Twitter shares have performed woefully since it made its stock market debut in 2013 but they jumped 15% on Thursday as the company looked on the verge of delivering a profitable bottom line.
"These third-party applications used Digits, a software development kit of our now-divested Fabric platform, that allowed third-party applications to send authentication messages via SMS through our systems, which did not relate to activity on the Twitter platform".
However, the company was forced to admit a mistake that caused a miscalculation of MAUs dating back almost three years.
Non-GAAP earnings per share came in at $0.10, up from $0.09 during the prior-year period and $0.03 better than analysts were expecting.
Twitter managed to grow its user base, with monthly active users jumping 4% year over year to 330 million.
But it turns out Twitter's numbers were even worse than had been reported.
"We continued to make progress toward a return to revenue growth in Q3, with revenue decreasing 4% year-over-year and increasing 3% sequentially (a decrease of 1% year-over-year and an increase of 4% sequentially, excluding the deprecated TellApart product)", the statement from the company read.More news: Coca-Cola Company (The) (KO) is Stewart & Patten Co. LLC's 8th Largest Position
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It now says the issue was first there in the fourth quarter of 2016, and has made adjustments for it and the following quarters.
Twitter revealed Thursday that it has overstated its monthly active user numbers for years by mistakenly including a segment of users from third-party applications.
The social networking site's losses also significantly decreased-Twitter faced a $21 million shortfall this quarter, down from $103 million in the same period a year ago. Twitter doesn't disclose how many daily active users it has, only the growth rate, which raises some questions about engagement. In the previous quarter, Twitter's US audience actually shrank slightly.
A quick readjustment of Twitter's Q2 monthly active user count shows that the site actually lost around a million users.
Twitter noted that it's now seen four consecutive quarters of double-digit DAU growth. Just this month, women around the world threatened to boycott Twitter after it temporarily suspended the account of actor Rose McGowan.
The disclosure could nonetheless do further harm to Twitter's reputation as the company contends with scrutiny over its role in Russia's efforts to meddle in the presidential election, complaints about what critics have called its scattershot efforts to prevent abuse and harassment on its platform; and skepticism among some investors concerned about its slowing user growth worldwide.