Shares of enterprise-software company New Relic (NYSE: NEWR) jumped on Wednesday after it reported financial results for the third quarter of its fiscal 2023. Adjusted profits came in much higher than Wall Street expected, and that's a leading reason New Relic stock was up 20% as of 11:40 a.m. ET.

New Relic's management had guided for Q3 revenue of up to $235 million. However, the company generated $239.8 million in Q3 revenue, well ahead of guidance and Wall Street's expectations. 

Even more impressive was New Relic's rapid improvements with profitability. The company's gross profit margin in Q3 was 74.4%, up dramatically from its 66.2% gross margin in the same quarter of last year and up from its 72% gross margin in the second quarter. CEO Bill Staples credited the improvements to the "engineering team's focus on cloud optimization and architectural improvements." 

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Source Fool.com