Oracle’s (NYSE: ORCL) recent quarterly results may have outpaced market expectations, but slowing cloud growth has caused a stir amongst analysts as they continue to downgrade the company. The market was very concerned and the stock fell 9% – the worst decline in the last five years.

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Oracle’s Financials

Revenue for the third quarter grew 7% over the year to $9.77 billion with an EPS of $0.83. The market was looking for revenues of $9.77 billion and an EPS of $0.72.

For the quarter, total Cloud revenue grew 32% to $1.57 billion. Within the segment, Cloud Software as a Service revenue grew 33% to $1.15 billion. But the market was not pleased. It was looking for cloud revenue of $1.18 billion. Platform-as-a-service and Infrastructure-as-a-Service sales rose 4% to $415 million, marginally ahead of the analyst expectations of $407 million.

Revenue from Cloud and On-Premise Software climbed 8% to $7.98 billion. Oracle also saw new software license sales grow 14% to $1.39 billion. But that too was lower than the $1.42 billion consensus estimate from analysts. Software license updates and product support sales rose 52% to $5.03 billion versus the $4.97 billion Wall Street estimate. Total on-premise software revenue rose 4% to $6.42 billion, marginally ahead of the consensus of $6.39 billion. Hardware revenue fell 3% over the year to $994 million and Software revenue declined 2% to $796 million.

For the current quarter, total revenues are expected to grow in the range of 1%-3%. It expects to report adjusted earnings of $0.92-$0.95, compared with the market’s forecast of $0.90 for the quarter.

Oracle’s Slowing Growth

The market was particularly disappointed by Oracle’s slowing cloud growth. For the current quarter, Oracle expects its cloud business to grow between 19% to 23%. The market was looking for a growth of 24%. Analysts believe that the slowing growth is because its transition to the cloud is “taking longer than initially expected“. Compare the growth with Amazon that reported a 45% increase in AWS revenues this past quarter.