What a ride it has been for Volcom (NASDAQ:VLCM) shareholders (and the Hidden Gems subscribers among them!). The company inspired by board sports culture included some pleasant surprises in its first-quarter earnings report last week.

First-quarter net income increased 23.8% to $5.5 million, or $0.22 per share, while revenue increased by 22.2% to $50.8 million. In more good news, Volcom increased its guidance for 2007 by $0.03 per share to a range of $1.47 to $1.50, with revenue expected to grow by 34% to 36% on a year-over-year basis.

Volcom may have expected its business selling through retailer Pacific Sunwear (NASDAQ:PSUN) to be flat on a year-over-year basis, but it actually grew by 9% instead. According to the conference call, though, Volcom still expects the Pacific Sunwear portion of its business will be down by mid-single digits this year, and reiterated its cautions stemming from its limited visibility into its future ordering. Don't forget, though, Volcom also distributes its wares through retailers like Zumiez (NASDAQ:ZUMZ), Nordstrom (NYSE:JWN), Federated's (NYSE:FD) Macy's, and Dillard's (NYSE:DDS).

The company does have significant expenses at the moment, notably related to building infrastructure for its European business, although it expects that segment to provide long-term revenue and earnings growth starting in the second half of this year.

The conference call also revealed several interesting new elements in Volcom's entertainment segment (which also has added up to effective grassroots marketing for its board sports-related brand). Its recording label will launch the company's first fully independent music tour; the Volcom tour will consist of mostly Volcom bands.

In another interesting aside, Volcom is launching its first "official" comic book line, dubbed VolComics, and a related tour. It should be interesting to see how such initiatives work to bolster the brand -- or whether Volcom may end up overextending itself as it delves into these different areas.

Last quarter, there was concern that Volcom's first quarter was going to be rather lackluster, but once again, this Motley Fool Hidden Gems recommendation has delivered a surprise. Although there are some risks inherent in trying to grow a company with a brand that is supposed to be synonymous with rebellion, given the way this company has been performing, it seems there's little reason to bet against Volcom at the moment.

For related Foolishness, surf on over to these articles:

Volcom and Zumiez are Motley Fool Hidden Gems recommendations. To see what other small-cap stocks have been selected as part of the market-crushing newsletter's portfolio, take a free 30-day trial today.

Pacific Sunwear has been selected by Motley Fool Stock Advisor.   

Alyce Lomax does not own shares of any of the companies mentioned. The Fool's disclosure policy plays a mean air guitar.