What happened

Shares of Stamps.com (NASDAQ:STMP) have skyrocketed today, up by 16% as of 12:15 p.m. EST, after the company reported Q3 earnings. The postage and shipping software specialist delivered a textbook beat-and-raise quarter.

So what

Revenue in the third quarter declined 5% to $136.2 million, topping the $123.2 million in sales that analysts were expecting. That led to adjusted profits of $19.5 million, or $1.12 per share, well above the consensus estimate of $0.70 per share in adjusted earnings.

Six winter-themed postage stamps

Image source: Getty Images.

"In our ongoing efforts to evolve our strategy to more fully embrace a global multi-carrier and e-commerce services focused business model, we achieved a significant milestone with the recent announcement of our new partnership with UPS," CEO Ken McBride said in a statement. "We're excited about this new collaboration and view it as a meaningful step in our strategy to diversify our carrier relationships."

Now what

The UPS partnership comes after Stamps.com said in February that it was discontinuing its relationship with the USPS, causing shares to tank precipitously. The company had cut its guidance in May, then proceeded to increase its outlook in August.

Stamps.com is raising its 2019 guidance again, thanks in part to the UPS deal. Total revenue for 2019 is now expected to be $535 million to $565 million, up from the most recent range of $520 million to $560 million. That's comparable to the forecast provided in February, which called for revenue of $540 million to $570 million. Adjusted earnings per share for 2019 are forecast at $3.85 to $4.85.

On the conference call with analysts, CFO Jeffrey Carberry noted that the UPS rollout will take several quarters as shipping volume migrates from USPS to UPS, so "financial gains in UPS will be offset to some degree by losses of revenue from our USPS partnership."