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Twitter's Ad Sales Jump 63%, but the Platform Still Needs a Lot More Users

Interim CEO Jack Dorsey addresses growth problem head-on

Jack Dorsey is the interim CEO of Twitter, the company he co-founded.

Twitter saw ad sales rise last quarter, leading to better-than-expected revenue, but the interim CEO Jack Dorsey, co-founder of the company, said user growth is still too slow.

The San Francisco tech company released Q2 earnings today, including ad sales that were up 63 percent year over year for the quarter, hitting $452 million. Overall, revenue reached $502 million.

Still, Dorsey expressed deep dissatisfaction with the pace of growth, and promised that a better user experience is in development. Also, for the first time, Twitter is planning a full marketing blitz to drive more mass adoption of the service.

In a Twitter first, the company is Periscoping its earnings tonight. 

"Our Q2 results show good progress in monetization, but we are not satisfied with our growth in audience," Dorsey said in the earnings announcement. "In order to realize Twitter's full potential, we must improve in three key areas: ensure more disciplined execution, simplify our service to deliver Twitter's value faster, and better communicate that value."

Dorsey was brought in to help Twitter's transition after Dick Costolo stepped down as CEO last month. Dorsey is considered a potential candidate for the full-time role, except for the fact that he also runs the mobile-payments company Square. Adam Bain, Twitter's head of revenue, also is a front runner for the top job.

Twitter has made big moves with its user features, startup acquisitions and advertising products, but some critics have faulted the company for lackluster user growth—a failure to keep up with the likes of Facebook in technology and mainstream appeal.

Last quarter, Twitter's monthly user base rose to 316 million people, up from 308 million during the prior quarter. 

After today's earnings release, Twitter told Wall Street analysts that it would take a considerable amount of time before it could attract mainstream users. The company is just starting to rethink the platform to make it easier for newcomers to use.

For instance, in the fall, Twitter will release Project Lightning, a media service that will curate the most popular content on Twitter at a given moment so people can quickly find and digest it.

Twitter also is looking for a new chief marketing officer to retell the company's own story, promising an aggressive marketing campaign. "For the first time, we'll have an integrated marketing campaign in the U.S. behind the launch of Project Lightning," said CFO Anthony Noto, during the call with analysts.

Today was the first earnings period with Dorsey leading the announcement, and for the first time Twitter livestreamed the results on its new app Periscope, where more than 4,000 people watched. The video-sharing app is seen as a key technology for Twitter, and already brands have used it to create new types of campaigns and communicate with audiences.

Twitter also disclosed today that it generates 88 percent of its ad revenue on mobile devices.

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