaborate with other participants to mitigate these risks, we cannot guarantee uninterrupted service.
Although we have invested in robust technology platforms, including cloud-based systems with redundancy and backup capabilities, these safeguards may not prevent all interruptions or data losses. Our disaster recovery plans may not address every scenario, and system failures could result in data loss, additional costs, liability claims, or negative publicity. Frequent or extended outages may cause customers to perceive our services as unreliable and seek alternatives.
Our business interruption insurance may not fully compensate us for losses from such events, and we may face costly and time-consuming claims from affected customers or partners. Any significant disruption to our information technology systems or those of key third parties could materially and adversely affect our business, financial condition, and reputation.
The proliferation of AI and machine learning technologies exposes us to a range of risks that could negatively affect our reputation, the effectiveness of our products and services, and our financial results.
The rapid evolution of generative AI is reshaping the business landscape and also introduces new legal, regulatory, and ethical considerations. AI systems may generate inaccurate, misleading, or harmful outputs, and the lack of transparency surrounding their training data and decision-making processes heightens the risk of unintended consequences, such as bias, errors, or exposure to intellectual property and data privacy issues.
We incorporate AI into certain aspects of our operations, which necessitates ongoing investment in oversight and security measures. As AI capabilities advance, some functions currently performed by our workforce may become automated, potentially reducing the demand for certain of our services. Despite our efforts to implement AI responsibly, we cannot ensure that all associated risks will be foreseen or mitigated, nor can we guarantee that AI-generated results will always be dependable. Misuse
of AI, whether intentional or inadvertent, could lead to business interruptions, legal exposure, or damage to our reputation. Furthermore, the regulatory environment for AI is rapidly changing, with new laws and requirements emerging in various jurisdictions.
If we are unable to keep pace with developments in AI technology, or fail to effectively harness AI to enhance our business, we may lose competitive positioning or miss out on expected efficiencies, which could have a negative effect on our business, financial condition, and results of operations.
Reliance on third-party service providers exposes us to operational, financial, and compliance risks.
We rely on external vendors for a range of critical services, including information technology, telecommunications, cloud services, transaction processing, financial clearing, and various outsourced functions such as finance, information technology support, and marketing print fulfillment. Any disruption or failure on the part of these providers, whether caused by human error, technical malfunction, cyber incidents, power failures, natural disasters, or other unexpected events, could hinder our ability to deliver products and services, interrupt our business activities, and negatively impact our financial results.
Although we have established contractual protections and oversight procedures, these measures cannot fully eliminate the possibility of service interruptions or guarantee continuous, reliable performance from our providers. A significant failure by one or more third-party provider could lead to substantial business disruption, customer attrition, reputational harm, and increased expense related to securing alternative solutions. In some cases, replacement services may not be immediately available or may be more expensive.
Additionally, our reliance on third parties limits our direct control over their compliance with applicable laws and regulations, including those governing anti-corruption, labor practices, safety, and environmental standards. Any breach of compliance or operational failure by a service provider could subject us to financial, legal, reputational, and operational risks.
The inability to attract, motivate, and retain key personnel and other qualified employees could adversely affect our business.
Our success depends on our ability to attract, develop, motivate, and retain highly skilled employees and key executives, particularly in a rapidly evolving technological environment. The competition for talent is intense, and the increasing prevalence of remote and flexible work arrangements has added complexity to maintaining our corporate culture and employee engagement. If our workplace environment, policies, or benefits are perceived as less attractive than those of our competitors, we may face challenges in recruiting and retaining qualified personnel.
We have implemented various human capital initiatives, including wellness programs, employee resource groups, and enhanced performance management processes, to support our workforce and succession planning. However, there is no assurance that these efforts will be sufficient to retain key employees or attract new talent. The loss of key personnel, including executive officers, or difficulties in hiring qualified replacements could result in increased labor costs, disruption of business operations, and loss of institutional knowledge.
