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What: Shares of e-commerce company Wayfair (NYSE:W) soared on Wednesday after the company reported its second-quarter results, with both revenue and earnings coming in well above analyst expectations. At noon Wednesday, the stock was up about 20%.

So what: Wayfair reported quarterly revenue of $491.8 million, up 66.4% year-over-year and about $53 million higher than the average analyst estimate. The number of active customers rose to 4 million during the quarter, up 53.5% year-over-year, and the number of orders delivered increased 80.7% year-over-year to 2 million. Direct retail revenue, generated through the websites of Wayfair's brands, rose 80.8% year-over-year to $440.3 million.

The company also beat analyst expectations for earnings, reporting a non-GAAP net loss of $0.15 per share. Analysts were expecting a non-GAAP loss of $0.29 per share. Gross margin rose to 24.6%, up from 23.2% during the same quarter last year, while operating expenses rose by 53%, substantially slower than revenue growth.

Now what: Wayfair is still unprofitable, reporting a GAAP net loss of $19.3 million during the second quarter. But this is an improvement compared to the second quarter of 2014, when the company lost $23.4 million, and losses are shrinking as a percentage of revenue. All of Wayfair's numbers are moving in the right direction.

Wayfair is a heavily shorted stock, so the big move today may partly be driven by shorts closing out their positions. Overall, it was a great quarter for Wayfair, with revenue growing at a rapid pace and profitability improving, so it's no surprise that investors are bidding up the stock.

Timothy Green has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.