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What: Shares of beauty company Coty (NYSE:COTY) jumped on Thursday following the company's fiscal second-quarter earnings report. Both revenue and earnings beat analyst estimates, and a new $500 million share repurchase program was announced. At 2:40 p.m. ET Thursday, the stock was up about 12.5%.

So what: Coty reported quarterly revenue of $1.21 billion, down 4% year over year but about $10 million higher than the average analyst estimate. On a like-for-like basis, which excludes the effects of currency, divestitures, and other items, revenue declined by just 1% year over year. Fragrance sales slumped 3% on a like-for-like basis, while color cosmetics sales rose 3% and skin and body care sales were flat.

Adjusted EPS was reported at $0.38, down 16% year over year but $0.03 higher than the average analyst estimate. Adjusted operating income rose by 7% year over year, but a one-time tax benefit in the prior-year period, as well as a higher interest expense, led to the decline in adjusted EPS.

Coty provided no specific guidance for 2016, but the company stated that its focus is on growing its biggest brands and optimizing costs. It also announced a new $500 million share repurchase program, replacing a completed $700 million share repurchase program.

Now what: Coty is set to merge with a major portion of Procter & Gamble'sbeauty business during the second half of the year, and the company stated in its earnings release that it's making progress toward integrating the new brands. Following the transaction, Coty shareholders will own 48% of the combined company, which will have annual revenue of more than $10 billion.  

The deal will turn Coty into a much larger player in the global beauty market. Its total revenue has been in decline since fiscal 2013, and the merger could help the company return to growth. Coty expects to achieve $550 million in total cost savings over the next three years, potentially boosting profitability.

Overall, Coty's quarter was better than analysts expected, despite the revenue decline. Going forward, it hopes that the merger with P&G's beauty business will drive profitable growth, turning the company into a global leader in the beauty industry.

Timothy Green has no position in any stocks mentioned. The Motley Fool recommends Procter & Gamble. 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.