(Reuters) - Data center services provider Digital Realty posted a surprise drop in second-quarter revenue and a decline in core funds from operations (FFO) on Thursday, sending its shares down 2.7% in extended trading.

High interest rates have prompted customers to spend cautiously on the company's services. It also faces stiff competition from rivals such as Equinix.

The Austin, Texas-based company provides data center and co-location solutions to support enterprise customers in their digitization efforts amid the AI boom.

Digital Realty's second-quarter revenue declined marginally from a year earlier to about $1.36 billion, compared with analysts' average estimate of $1.38 billion, according to LSEG data.

Its core FFO, a key measure of cash flow, declined to $1.65 per share, compared with $1.68 per share from a year earlier.

The real estate investment trust maintained its annual revenue forecast of between $5.55 billion and $5.65 billion. Analysts, on average, expect annual revenue of $5.59 billion.

The company also maintained its annual core FFO forecast of between $6.60 and $6.75 per share.

(Reporting by Jaspreet Singh in Bengaluru; Editing by Mohammed Safi Shamsi)