What: Shares of 8x8 (NASDAQ:EGHT) rose as much as 22.3% early Friday, then settled to trade up 10.5% as of 11:30 a.m. ET after the communications technology specialist reported better-than-expected fiscal third-quarter 2016 results.

So what: Quarterly revenue climbed 29% year over year to $53.2 million, including a 29% increase in service revenue to $48.9 million. Based on generally accepted accounting principles, that translated to a net loss of $1.7 million, of $0.0.2 per diluted share, compared to net income of $0.01 per share in the same year-ago period. On adjusted (non-GAAP) basis -- which offers context on the business' performance by excluding things like stock-based compensation -- 8x8 reported net income of $4.3 million, or $0.05 per share, up slightly from net income of $4.1 million, or $0.04 per share in last year's fiscal Q3.

Analysts, on average, were expecting more modest 25.7% growth in revenue to $52 million to result in a slight year-over-year decline in earnings to $0.03 per share.

"8x8 executed another solid quarter," elaborated CEO Vik Verma, "posting a 94% increase in new monthly recurring revenue sold to mid-market and enterprise customers and by channel sales teams. We continued to demonstrate the effectiveness of our global and multi-channel growth strategies, capturing larger customers and demonstrating our leadership position in the fast-growing UCaaS industry."

Verma also noted 8x8's service revenue from mid-market and enterprise customers climbed 53% year over year and now comprises half of all service revenue. 

Now what: As a result, 8x8 increased both ends of its fiscal 2016 revenue outlook by $1 million, resulting in a new range of $205 million to $207 million, or growth of 26% to 27% over fiscal 2015. In addition, given strength in high-margin service revenue, 8x8 also anticipates adjusted net income as a percentage of total revenue this fiscal year to be 6% to 7%, up from previous guidance of 6%. 

By comparison, consensus estimates called for full-year revenue and earnings at the low end of 8x8's new guidance ranges. 

To be fair, 8x8's beat was a modest one, which helps explain why shares gave back some of this morning's early gains after the market's extremely positive reaction. But it was another beat and raise nonetheless. And with 8x8 continuing to drive growth where it counts as it strives toward sustained GAAP profitability, it's no surprise investors are pleased today.

Steve Symington 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.