What happened

Shares of education services and content provider Houghton Mifflin Harcourt (HMHC) jumped on Thursday after the company reported its first-quarter results. Revenue and earnings came in above analyst expectations, prompting investors to push the stock 9.4% higher as of 1:21 p.m. EDT.

So what

HMH reported first-quarter revenue of $222 million, up 8% year over year and well above the $196.9 million analysts were expecting. Billings were up 10% year over year to $184 million. The sales increase was driven by an increase in domestic education net sales and Heinemann professional publishing net sales, as well as other items.

Vocabulary books from HMH.

Image source: Houghton Mifflin Harcourt.

HMH posted a net loss of $121 million, down 27% year over year. EPS was a loss of $0.98, $0.10 higher than analysts were expecting. Higher revenue and decreases in both cost of sales and operating expenses boosted the bottom line.

HMH CEO Jack Lynch emphasized that 2017 would be a year of change:

We began 2017 with a solid first quarter. This is a transitional time for HMH as we make the necessary operational changes to streamline the Company. Importantly, we remain focused on strengthening our core business and improving our industry-leading educational offerings.

Now what

HMH is engaged in a review and evaluation of its business, with plans to improve its operational efficiency and right-size its cost structure. The company expects to achieve between $70 million and $80 million in annualized cost savings by the end of 2018, although this will come with charges totaling $41 million to $45 million.

HMH CFO Joe Abbott painted a rosy long-term picture despite the company's current challenges:

While the first quarter has historically been a small contributor to our annual results, with both net sales and billings up year-over-year, we are encouraged by our early performance this year. After a thorough review of our operations, our main priorities are simplifying our business, reducing costs and focusing our investments in areas of our business with the highest potential for long-term growth. We are confident that these initiatives will make HMH more efficient, more competitive and better positioned to generate long-term value.

Investors bought into the turnaround story on Thursday, but the company has a long road ahead of it.