Fujitsu posted a profitable first fiscal quarter, though it continues to struggle in gaining traction with its software-based products.

The Japan-based company reported a 2.5-percent increase in revenues for its fiscal Q1 2017, which ended June 30, hitting nearly $8.4 billion for the quarter. Total profits increased more dramatically from a loss of $126.7 million last year to a return of $19 million this year.

All of that growth came from the company’s domestic business, as Fujitsu’s international operations posted a 2 percent drop in revenues and nearly 3 percent drop in profits.

The company’s technology solutions business, which includes its optical networking and data center services, showed flat year-over-year revenues of around $6.1 billion. However, operating profits for the division dipped more than 26 percent to $47.1 million. The company tagged most of that drop to an “overseas legal dispute.”

Fujitsu is a big player in the optical networking space, competing alongside rivals Nokia, Ciena, and Infinera. ACG Research predicts the optical data center interconnect market will grow from $13.6 billion in sales last year, to $17.3 billion in sales by 2021.

Fujitsu’s management also said sales of its software-defined networking (SDN) products were “not yet near a level where we can be satisfied.” The company did note its software products had been “accepted by some major telecom carriers, and we would like to leverage sales of software into a broader business with peripheral services.”

Fujitsu has been a long-time partner in AT&T's SDN plans. More recently it worked with the carrier on its reconfigurable optical add-drop multiplexer (ROADM) trial in Texas.

Looking ahead, Fujitsu said it expects its cloud business to post a 20 percent year-over-year increase in revenues for the full fiscal year to more than $3.4 billion.

“The cloud is like a vessel, and we expect to build business applications on top of it, and then digital services on top of those, raising our profit margin,” explained Fujitsu CFO Hidehiro Tsukano, according to a transcript of the company’s conference call with investors.

Fujitsu this week was one of a number of companies to join the Open Network Automation Platform (ONAP). The Linux Foundation-hosted open source group was born out of the merger of AT&T’s ECOMP platform and the Open-O project.