Twitter plunges as monthly users unexpectedly fall (TWTR)

The Twitter logo is seen on mobile device. HANDOUT

The Twitter logo is seen on mobile device. HANDOUT

Segal said the efforts to improve accounts along with other factors had a negative hit to monthly active users of 3 million in the quarter, which compares with the 1 million net decline, but added that efforts to improve quality of the accounts would take an even bigger bite out of third-quarter monthly users.

The user outlook came as Twitter reported higher-than-expected revenue thanks to the FIFA World Cup driving ad demand, strength in video ads and booming global ad revenue. Twitter's share price dropped almost 20 percent after the earnings report, matching a similar decline in Facebook's stock after its earnings report showed challenges ahead, partly a result of confronting toxic elements, too. Stalled American user growth and tighter rules on data protection in Europe may dampen revenue growth in two of the company's biggest markets.

Twitter and Facebook are trying to reduce the amount of abuse and hate speech on their platforms, but that's affecting their growth, one of the things investors value the most.

Profit was $100m, marking Twitter's third quarter in a row of profits.

While monthly visitors declined, Twitter highlighted daily active users as the best measure of success.

But a lingering concern has been the stalled user base, with Twitter struggling to move beyond its core group of celebrities, journalists and politicians. The company doesn't disclose the total number of daily users.

As for the rest of the report, the company earned an adjusted $0.17 a share on revenue of $710.5 million - beating the $0.16 and $697.3 million that analysts were expecting. Shares tumbled 19%, wiping out $120 billion in market cap, after the company missed revenue expectations and warned of slowing growth ahead.

Yet the market had more than doubled Twitter's value over the past year to $32 billion, and the valuation to 50 times estimated earnings.

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They believe users have woken up to Facebook's growing list of controversies and chose to vote with their "Log Out" buttons. And for those hoping for a swift bounce back, the company told Wall Street the numbers won't get any better this year.

"We want people to feel safe freely expressing themselves and have launched new tools to address problem behaviours that distort and distract from the public conversation, " CEO Jack Dorsey said in a prepared statement. "This is an identical overreaction that we saw in Q2 a year ago".

Twitter deleted more than 70m fake or offensive accounts in May and June, and has continued to delete accounts at a rate of 1m a day, according to research by the Washington Post.

Revenue of $711 million rose 24 percent from past year and exceeded the average estimate of $696 million.

In the meantime, Twitter's business, heavily dependent on advertising, is hanging in there.

Wall Street was looking for Q2 earnings of 17 cents a share with $696.2 million in revenue.

The new capital expenditures forecast is for between $450 million and $500 million, up from $375 million to $450 million, as Twitter expands and upgrades the computer infrastructure underlying its service. Markets outside the U.S. grew 44% year on year to $US344 million.

"We are proud of the tangible improvements people are seeing on Twitter", the company wrote in a letter to investors.

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