Any inability to attract, motivate, or retain key personnel and other qualified employees could materially and adversely affect our business, financial condition, and results of operations.
Rising prices and reduced availability of essential materials and services may negatively impact our financial performance.
We face risks associated with the cost and availability of key materials, such as paper, plastics, ink, promotional items, merchant services equipment, and other necessary raw materials. Our reliance on third-party providers for services such as delivery, data supply, and financial clearing also subjects us to potential price fluctuations or supply constraints. Inflationary pressures and supply chain disruptions have resulted in higher costs and reduced availability of some materials and services, and these conditions may persist. If inflation continues and outpaces our ability to raise prices, or if price increases dampen customer demand, our business, financial condition, and operating results could be materially and adversely affected.
Supply chain challenges arising from global instability, changes in trade policies, tariffs, labor shortages, adverse weather events, or financial difficulties among suppliers, could further hinder our ability to obtain materials and services at competitive rates. For example, paper costs represent a significant portion of our expenses, and volatility in paper prices, driven by limited supplier options and declining industry demand, may limit our ability to negotiate favorable pricing.
We also rely on third-party vendors for delivery and outsourced products. Disruptions in these services, such as labor disputes, slowdowns, or increases in postal and fuel costs, may require us to seek alternative providers at higher prices, negatively impacting our margins and results of operations. Financial challenges faced by the U.S. Postal Service that could lead to increased postal rates or reduced delivery scope may further increase our delivery costs and impact our ability to serve customers effectively.
In our Data Solutions segment, changes in laws, regulations, or industry practices could limit our access to vital data sources, impairing our ability to provide effective marketing solutions and potentially reducing our revenue.
Additionally, we depend on financial institutions for clearing services and payment card networks for transaction processing. Increases in fees, competitive dynamics, or regulatory changes affecting interchange rates could increase our operating costs and reduce profitability. If we are unable to secure alternative providers for these services, our ability to process transactions for certain customers may be compromised, negatively impacting our business and cash flows.
Competitive market conditions and contractual arrangements may limit our ability to pass increased costs on to customers. Any of these factors could materially harm our business, financial condition, and results of operations.
Risks related to customer payments and chargebacks could adversely affect our business and financial results.
We are exposed to risks associated with customer payments, including liability for fraudulent transactions, chargebacks, and merchant defaults. Fraudulent activity, such as the use of stolen credit card information or unauthorized electronic payment transactions, may occur on our websites or through our payment processing services. While we have implemented safeguards to detect and prevent fraud, these measures cannot fully eliminate the risk. Any significant increase in payment-related fraud could result in financial losses, reputational harm, and potential penalties from payment card networks for insufficient fraud protection.
We may also be held liable if merchants or other parties fail to deliver goods or services to cardholders, resulting in disputes and chargebacks. If a cardholder dispute is resolved in favor of the customer, the transaction is charged back to the merchant, and the purchase price is refunded to the cardholder. If we are unable to recover the disputed amount from the merchant, due to insolvency, closure, bankruptcy, or other reasons, we bear the loss for the refund.
Although we maintain credit risk management programs, require collateral, and monitor transaction activity to mitigate these risks, defaults by merchants or other parties could result in significant losses. An increase in chargebacks not reimbursed by merchants, or a rise in merchant defaults, could materially and adversely affect our business, financial condition, and results of operations.
Changes to payment card network rules could adversely affect our business and financial results.
As a provider of transaction processing services, we are subject to the operating rules, standards, and requirements of payment card networks such as Visa, Mastercard, and others, either as a registered member or as a service provider for member institutions. These networks regularly update and interpret their rules, which govern areas such as transaction processing, chargebacks, data security, merchant onboarding, and fee structures.
Any changes to, or new interpretations of, these network rules could materially impact our business. For example, modifications to chargeback procedures may limit our ability to contest disputed transactions or increase our exposure to chargeback losses. Changes in fee structures, data security requirements, or merchant onboarding standards could result in higher operating costs, require significant investments in technology or compliance, or restrict our ability to offer certain products and services. In some cases, new or revised rules may conflict with our current business practices, necessitating costly or complex operational adjustments.
