Like a modern smartphone, these ShoreTel phones can do much more than basic voice calls. Image: ShoreTel.

What: Shares of ShoreTel (NASDAQ: SHOR) gained as much as 13.9% on Friday, thanks to a fantastic first-quarter report.

So what: In the first quarter of fiscal year 2016, ShoreTel saw sales hold steady year over year, at $90.2 million. Adjusted earnings increased 29%, to $0.09 per diluted share. Your average Wall Street analyst would have settled for earnings of $0.04 per share, though they did nail ShoreTel's top-line revenues exactly.

Looking ahead, the maker of IP-based phone systems and other networked communications solutions expects to deliver roughly $90 million in third-quarter sales. Do take note, however, that the guidance comes with a fairly wide margin of error, ranging from $87 million to $93 million.

Now what: ShoreTel is busy rolling out partner programs, and extending the capabilities of their core communications software. In the second quarter, most of the sales growth came from a suite of cloud-based calling platforms. So-called hosted sales jumped 19% year over year.

Adding some much-needed stability to ShoreTel's quarterly results, the company is also moving many of its customers over to long-term contracts. Today, 51% of ShoreTel's revenues come from these long-term agreements, a 15% improvement from the year-ago period.

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"We are now in the third and final phase of our strategic transformation and we continue to operate from a position of strength with momentum and accelerating results," said ShoreTel CEO Don Joos in a prepared statement.

Fellow IP telephony specialist 8x8 (NYSE:EGHT) also reported results on Thursday night, growing faster than ShoreTel, but only meeting and not beating Wall Street's targets. 8X8 shares rose as much as 8.5% on that report, and you almost have to believe that some of that jump came from ShoreTel's good news bleeding over into other IP-based telecom businesses.

Up next, Vonage Holdings (NASDAQ:VG) will publish its quarterly results on November 2. With no news of its own today, Vonage shares still rose as much as 3.6% on Friday. In short, investors are treating ShoreTel like an industry bellwether.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.