By Elizabeth Culliford
SAN FRANCISCO, Oct 24 (Reuters) - Twitter Inc TWTR.N posted worse-than-expected third quarter revenue and profit on Thursday, which the company attributed to advertising problems including product bugs and unusually low demand over the summer.
However, the social media platform did record another rise in daily users who see ads on the site, beating analyst estimates.
Twitter's Chief Executive Jack Dorsey said the growth in monetizable daily active usage (mDAU) was driven by product improvements, including making the site easier to navigate and more proactively identifying abusive content for removal.
Twitter's revenue rose 9% from a year earlier to $824 million, missing Wall Street expectations of $874 million, based on IBES data from Refinitiv. Total advertising revenue was $702 million, an increase of 8% year-over-year.
Third-quarter net income was $37 million, or $0.05 per share. In the same period last year, the firm reported net income of $789 million, or $106 million when adjusted to exclude certain items.
Analysts had expected net income of $161.5 million.
Twitter had forecast that third quarter revenue growth would lag the first two quarters, partly due to ending some older ad formats. But it also encountered unexpected problems, such as bugs which impacted its ability to target ads and share data with ad partners, and fewer big events compared with the previous summer.
For the fourth quarter, Twitter expects total revenue to be between $940 million and $1.01 billion. Wall Street on average expects $1.06 billion.
Twitter has stopped disclosing its monthly active users count, instead reporting mDAU, a metric it created to measure users exposed on a daily basis to advertising through the site or Twitter applications that are able to show ads.
The company's average mDAU hit 145 million, beating analyst expectations of 141 million, according to IBES data from Refinitiv. This alternative metric was up 17% year-over-year.
In July, Twitter launched a more personalized desktop Twitter.com as part of its efforts to make the platform better for conversations. It has also experimented with the ability to follow topics, and has recently expanded testing for a feature to hide replies.
Recently, the company made 6-second video bidding available for global advertisers and it has continued to expand its live and on-demand video partnerships, including deals with NBC Olympics and Eurosport for coverage of the 2020 Tokyo Games.
Twitter and other social media platforms have also recently come under scrutiny over their ad policies.
Twitter, Facebook Inc FB.O and Alphabet Inc's GOOGL.O Google were this month criticized by U.S. democratic presidential candidates, including former Vice President Joe Biden, for allowing politicians to run ads containing false or misleading claims.
In August, Twitter announced it would no longer accept advertising from state-controlled news media outlets, shortly after it came under fire for showing ads from Chinese state-controlled media that criticized the Hong Kong protesters.
Twitter also faced heat over its handling of user data when it said in October that email addresses and phone numbers uploaded by users to meet its security requirements may have been 'inadvertently' used for advertising purposes.
Total operating expenses, including cost of revenue, rose by 17% year-over-year to $780 million, partly due to plans to hire more employees.
The company expects fourth-quarter operating income to be between $130 million and $170 million.
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(Reporting by Elizabeth Culliford in San Francisco; Additional reporting by Ambhini Aishwarya in Bangalore; Editing by Peter Henderson and Christopher Cushing)
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