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TWITTER GOT KILLED TUESDAY NIGHT

Twitter beat Wall Street's second-quarter financial targets, but the company's gloomy outlook for user growth sent the company's stock skidding Tuesday night.

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Shares of Twitter, which had popped as much as 6% after the earnings beat, quickly reversed course during the conference call and were trading down more than 12% after the earnings call ended.

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Twitter interim CEO Jack Dorsey. Kimberly White/Getty

The sell-off happened after Twitter finance chief Anthony Noto told investors not to expect any meaningful growth in the size of Twitter's audience for a "considerable" amount of time.

Twitter is in the midst of a leadership change after the resignation of Dick Costolo at the start of the month. Twitter cofounder Jack Dorsey has taken the reins as interim CEO while the board looks for a new permanent CEO — a job for which Dorsey may be a candidate.

The positive part: Dorsey and the team are clearly acknowledging that Twitter has problems — product execution hasn't been disciplined enough, the service is too complicated, and people don't really understand how to get value out of it. And Dorsey laid out some ideas to address those problems, such as changing the order in which tweets are displayed. But it will take time, as Noto acknowledged.

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Here are the key numbers from Twitter's second quarter:

Revenue: $502 million, up 64% year-on-year and ahead of the average analyst estimate of 481.1 million.

Adjusted EPS: $0.07, versus the average analyst estimate of $0.04 in the year-ago quarter.

Monthly Active users: 316 million users versus 308 million in the first quarter — Twitter is now including SMS followers in its MAU count.

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Monthly Active users, excluding SMS: 304 million, compared with 302 million in the first quarter.

Q3 Revenue Guidance: $545 million to $560 million, versus the average analyst expectation of $555.8 million.

Twitter's user growth in the US came to a halt during the second quarter, stalling at 66 million users (including SMS), the same number as in the first quarter of the year. All of the new users in Q2 came from international regions.

During the conference call, Dorsey declined to comment on his own potential interest in the CEO job or on the CEO search in general, telling an inquiring analyst that the company had no update to provide.

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But the turmoil at Twitter was underscored Tuesday when two Twitter executives announced they were jumping ship right before Twitter's Q2 earnings were released.

Twitter raised the low end of the range of its full-year revenue guidance. The company said it expected full-year 2015 revenue to range between $2.20 billion and $2.27 billion, versus its previous forecast of $2.17 billion to $2.27 billion.

On a GAAP basis, Twitter posted another quarter of red ink in the second quarter, with a net loss of $137 million, compared with a net loss of $145 million in the year-ago period.

Interestingly, while Twitter is trying to revamp its lineup of products, the company appears to have clamped down on research-and-development spending during the quarter. R&D spending increased 12.3% year-on-year during Q2, compared with the 27% increase in R&D spending that Twitter experienced in Q1.

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Twitter needs to show Wall Street that it has a plan to reignite its user growth and ensure that it doesn't become a social-networking also-ran. The service is popular among celebrities, journalists, and activists, but its audience of slightly more than 300 million users is tiny compared with Facebook's reported 1.4 billion users.

The company has said it will roll out a slew of new features that will make the service easier to use and capitalize on areas where Twitter is already popular, such as live events like sports. Twitter also recently struck a deal with Google that should expand the reach of tweets beyond users who are logged in to the service.

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