Saudi billionaire invested in the social media site in 2011
Twitter's monthly active users rose a better-than-expected 24 percent in the second quarter as the online messaging service mostly succeeded in stemming a dwindling pace of growth, sending its shares soaring after hours.
Twitter, which is part-owned by Saudi billionaire Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud's Kingdom Holding Company since 2011, has battled to reverse a steady decline in its once-heady pace of user growth, saw users increase to 271 million, still dwarfed by rival Facebook's 1.3 billion. Wall Street analysts had been expecting a pace of growth closer to 21 percent.
Timeline views, a measure of the engagement of its users, also exceeded expectations with a 15 percent increase, far outpacing the roughly 8 percent expected.
Twitter, whose rapid-fire format has proven popular as a companion to major global events, may have enjoyed a boost from the World Cup. The world's most popular sporting event peaked with the finals in July.
For the current quarter, Twitter is forecasting revenue of $330 million to $340 million, again outpacing forecasts for around $323.7 million, according to analysts polled by Thomson Reuters I/B/E/S.
"The expectations going in had become quite low," said Sterne Agee analyst Arvind Bhatia. "Even in the U.S. their performance was good. For now, that will put to rest some of the concerns about U.S. growth."
"One would still have to say that the jury is still out," Bhatia said. "You have to look maybe at what happens in the next quarter and see if they can continue to have upside on the user growth."
Its shares jumped 35 percent to $51.20 in extended trading, from a close of $38.59 on the New York Stock Exchange.
Before Tuesday's after-hours surge, Twitter had lost about 40 percent of its market value since the start of 2014.
Yet it remains valued at almost 200 times earnings, based on bullish investors' belief it can transform itself into a mainstream Internet platform on the same scale as Facebook.
Some investors argue its reported user numbers do not fully reflect engagement, particularly with media viewers. Others say its inherently complex format deters wider adoption.
At its peak, Twitter enjoyed a $46 billion capitalization on $665 million of revenue in 2013, making it at the time one of the world's priciest stocks.
User growth has stagnated since Twitter went public to much fanfare in November. Costolo has said that tweaks to Twitter's product would result in better user engagement, and has asked Wall Street for time to show improvement.
It has granted more prominent placement to photographs to liven up its interface, simplified the sign-up process, and allowed ads touting mobile-app installations to drive up revenue.
On Tuesday, Twitter reported a 124 percent jump in quarterly revenue to $312 million, beating expectations for $283.1 million. It posted non-GAAP net income of $14.6 million or 2 cents a share, reversing a loss of $16.4 million or 12 cents a share a year earlier.
Prince Alwaleed invested $300m in the social networking platform in 2011 and his stake interest in the website is now said to be worth more than $1.2 billion following the 2013 IPO.