Twitter shares plunge 20.5 percent

Twitter share price tumbles after it loses 1m users in three months

Twitter had 335 million monthly users in the second quarter, below the 339 million Wall Street was expecting, and down slightly from 336 million in the first quarter.

"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.

But it is a necessary strategy if Twitter is to gain the trust of many advertisers.

Allegations of Russian meddling in the 2016 US election by spreading misleading or divisive content over social media have made the issue of improving control over accounts and content critical for Twitter.

In the financial report released Friday, the company acknowledged that "our work sometimes includes the removal of accounts, some of which are included in our metrics", but that getting rid of problematic accounts will make the service more user-friendly, driving future growth.

Revenue of $711 million, mostly from advertising and up 24 percent from previous year, exceeded the average estimate of $696 million among analyst research aggregated by Thomson Reuters. The company has previously disclosed these numbers. The number of users could also decline in the third quarter, Twitter warned.

Twitter shares have more than doubled over the past year as it shows signs of sustaining profitability after years of losses.

Twitter, like other social media platforms, says it's putting the "health" of its platform over user growth.

The company, however, said the vast majority of malicious accounts are inactive or caught before they become counted among active 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.

Looking at the rest of the numbers, Twitter posted a Q2 net income of $100 million, or 13 cents per share - a record high for the company.

Shares of Twitter Inc. slumped 12 per cent on what was otherwise a strong quarter, it scrambles to clean up a user base in a supercharged environment.

The earnings call did not touch on a new looming issue for the company, which President Donald Trump tweeted about Thursday.

Twitter again touted daily active user growth.

Twitter also saw usage fall after saying it would not subsidize messaging fees for users who accessed its app through text messages.

Costs related to licensing video and powering automated analysis of user data increased overall expenses 10 percent to $631 million in the second quarter compared with 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.