On Tuesday, Xerox released its first quarterly report since the split with what is now Conduent. The company missed on its overall revenue projections by about $40 million, but managed a modest gain of less than 1 percent in operating margin to 14 percent over the same quarter in 2015. Xerox CEO Jeff Jacobson attributed the improved margin to better-than-expected savings from the company’s Strategic Transformation program, which aimed to cut expenses and boost productivity.

Xerox reported lower sales in both document technology ($504 million, down from $594 million in Q4 2015) and services ($140 million, down from $145 million in Q4 2015. Interesting notes explaining the document technology decline include:

An 8 percent decline in color MFPs, which Xerox attributed to timing issues in the channel
A 19 percent decline in monochrome MFPs, largely due to fewer large deals in developing countries
Flat sales of mid-range color systems
A 13 percent decrease in mid-range monochrome systems, reflecting overall market decline
An 18 percent decrease in high-end monochrome systems, also reflecting overall market decline.

One positive area was a 3 percent increase in high-end color systems, which Xerox attributed to favorable response from the drupa event.

On the service side, both equipment sales and annuity revenue were down, 3 and 4 percent, respectively. Although some of the decline is attributable to currency fluctuations, signings of service contracts declined by 24 percent over the same quarter in 2015. The reasons given for the decline include a decision to not to pursue low-margin opportunities and higher competitive pressure related to the timing of product launches. The numbers do not reflect service contract signings from channel partners.

Jacobson outlined four reasons why he believes Xerox is well positioned for the future:

An “attractive” business model designed to take advantage of the $85 billion total market opportunity, 75 percent of which is in annuity revenue
Focus on cost and productivity which has the company ahead of its three-year Strategic Transformation plan
Positioned to capitalize on growth areas in the market through product launches and growing the channel
A commitment to maintaining Xerox’s status as an investment-grade stock