Twitter's investments in live video and entertainment, the company's latest attempt to grow its audience, aren't yet paying off for investors.
While the number of monthly active users surpassed analysts' estimates in the second quarter, Twitter reported quarterly sales on Tuesday that fell short of expectations, sending shares down 12 percent in after-hours trading. The forecast for the third quarter also missed estimates.
Since returning to run the company a year ago, CEO Jack Dorsey has been aiming to keep pace with Facebook and Snapchat, as the market for social apps and messaging services becomes more competitive and ad dollars stretch across new platforms. Twitter's core messaging platform is struggling to keep advertisers excited.
From the national political conventions to live events like Wimbledon and select National Football League games, Twitter is signing content deals to help boost engagement and attract brand spending. The company is counting on revenue from those partnerships to make up for weakness elsewhere.
"We continue to believe that, with disciplined execution against our priorities, we can drive sustained engagement and audience growth over time," Anthony Noto, Twitter's chief financial officer, said in a statement. "We're partnering with the providers of the world's most popular live content to bring more and more of those events onto Twitter to provide a unique and compelling consumer experience."
The San-Francisco based social media company said revenue increased 20 percent to $602 million, falling short of analysts' estimates of $607 million, according to Thomson Reuters. That marks a deceleration from 61 percent growth a year earlier. For the current period, Twitter forecast sales of $590 million to $610 million, while analyst projections called for revenue of $678 million.