Failure to comply with network rules or to adapt to changes in a timely manner could result in penalties, increased costs, reputational harm, or an inability to process transactions through certain networks. Any of these outcomes could materially and adversely affect our business, financial condition, and results of operations.
Dependence on card network registrations and sponsorships could adversely affect our business and financial results.
Our ability to generate revenue from services provided to merchants that accept Visa and Mastercard is contingent upon maintaining ongoing registrations with these card networks, securing sponsorship from financial institutions, and, in some cases, holding direct membership in specific networks. To process Visa and Mastercard transactions, we must either be a direct member or be registered as a merchant processor or service provider, which often requires sponsorship by a member financial institution.
If our sponsoring financial institution in any market ceases to provide sponsorship, we must promptly secure a new sponsor or obtain direct membership with the card networks. Both alternatives may be difficult, time-consuming, and costly. Failure to secure a new sponsor or achieve direct membership could prevent us from offering processing services to affected merchants, resulting in lost revenue and a material adverse impact on our business, financial condition, and results of operations.
Additionally, agreements with our financial institution sponsors may grant them significant discretion over certain business practices, including merchant solicitation, application, qualification procedures, and the terms of merchant agreements. Actions taken by sponsors under these agreements could materially affect our operations and financial results.
Non-compliance with card network requirements by us, our merchants, or independent sales organizations (ISOs) could result in fines, suspension, or termination of our registrations or memberships. If terminated, we would lose the ability to process transactions for affected merchants, which would have a material negative impact on our business. Furthermore, if fines or penalties are imposed due to non-compliance and we are unable to recover these amounts from the responsible merchant or ISO, we may be required to absorb these costs, adversely affecting our results of operations.
LEGAL AND COMPLIANCE RISKS
Governmental regulation is continuously evolving and could adversely affect our business.
We are subject to a complex and continually changing framework of international, federal, state, and local laws and regulations that impact nearly every aspect of our operations. These requirements cover a broad range of areas, including, but not limited to, labor and employment, advertising, taxation, data privacy and security, digital content, consumer reporting and protection, payment processing, e-commerce, real estate, intellectual property, healthcare, environmental compliance, and workplace health and safety. Additionally, new and emerging regulations, such as those targeting climate change and AI, may soon introduce further obligations or restrictions on our business.
The regulatory environment in which we operate is dynamic and can impose significant limitations on our activities. Compliance may require us to alter our business practices, modify or discontinue certain products or services, or implement new systems and processes. These changes could increase our operating costs, reduce our efficiency, or limit our ability to collect, use, or store personal information. In some cases, regulatory changes may also influence customer behavior, which could impact demand for our offerings. The ultimate effect of such changes on our business, financial condition, or results of operations is difficult to predict.
Portions of our business are highly regulated, and our performance is directly affected by applicable laws and industry standards. For example, we must comply with a variety of data protection and privacy laws that require us to implement robust policies and procedures to safeguard consumer information. These laws may restrict how we use or share personal data, and non-compliance could result in significant penalties or reputational harm. Our payment processing activities are also subject to extensive regulation, including rules governing merchant processing, automated clearing house transactions, remote deposit capture, lockbox services, and credit card processing fees. Legislative changes, such as potential caps on credit card processing fees, could negatively impact our revenue, particularly in our Merchant Services segment.
In addition, some of our contracts with financial institution clients impose requirements that exceed those mandated by law, such as stricter confidentiality obligations regarding small business customer data. These contractual and regulatory constraints may limit our ability to pursue certain business opportunities or use information in ways that could benefit our operations. The growing complexity and scope of privacy and cybersecurity regulations may further increase our compliance costs and those of our clients, potentially reducing their willingness or ability to purchase our products and services.
