What happened

Shares of Paycom Software, Inc (NYSE:PAYC), a provider of cloud-based software used for payroll processing and other human resources functions, are up 12% as of 10:45 a.m. EST on Thursday. 

So what

Thursday's surging stock price can be traced to the release of a better-than-expected earnings report that was full of good news.

The word "payroll" over a tablet

Image source: Getty Images.

Here's a look at Paycom's quarterly results when compared to the year-ago period:

Metric

Q4 2016

Q4 2015

Year-Over-Year Change

Revenue

$87.8 million

$65.1 million

35%

Adjusted EBITDA

$20.7 million

$10.5 million

97.4%

Non-GAAP net income

$10.8 million

$6.0 million

80%

Non-GAAP EPS

$0.18

$0.10

80%

Data source: Paycom Software.

These figures compared quite favorably to management's guidance range of $85 million to $87 million in revenue and $14 million to $16 million in adjusted EBITDA. They also handily bested Wall Street's expectation of $86.2 million in revenue and $0.15 in EPS.

Paycom's management team also expects the good times to continue heading into the first quarter of 2017. The company is guiding for revenue to land between $114.5 million and $116.5 million for the first quarter. The midpoint of this range represents growth of 28% over the year-ago quarter. Adjusted EBITDA is expected to also outpace revenue growth yet again, and land between $42 million and $44 million. 

The picture is looking equally bright for the full year ahead. Paycom is projecting total revenue to increase 29% to a range of $422 million to $424 million and for an adjusted EBITDA to grow by 21% to a range of $113 million to $115 million.

The better-then-expected quarterly results and upbeat forecast caused investors to cheer. 

Now what

Paycom's fourth-quarter results clearly show that the company is successfully winning market share away from legacy providers such as Paychex and ADP. This hints that the company's strategy to focus on small and medium-sized businesses is really paying off. 

CEO Chad Richinson was quite happy with the company's performance in 2016, and he boasted that Paycom now counts more than 17,800 clients on its platform. Better yet, the company's retention rates for 2016 stood at 91%, which show how much value its customers get from using the company's platform. 

All in all, Paycom looks well-positioned to grow its top and bottom lines in the years ahead. With so much good news packed into this report, it's easy to understand why investors are bidding up shares today.

Brian Feroldi owns shares of Paycom Software. The Motley Fool owns shares of and recommends Paycom Software. The Motley Fool recommends Automatic Data Processing. The Motley Fool has a disclosure policy.