Why Paycom shares rose 21% on Thursday to become the S&P 500’s biggest gainers

Shares of Paycom Software (PAYC) rose 21% on Thursday, posting the best daily performance in the S&P 500, after the payroll and human resources software company reported better-than-expected sales and profits for the third quarter.

Strength in the labor market, with a cooling of inflation, is behind a steady pace of hiring and has helped drive demand for Paycom’s workforce management solutions.

Paycom reported robust revenue growth in the third quarter, with total revenue increasing 11.2% year over year. Recurring revenue increased by 11.6% for Paycom, accounting for 98.5% of Paycom’s total revenue. This is highly desirable for software and service providers like Paycom as it represents a steady stream of expected sales.

Paycom shares struggled in the first half of 2024, hitting a summer low of less than $140 per share. However, the trend has been more positive since mid-July, and with Thursday’s surge, shares have moved back above $200 and into positive territory for the year.