As our reliance on digital channels for sales and marketing grows, we are increasingly affected by laws governing online commerce, mobile applications, search engine marketing, behavioral advertising, privacy, and email communications. New or more restrictive regulations, such as enhanced privacy laws, consumer protection rules targeting “dark patterns,” limitations on search engine marketing, anti-spam laws, or email privacy requirements, could limit our marketing effectiveness, reduce website traffic, or increase customer acquisition costs.
Rising regulatory costs may also prompt financial institutions to exert greater pricing pressure on their suppliers, including us, and could accelerate industry consolidation. Some financial institutions restrict the marketing of add-on services, such as bundled products, fraud protection, or expedited delivery, which may limit our ability to offer these services to end customers. As our offerings become more technologically advanced and regulatory expectations for third-party oversight increase, additional parts of our business may become subject to direct federal regulation or examination. This could further increase our compliance burden, slow the introduction of new products and services, and hinder our ability to respond quickly to market changes.
Litigation and third-party claims can lead to expensive and distracting litigation, operational disruptions, and adverse financial impacts.
We are periodically subject to claims, lawsuits, and other legal proceedings arising from our business operations, including potential class action lawsuits. These matters may relate to a variety of issues, such as employment disputes, alleged breaches of contract, claims of deceptive or unfair business practices, violations of consumer protection statutes, legacy distributor rights, or environmental concerns. In addition, we may be subject to allegations of patent or other intellectual property
infringement, including actions brought by non-practicing entities seeking to enforce patent rights. Such claims may not only result in litigation against us, but could also trigger investigations or enforcement actions by federal or state regulatory authorities. As our business continues to expand and diversify, the frequency and complexity of these legal matters may increase.
Regardless of their validity, these claims can be costly and time-consuming to defend, and may divert the attention of management and key personnel from day-to-day business operations. We record accruals for legal matters when we believe a loss is probable and can be reasonably estimated. However, the outcome of litigation and other dispute resolution processes is inherently uncertain, and we may not be able to predict or control the final result. An adverse judgment or settlement in a significant legal matter could require us to pay substantial damages, fines, or legal fees, or could force us to alter our products, services, or business practices in ways that are costly or disruptive.
Any of these outcomes could have a material negative impact on our business, financial condition, and results of operations.
Difficulties in protecting our intellectual property could adversely affect our competitive position and financial results.
We rely on a combination of trademark, copyright, patent, and trade secret laws, as well as confidentiality and licensing agreements, to protect our trademarks, proprietary software, and other intellectual property assets. However, these legal and contractual safeguards may not provide comprehensive or permanent protection. Despite our efforts, third parties may infringe upon, misuse, or misappropriate our intellectual property, or may independently develop products or services that are similar to ours without violating our rights.
Defending and enforcing our intellectual property rights can be complex, costly, and time-consuming. We may be required to invest significant resources in monitoring potential infringements, pursuing legal action, and maintaining the confidentiality of our trade secrets. If we are unable to adequately protect, secure, or enforce our intellectual property rights, we could lose valuable competitive advantages, experience a reduction in revenue, and suffer damage to our brand reputation. Any of these outcomes could negatively impact our business, financial condition, and ability to compete effectively in the marketplace.
FINANCIAL RISKS
Adverse economic conditions could negatively impact our business, financial position, and results of operations.
Our business performance is closely linked to prevailing economic conditions, which influence both business and consumer spending trends. Factors such as inflation, unemployment rates, consumer and business confidence, credit availability, and overall market volatility can significantly affect demand for our products and services. In periods of economic uncertainty or downturn, existing and potential customers may delay, reduce, or forgo purchases, which could negatively impact our revenue and profitability. Persistent inflationary pressures may further erode customer purchasing power, leading to reduced demand for our offerings.
A significant portion of our revenue is generated from small businesses, which are generally more susceptible to economic fluctuations than larger enterprises. Economic downturns may make it more difficult for small businesses to access credit or maintain operations, resulting in lower demand for our products and services. Key factors such as small business confidence, rates of business formation and closure, and credit availability are critical to our financial performance.
