Twitter Inc forecast first-quarter revenue that was below analyst estimates on Thursday and said the number of users fell in the fourth quarter, sending its shares down 6 percent in premarket trading.
The social media company said monthly active users declined, partly because it deleted millions of abusive accounts following criticism the platform was being used for political manipulation and hate speech.
For the quarter through March, Twitter said it expected total revenue of between $715 million and $775 million. The midpoint of that range was below analysts' average estimate of $765 million, according to IBES data from Refinitiv.
Operating expenses were expected to surge about 20 percent year-on-year in 2019 due to efforts to improve its service, exceeding analysts' average estimate of 12 percent.
The higher expenses could eat into eats earnings, some analysts said.
"Yes, total user numbers are down, but we've known for a while now that Twitter has a fake-users problem and is trying to deal with it, so that shouldn't come as a surprise to anyone," said Clement Thibault, analyst at global financial platform Investing.com.
"Higher operating expenses, on the other hand, are a bigger problem, as I anticipate Twitter's margins and profits to shrink considerably in 2019."
It expects capital expenditure of between $550 million and $600 million, well above analysts' average estimate of $415 million for 2019.
Still, the company reported a better-than-expected 24 percent jump in fourth-quarter revenue, helped by growth in its video advertising business.
Overall revenue rose to $909 million in the quarter, beating the estimate of $868.2 million.
Total advertising revenue rose 23 percent to $791 million. More than half that revenue came from video ads placed by corporate clients.
Revenue from data licensing and other non-advertising businesses rose 35 percent from a year earlier to $117 million.
Excluding some items, Twitter reported quarterly profit of 31 cents a share, beating the average estimate of 25 cents.
The number of average daily active users exposed to Twitter ads, a new figure disclosed by the company, rose to 126 million in the fourth quarter from 115 million a year ago and 124 million in the previous quarter.
Monthly active users totaled 321 million. That was in line with analysts' forecasts, but down from 330 million a year earlier and 326 million in the third quarter.
After the current quarter, Twitter said it would stop disclosing monthly active users, a statistic internet companies have routinely reported over the past decade.
Shares were down about 6 percent in premarket trading at $32.10, after closing at $34.16 on Wednesday.