Quarter after quarter, luxury-furniture company RH (NYSE:RH) continues to impress investors. That trend held true with the company's second-quarter financial results, reported on Sept. 8. RH stock jumped around 8% following this Q2 report.

In this video from Backstage Pass, recorded on Sept. 9, Motley Fool contributor Jon Quast explains to fellow contributor Jason Hall what exactly had the market so excited with this quarter from RH. Moreover, Jon talks two growth drivers -- international expansion and hospitality -- as things to watch.

Jason Hall: Let's pivot back, Jon, to earnings and a company that just reported yesterday. We used to call it Restoration Hardware, but now it's just RH. Tell us what happened.

Jon Quast: Just RH. I believe that RH reported either yesterday afternoon or this morning. I forget which of the companies did. Yeah, this is a company that has astounded me for years. It is a luxury furniture business, high-end, and you think about furniture, everyone just wants the best deal. That's how I think about it, but I didn't think there was room for a luxury retailer in the space, but apparently, there is, I'm trying to pull up my slide show here, where are we?

Hall: You can do it, Jon, I have faith.

Quast: Look at that.

Hall: There it is.

Quast: Boom. Here we go. The second quarter of 2021 for this luxury furniture business, that is RH. This company reported revenue of $989 million. That was up 39% from last year. Like Lululemon, this was not a case of an easy comparable period. Revenue was up last year as well. It was only up about 1% last year, but it was still up last year and up 39% this year, that's a big growth number.

Now, did they beat management guidance? Yes, they did. Management had guided for 35% to 37% year-over-year growth, so 39% coming in ahead of what they guided for. It also beat Wall Street's expectations. Their average expectation so on average, analysts expected $975 million in revenue. One very enthusiastic analysts thought maybe they go over $1 billion. They didn't do that. But still, for the most part management guidance beat Wall Street's expectations on the top line.

Going to the bottom line now RH really break out a lot of profitability metrics and it's almost hard to follow sometimes. Earnings per share, this is what they reported $7.09. That is up 91% from last year. Their earnings-per-share were up big last year as well, and they reported an adjusted operating margin of 25.2% up from last year as well. Now there's a reason for this, that beat guidance. Management was looking at the operating margin here. They didn't give earnings-per-share guidance is my point, they gave operating-margin guidance. They beat that.

Wall Street, on the other hand, they had their projections for earnings-per-share, they beat that soundly, average $6.48, $6.77 on the high-end. Just smashed it on profitability.

Going forward, management is guiding for full year revenue growth of 31% to 33%. That is a raise and keep in mind that they just raised their guidance last quarter as well. Pretty big raise there from 25% to 30% growth. They also raised their operating margin guidance to the number you see there. They also raised their return on invested capital guidance. So this is what I'm talking about here. They break out a lot of profitability metrics here. Basically, the money that they invest, they had been expecting a 60% return, now going for a 70% return.

This is a business that just continues to impress me over and over. Jason, I'll let you speak first and then I have a couple more thoughts.

Hall: I'm going to share another chart here because this really talks about operationally how good they are, what they do, understanding their market, getting great margins but then taking those margins and pushing them to the bottom line. I'm going to do this first. I don't know, can you see this stock price chart here, the purple one?

Lou Whiteman: Yeah.

Hall: With the school bus, yellow one? This is when the stock was recommended in Stock Advisor back in March of 2015. That's what it's done since then. It's absolutely crushed. You see a lot of it there were some underperformance and then some market performance. Then just really went on a tear more recently here. But this is what's happened in the background. This is a company that was getting single-digit operating margins and there were things going on, management was making some changes in the business and it's paid off.

I want to compare these operating margins to some other furnishings and furniture company name. A popular one now is Wayfair. Selling on online. 3% was negative operating margins for line. A lot of this was business building. For Wayfair was business-building. This is more recently, it's pulled so much business forward that it's getting positive operating earnings. But then you throw on companies like Haverty and Ethan Allen, which rider more pure-plays. You see everybody has been riding this tailwinds of COVID. But RH has just been above and beyond at being more profitable for a long time. There you go. Go ahead, Jon. Back to you, buddy.

Quast: Like you said, I think, what was the CEO's name? Gary Friedman, I believe it is. He talks about how if you're going to get premium margins, you've got to be a premium business. They really believe that they are the best premium business that there is out there. They really pivoted to a market that a lot of people didn't even think it existed. Myself included. They are dominating it.

They think that they can dominate this worldwide. They are mostly a U.S. business right now. They are pushing hard into Europe at the moment. They think that they can continue to do this in many markets. Take over this luxury space. It doesn't hardly even exist in other retailers. They think that they can be a $20 to $25 billion annual furniture business. Right now, they're under $4 billion for sure. This is still a big growth engine that they have is this international expansion.

Beyond that, the same thing that they did with furniture, they believe they can do with hospitality. Creating a luxury hotel business. This is something that they have big plans for launching in New York city hopefully in the spring of 2022. In the earnings call, the CEO of RH teased that they have identified a very well-known individual to run this hospitality business. Once that person is officially named, he says, it's off to the races for this.

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.