Our business also depends on the stability of the financial services industry. Economic stress can lead to financial institutions seeking additional capital, merging, or failing. The loss or consolidation of major financial institution clients could result in reduced revenue, increased credit risk, and potential losses related to prepaid product discounts, accounts receivable, or contract termination payments. Mergers and acquisitions among financial institutions may intensify competitive pressures, as combined entities seek to leverage economies of scale and reduce costs, potentially resulting in pricing pressure and loss of business.
Additionally, global events such as pandemics, geopolitical instability, changes in trade policies, and other disruptions can increase economic uncertainty and negatively affect our business. The long-term impact of such events, including potential recessions, remains unpredictable and could further adversely affect our financial condition and results of operations.
Asset impairment charges have a negative impact on our results of operations.
A substantial portion of our assets is comprised of goodwill, which must be evaluated for impairment at least annually, and more frequently if events or changes in circumstances suggest that the asset's carrying value may not be recoverable. Several factors could lead to a reduction in the fair value of our reporting units, such as unfavorable economic trends, shifts in our business strategy or organizational structure, underperformance of acquired businesses, heightened competition, loss of
significant customers, prolonged declines in our stock price, or unexpected reductions in order volumes for our products and services.
Should any of these situations arise, we may be required to recognize impairment charges to write down the value of goodwill or other long-lived assets. These charges could be significant and would negatively impact our consolidated financial results. We have incurred asset impairment charges in the past and may need to record additional charges if similar circumstances occur in the future. Information regarding our 2025 impairment analyses can be found under the caption "Note 7: Fair Value Measurements" in the Notes to Consolidated Financial Statements located in Part II, Item 8 of this report.
Our existing and future leverage could adversely affect our financial condition and results of operations .
As of December 31, 2025, we had $1.44 billion of outstanding debt. Both we and our subsidiaries may incur additional indebtedness in the future. A high level of indebtedness could have several adverse effects on our business, including:
• Limiting our ability to obtain additional financing for working capital, capital expenditures, acquisitions, or other corporate purposes;
• Increasing our cash requirements for interest and principal payments, which could reduce funds available for operations, growth initiatives, or other strategic investments;
• Restricting our flexibility to respond to changes in our business, industry, or economic conditions; and
• Heightening our vulnerability to adverse economic or industry developments.
Our credit agreement contains restrictive covenants that impose significant limitations on our operations and financial flexibility. These covenants restrict our ability to pay dividends, repurchase or redeem capital stock, make investments or loans, sell assets, enter into transactions with affiliates, change the nature of our business, or incur additional liens. Such restrictions could limit our ability to pursue business strategies that may be in our long-term best interests.
Our ability to meet our debt obligations depends on our future operating performance, which is subject to economic, financial, and business conditions, many of which are beyond our control. If we are unable to generate sufficient cash flow to service our debt and meet other cash requirements, we may need to seek additional financing, refinance or restructure existing debt, or reduce or delay planned capital or operating expenditures. There is no assurance that such actions would be successful or available on favorable terms, which could have a material adverse effect on our financial condition and results of operations.
Exposure to interest rate risk from our variable-rate indebtedness could adversely affect our results of operations.
A portion of our outstanding debt, including borrowings under our revolving credit facility, our secured term loan facility, and our receivables financing agreement, is subject to variable interest rates. As of December 31, 2025, $519.4 million of our debt was exposed to changes in prevailing interest rates. Increases in interest rates would result in higher interest expense, which would negatively impact our earnings, reduce cash flows available for working capital, capital expenditures, and other strategic investments, and adversely affect our overall financial condition.
While we actively monitor interest rate trends and may utilize financial instruments or strategies to manage our exposure, there is no assurance that these measures will fully mitigate the impact of rising interest rates. Fluctuations in interest rates are largely beyond our control and could materially and adversely affect our results of operations and ability to achieve our business objectives.
