Twitter surprises analysts with a big earnings beat

"We need to communicate our values better," interim chief executive Jack Dorsey said in a conference call with analysts. The people and businesses that use the service, he said, "must come first and be at the center of everything we do."

Twitter brought in $502 million in revenue and earnings of 7 cents per share during the quarter, significantly higher than analysts expected. It also reported another loss, $137 million, but that was slightly better than the $145 million loss it reported in the same period last year.

The company said that its advertising revenue increased 63 percent to $452 million, with 88 percent of that coming from mobile devices.

Twitter's closely watched active user base also grew to 316 million during the quarter, up from 308 million in the previous quarter. That was an increase of 15 percent from the same period last year.

The strong financial performance and stable growth could be good news for the company, which is the midst of a search for a new chief executive.

Yet investors' initial optimism appeared to disappear quickly as Dorsey and Chief Financial Officer Anthony Noto said that it will take time for Twitter to reach the "mass market" and sustainable user growth.

Although the social network has a devoted base of users, it's been hard-pressed to recruit new people to the flock. Twitter has also been branching out, most notably buying the live-streaming service Periscope in March. But, so far, that hasn't been enough.

It's clear that Twitter is doing a better job of making money off its existing users. But it still has to find a way to expand its user base. Dorsey, on a call with investors, said that the user growth numbers were "unacceptable" and that the company hasn't been doing a good job of making itself accessible.

Twitter may do that in a number of ways, Dorsey said, including changing the way it displays messages, which are in reverse-chronological order. That layout works well for power users but may not be the best way for Twitter to become the go-to service for meaningful news updates.

Users should expect Twitter to be "as easy as looking out your window" to find out what's happening and to be the world's most powerful microphone, Dorsey said.

Dorsey returned to lead the company earlier this month as interim chief executive, replacing Dick Costolo.

But Dorsey is also the chief executive of Square and has been holding both roles. It's not clear whether Dorsey is a candidate for the top job; Business Insider reported that Adam Bain, the company's president of revenue and global partnerships, is currently the board's top pick for the role.

Twitter did not offer any updates on the chief executive search Tuesday. Two top Twitter executives focused on growth and product, however, did announce that they are leaving their positions. Todd Jackson, Twitter's product director, is headed to Dropbox; its vice president of product management, Christian Oestlien, will head to YouTube.