Dive Brief:

• Twitter reported earnings on Tuesday that beat analyst expectations for revenue growth, but investors reacted negatively to the company's revenue forecast and indications that Twitter's user growth is stagnating.
• Twitter's stock fell about 13% in extended trading after the company revised down its fourth quarter forecast to $695-$700 million (analyst expectations were $740 million) and reported it now has 320 million monthly active users, compared to estimates of 324 million. 
• This was the first earnings call with Jack Dorsey as permanent Twitter CEO (for the second time around, at least), and the CEO cautioned analysts and investors that the company needs time to show meaningful user growth.

Dive Insight:

Twitter's dim revenue forecast and stalling user growth is troubling for investors and advertisers alike, and it begs the question: Has Twitter hit its ceiling? If anything, Twitter's most recent earnings lend credence to critics that say Twitter's use is limited and the network will never achieve the reach of rival Facebook.

CEO Jack Dorsey touted the newly-launched Moments for making it easier to understand the Twitter product as well as making it more accessible to non-users. He indicated other similar projects are in the works, good news for advertisers who may be able to reach wider audiences through products like Promoted Moments. 

"Moments represents a real shift in our thinking," Dorsey said during the call. 

Twitter said its content reaches one billion people per month, well above the 320 million monthly active users it currently has. Investors believe Twitter needs to tap into the larger audience. 

New users are coming mainly from overseas, but as the Wall Street Journal points out, Twitter typically charges more for ads in the U.S.

Twitter has ideas for potentially monetizing logged-out users. During the call with investors on Tuesday, COO and Revenue Chief Adam Bain revealed the company has a pilot program ready to test.

“We ... are monetizing logged-out users across the network," Bain said, referring to ads Twitter sells on third-party apps. "This is the first time that we’ve been doing that. It’s going to come in handy as we also begin to run a pilot here in Q4 for on-Twitter logged out monetization. So we’re going to take some of those learnings and apply it back to Twitter logged-out products."

Re/code reports that starting this quarter, Twitter plans to serve ads on Twitter.com, which means that whoever visits Twitter's homepage or clicks on a Tweet in Google Search is likely to see promoted Tweets. AdAge notes that user interaction with ads on Twitter is up, but the company is making less money off of those interactions. Twitter blamed price decreases on its video ads, which have seen an increase in interactions partly due to Twitter's rolling out of auto-play video ads last quarter.

"After introducing autoplay video, marketers saw an 84% decrease in the cost-per-video-views on Twitter. Additionally our marketers saw a 7x increase in the amount of video completions," Bain said.

Twitter's advertising revenue grew 60% year-over-year; about 86% of that ad revenue came from mobile ads. Executives on the earnings call noted that Twitter now boasts 100,000 advertisers. For comparison, Facebook has 2.5 million.

"Our focus is on three things: a more disciplined execution, simplifying our services and better communicating our value," Dorsey said on the call. "We’ve made meaningful progress across all three."