Twitter has reported its slowest quarterly sales growth in three years, as the firm fends off competition from a growing number of social media sites.
Revenue for the second quarter was up 20% to $602m, far slower than the same quarter last year when it rose 61%.
But the micro-blogging site managed to shrink its quarterly loss to $107m(£84.7m) from $136m last year.
The company also reported a 3% increase in monthly active users (MAU) an important metric for advertisers.
Twitter attracted 313 million MAUs up from 310 million in 2015.
“We continue to believe that, with disciplined execution against our priorities, we can drive sustained engagement and audience growth over time,” said Twitter chief financial officer Anthony Noto.
The company’s stock fell over 9% in after-hours trading.
Twitter has been increasing its efforts to attract users in the face of competition from Snapchat and Instagram.
In April, Twitter announced a partnership with the US National Football League to stream 10 games in the upcoming season. Media experts say this could have a marked impact on long term user engagement.
In a letter to shareholders, Twitter chief executive Jack Dorsey said: “We are confident in our product roadmap, and we are seeing the direct benefit of our recent product changes in increased engagement and usage”.
As expected by some analysts, Twitter saw a seasonal uptick in advertising revenue which rose 18% to $535m. But without strong user growth attracting advertisers becomes harder.
The results have called into question the leadership of Mr Dorsey who is one of the company’s co-founders.
He re-joined Twitter as chief executive last year as part of an effort to turn the struggling social media site around. In Twitter’s history, it has never produced a profit.
But since his return the company has added just 9 million monthly active users.
Mr Dorsey has made changes to try and make the micro-blogging site more appealing. The firm has loosened its 140-character limit and begun showing tweets in order that users will find more interesting rather than chronologically.
But analysts said the changes had not had much impact.
“Clearly, the turnaround is still a work in progress and the question of whether being a platform for a mass audience versus a niche audience needs to be answered,” said James Cakmak, analyst at Monness, Crespi, Hardt & Co.
Patrick Moorhead, analyst at Moor Insights & Strategy, was also critical: “We are a year into Dorsey coming back and there is really no end in sight of when it is going to start picking up to where investors are going to be happy.”