What happened

FedEx (FDX 0.11%) reported quarterly earnings that came in well ahead of expectations, and boosted its full-year guidance. Investors are glad that the company delivered, sending shares of FedEx up as much as 10% on Friday.

So what

FedEx was one of the first major companies to issue a warning about the economy last fall. The company's shares plunged in September after FedEx missed on earnings and said it had seen market conditions deteriorate rapidly.

The transportation giant at the time promised to make adjustments to its cost base that it said should help it perform better in the current environment. On Thursday, after markets closed, FedEx posted results that indicate it has had success in those efforts.

FedEx earned $3.41 per share in its fiscal third quarter on revenue of $22.2 billion. The earnings number was well ahead of the $2.73 per share consensus estimate even though revenue came in about $500 million below expectations. Revenue was down about 5.9% year over year.

The company said that results were negatively affected by continued demand weakness, particularly at FedEx Express, as well as by foreign currency weakness. FedEx Ground was a standout in the quarter, posting an 11% increase in revenue per package while also benefiting from cost reduction actions.

"I am proud of the FedEx team, who delivered outstanding service to customers during our peak season while also making solid progress on our transformation initiatives," CEO Raj Subramaniam said in a statement. "We've continued to move with urgency to improve efficiency, and our cost actions are taking hold, driving an improved outlook for the current fiscal year."

Now what

FedEx raised its guidance for the full fiscal year to earnings of between $14.60 and $15.20 per share, higher than its previous $13 to $14 per share estimate and ahead of the $13.56 per share consensus.

There is some uncertainty in those projections, as FedEx warned it is unable to forecast certain retirement plan accounting adjustments. But the momentum is heading in the right direction.

The company is still facing headwinds, but it appears the cost cuts and other adjustments announced last fall are having the desired effect. With Friday's jump, FedEx shares are back to near where they were prior to the plunge in September.

It will take time to accelerate from here, but FedEx does appear to be heading in the right direction.