When Twitter released its first quarter financial results a few months ago, investors were hopeful that the company's across-the-board growth in user numbers was a sign that Twitter's business strategy was paying off.
This morning, however, Twitter revealed that it added 9 million fewer users this quarter as compared to Q1.
The microblogging social network said its tally of monthly active users (MAU) was flat at 328 million in Q2, representing effectively zero growth between quarters. Twitter claims that "seasonality issues" negatively impacted the MAU numbers.
Twitter's shares dropped more than 13 percent in early trading.
On the upside, the site's average daily active usage grew 12 percent year over year.
"We have elevated importance of daily active users, the key driver of overall growth, both from audience standpoint, engagement standpoint and also from an advertising standpoint," said Twitter COO Anthony Noto, on the conference call with analysts.
Looking at the rest of the numbers, the social network posted a Q2 net loss of $116 million, or 16 cents per share. That's up from a Q1 net loss of $62 million, or 9 cents per share. Non-GAAP earnings were 8 cents per share on revenue of $574 million, down 5 percent year over year.
Wall Street was looking for Q2 earnings of 5 cents a share with $536 million in revenue.
Elsewhere on the balance sheet, Twitter said total advertising revenue was $489 million, a decrease of 8 percent from the previous year. Video was Twitter's best performing ad format in Q2.
One of the big highlights for Twitter this quarter was year-over-year growth in its data business. Twitter said revenue from its data licensing business was $85 million, up 26 percent year over year.
"We think this is a large opportunity for us," said Noto. "We're taking data and packaging it for our partners. We're looking at developing new use cases for the data business outside of the current footprint of users, and we're excited about the prospects."
In terms of ongoing battle to prevent abuse on its platform, Twitter CEO Jack Dorsey said users are experiencing less abuse today than they were 6 months ago. "We take action on 10 times the abuse of accounts daily compared to this time last year," he said. "Strong progress, but as always there's more work to be done."