Dive Brief:

• The social micro-blogging site logged adjusted second-quarter profits of 7 cents a share, topping estimates by three pennies. Sales of $502 million also bested Wall Street estimates of $482 million. Notably, mobile accounted for 88% of Twitter's ad revenue.
• Twitter added 14 million new users in total, but just two million core users. Interim CEO Jack Dorsey even said he's "not satisfied" with user growth.
• The stock grew 10% immediately following the release before reversing course and dropping 7% after a non-update about the company's CEO search.

Dive Insight:

The social media company topped analysts' projections in certain regards, with revenue rising 61% over the same time last year, and hiked its 2015 sales forecast. However, user growth was a sore spot and shares were down more than 11% in early morning trade Wednesday morning. Twitter stock hit a new 52-week low after the earnings report and call.

“Our Q2 results show good progress in monetization, but we are not satisfied with our growth in audience,” Co-Founder and Interim CEO Jack Dorsey said in an earnings release, and reiterated in a conference call. Twitter now has 304 million total users, up from 302 million in the quarter prior and not counting SMS Fast Followers, but the San Francisco-based social site has struggled to impress Wall Street since its debut, and the increase of two million new core users is the smallest quarter-over-quarter addition it's reported, as Re/code noted. Facebook, by comparison, boasts 1.4 billion users.

A MarketWatch Twitter earnings live-blog pointed out that 12 million of the micro-blogging site's year-over-year growth in monthly active users came from text messaging, or SMS Fast Followers, which analysts see as a crucial point in Twitter's growth story. These users are signed up to receive tweet alerts as text messages, but remain logged off.

Twitter has also been updating its product offerings to attract a broader set of users, as well as more advertisers, and attributed the strong earnings to a sharp rise in ad revenue, driven primarily by Promoted Tweets -- its core ad product. The social media service is also looking to up spending on its direct-response ads, and recently added a slew of ad products such as its not-yet-launched Project Lightening and a new targeting element for marketers with live events. The new feature includes a calendar with upcoming events, historical data on past event performance and one-click activation of campaigns.

In the earnings release, Dorsey zeroed in on three improvement areas that would boost Twitter's value add, writing: “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.”

This marked Dorsey's first time speaking as CEO of a public company, where he has been at the helm of since former CEO Dick Costolo exited on July 1. The former CEO, who sits on the board, was tuned into the earnings call on Periscope, the Twitter-owned video live-stream service. 

Twitter CFO Anthony Noto said ad revenue was driven by strong year-over-year growth in demand and advertiser base. He said from a product standpoint, promoted video ads and mobile app downloads led the ad revenue spike. Noto expressed a need for improvement in direct-response capabilities for marketers including targeting and measurement, and said Twitter is "working rapidly to be able to launch an integrated marketing strategy and campaign before the end of 2015."

Noto, however, also took a cautious view toward Twitter's lackluster user growth numbers:

We don’t expect to see sustained meaningful growth in MAUs until we start to reach the mass market. - @anthonynoto #TWTRearnings $TWTR

— TwitterIR (@TwitterIR) July 28, 2015

Scott Kessler of S&P Capital IQ told Bloomberg that investors were looking to hear "an update related to what Twitter's vision is going to be, and frankly, who the CEO is going to be. It's really not clear."

Right before the earnings release, Twitter's VP of product management and the head of its content and discovery team both announced they would be leaving the company. Re/code reported the micro-blogging service is also in the market for a new CMO, as they also plow forward in their mission to fill the CEO spot.

As for speculation about Twitter's next permanent CEO, for which Dorsey is considered to be in the running, Dorsey responded on the call to questions about his plans that he is "just focusing on making Twitter better."

Twitter's stock shot down following the non-update.