Twitter's second earnings report since it went public in November was followed by a swift slump in its share price in after-hours trading Tuesday, despite a growth in users and revenue.

Investors were apparently spooked by Twitter's failure to demonstrate the kind of explosive growth that Facebook showed at this stage of its business.

After a stunning public offering in November, Twitter's share prices have fallen from $70 in December, closing at $40.74 on Monday and falling below $38 a share in after hours trading Tuesday.

"Investors are still a little bit worried about engagement at Twitter," said Colin Sebastian, an analyst with Robert W. Baird & Co.

User growth from the previous quarter was "somewhat sluggish," Sebastian said. Still, he added, "Twitter is a very legitimate platform for users and advertisers that will see waves of growth and monetization."

The social networking and micro-blogging service reported 255 million monthly users, a gain of 14 million, or 5.8 percent. Last quarter it reported a gain of 9 million, or 3.8 percent. The company is following the social networking pack in making a shift to mobile devices, with 80 percent of its users accessing Twitter from a mobile device, up from 60 percent the year before.

Twitter is "unfolding as a platform across a broad mobile landscape," said CEO Richard Costolo.


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Revenue of $250.5 million beat expectations and was up from $242 million last quarter. That was a gain of 119 percent from a year ago.

A loss of $132.3 million was a big improvement over the $511.5 million loss reported last quarter, but up from $27 million a year earlier. Advertising revenue of $226 million was up from $220 million in the previous quarter, and represented a gain of 125 percent from the same period a year ago.

Mobile advertising was about 80 percent of total ad revenue, the company reported.

"We had a great first quarter," Costolo said. "I love the work we've done making the platform more visually engaging."

But usage was buoyed by several extraordinary events in the quarter just reported -- the Academy Awards, the Superbowl and the Grammys -- and there are fewer big events coming up, he said.

"We had 3.3 billion views of tweets just about the Oscars in the 48 hours after the Oscars. That's a big number," Costolo said. "That's a tiny example of the ubiquity, the almost omnipresence we have in the world," he said.

Costolo defended Twitter's television strategy.

Independent research shows that 92 percent of users take some action, like switching on a television program, after seeing a tweet about it, Costolo said. "Our Twitter and TV strategy is on the right track," he said.

The company raised its revenue outlook for 2014 from $1.2 billion to $1.25 billion, a $50 million increase from last quarter.

Contact Pete Carey at 408-920-5419 Follow him on Twitter.com/petecarey