What happened

Shares of Paycom Software (NYSE:PAYC), a provider of human resource software, have surged in 2019, rising 85% during the first half of the year, according to data provided by S&P Global Market Intelligence.

The stock's huge run-up has been fueled by a combination of a rebound from a sharp sell-off in tech stocks in the fourth quarter of 2018 and the company's strong business results reported so far this year.

A chalkboard sketch of a bar chart with an arrow highlighting a growth trend

Image source: Getty Images.

So what

Part of Paycom's rise in 2019 is undoubtedly simply a rebound following a tough fourth quarter of 2018 for high-growth tech stocks. Illustrating how tech stocks overall have rebounded this year, the tech-heavy Nasdaq Composite index rose nearly 21% during the first six months of 2019.

But Paycom's underlying business performance has helped, too. The company's fiscal fourth-quarter revenue surged 31% year over year to $150.3 million, easily beating analysts' average forecast for the period. Revenue continued to rise rapidly in the company's most recent quarter, climbing 30% year over year. Non-GAAP (adjusted) earnings per share also jumped nicely during the period, rising 24% to $1.19, beating analysts' average estimate of $1.11. 

Now what

With Paycom's results in 2019 exceeding management's own guidance, it's no surprise that it raised its outlook in its most recent quarterly update. The company said it now expects full-year revenue between $718 million and $720 million, up from previous guidance for revenue between $710 million and $712 million. In addition, Paycom is guiding for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) between $296 million and $298 million, up from a forecast for $288 million to $290 million.

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