Juniper Networks reported declines in sales and net income for the three months ended March 31, 2018. But the hemorrhaging was less than feared, leaving the company’s stock trading slightly up today.

Juniper reported first quarter 2018 revenues of $1.08 billion, a decrease of 11 percent year over year. And it reported non-GAAP net income of $99.5 million, a decrease of 44 percent compared to the same quarter last year, resulting in earnings per share of $0.28.

But the results came in higher than expected. “We hit the high-end of our guidance during the March quarter due to better than expected results from our cloud vertical and another quarter of growth in our enterprise business," said Rami Rahim, CEO of Juniper Networks.

The company reported cloud revenue of $268 million for the quarter, growing 4 percent sequentially, slightly ahead of management’s expectations.

For the last several quarters, Juniper has been quelling concerns about its cloud customers’ transition from MX routers to PTX routers. The PTX routers provide lower margins per port. Rahim characterizes 2018 as a “transition year” for Juniper.

“The new architectures are well understood at this point,” said Rahim. “Our PTX products accounted for more than 80 percent of the cloud routing ports we shipped on a 10 gig equivalent basis during Q1 compared to less than 40 percent one year ago. We're just very pleased right now that we are making progress. And the more progress we make, the more confidence we have that we're going to get through this transition throughout the remainder of the year and get back to a year-over-year growth in cloud routing next year.”

Rahim pointed out that the big cloud providers have reported their numbers, and “They're not seeing any slowdown in their business.” In fact, last week Microsoft, Amazon, and Alphabet all reported strong growth in their cloud businesses.

As far as the transition from MX to PTX routers, Rahim said, “A lot of that transition is behind us. The math starts to work in our favor next year.”

For now, investors seem willing to wait for Juniper’s promised turnaround in earnings.

400G switching is the next frontier for hyperscale data centers and cloud providers, and Juniper plans to compete in that technology. “I think the 400 gig transition is one that we're very excited about as an opportunity to capture share,” said Rahim. “We're very much getting ready for it from the standpoint of the systems that are on our roadmap, the silicon technology that we have chosen, the optics components that will be required.”

Juniper recently gave its Contrail software-defined networking (SDN) code to the Linux Foundation, which has since renamed the project Tungsten Fabric.

And Juniper is focusing on improvements in its commercial iterations of Contrail. Rahim said the company had garnered several new Contrail customer wins during the first quarter. “We are executing on an extremely compelling product roadmap for Contrail,” he said.

The company recently rolled out Contrail Enterprise Multi-Cloud, which it’s positioning as a more open alternative to Cisco’s ACI and VMware’s NSX. Juniper’s technology controls both the underlying devices of the data center infrastructure as well as the policy control overlay.