Oracle’s fiscal first-quarter results, released on Monday, exceeded analysts’ expectations thanks to growing demand for cloud services driven by businesses’ efforts to develop generative artificial intelligence applications.

Despite the positive results, Oracle Corporation (NYSE:ORCL) shares dropped more than 10% pre-market today as the company provided a less optimistic outlook for the second quarter during the earnings call.

Oracle reported adjusted earnings per share (EPS) of $1.19 on revenue of $12.45 billion, surpassing the Street expectations of EPS of $1.15 on revenue of $12.44 billion.

During the earnings call, Oracle projected that total revenue would grow by 5-7% at current currency rates and 3-5% in constant currency. However, the company anticipated cloud revenue growth of 28% in constant currency, slightly below the 29% reported for the first quarter. This cloud revenue outlook is likely the primary reason for the stock’s post-earnings decline.

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