What happened

Shares of 8x8 (EGHT -0.37%) closed Thursday's trading session 27.3% higher. The cloud-based business communications expert reported stellar third-quarter earnings on Wednesday evening, and the positive news fell on a wildly bullish day for the broader stock market.

So what

8x8's sales rose 18% year over year, landing at $184.4 million. Adjusted earnings more than tripled from $0.02 to $0.07 per diluted share. The average Wall Street analyst was looking for $186.2 million and $0.03, respectively. In other words, revenue came in a bit short, but bottom-line earnings crushed the Street's expectations.

Now what

According to interim CEO Sam Wilson, the company saw its best customer-retention metrics in several years, alongside expanding profit margins and robust cash flows.

"I believe our industry is at an inflection point," Wilson said. "With our increased focus and investment in research and development, we have the opportunity to leverage our [eXperience Communications-as-a-Service] first-mover advantage, accelerate [contact-center-as-a-service] innovation, and become a true leader across customer experience communications."

Wilson's company is serious about R&D. That budget increased by 39% while sales and marketing expenses only saw a 3% bump. That's a smart way to balance 8x8's operating costs. In the tech sector, today's R&D dollars will support tomorrow's innovation and sales growth.

Thursday's price jump erased a few months of punishing cuts, bringing 8x8's shares back to prices last seen in June 2022. The stock isn't exactly cheap at 24.5 times adjusted earnings, but it's good to see the business build a more-profitable client list.