And as the social network struggles to add new users, its advertising revenue also fell during the third quarter.

Twitter Inc.’s user growth problem added a new dimension on Thursday morning. The social network acknowledged that it has misstated its monthly active user numbers since the fourth quarter of 2014 due to mistakenly included data from third-party applications in its tally.

In the second quarter, for example, it reported having 328 million monthly active users, when the actual number was 326 million, and in the first quarter it said it had 328 million monthly active users when it actually had 327 million.

The revelation came as the social network reported its third quarter earnings, which showed that its advertising revenue declined 7.7% during the quarter to $502.8 million from $548.0 million a year earlier. That marks the fourth straight quarter that Twitter’s advertising revenue was lower than it was in the year-ago period.

The company has failed to capture more than a tiny fraction of the digital advertising market, which is dominated by Alphabet Inc.’s Google and Facebook Inc.

Twitter noted that it grew its monthly active users 4% during the third quarter, a positive sign for investors who view audience size as a measure of Twitter’s long-term health. Daily active users increased 14%, the fourth consecutive quarter of double-digit growth, the company said.

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CEO Jack Dorsey has shifted the company’s focus to videos and live events as a way to spur audience growth. Twitter attributed the user gains to changes that make the platform easier to use, improved marketing and heightened awareness of Twitter from global events.

And Anthony Noto, Twitter’s chief operating officer, said he believes that simpler advertising options could spur growth. “We do not have millions of advertisers like our competitive peers and a big reason why we do not is we haven’t had a turn-it-on forget-it type of advertising product, an always on advertising product,” he said. “We think the self-serve channel has the potential to be that. And so we’re investing in that area to see if we can find a good product market fit. So in addition to the customer success team, we’ve also made investments on onboarding and we’ve made investments in a new subscription product that for $99 you don’t have to pick what ad formats you want to use on Twitter. We do all that for you. We get you account follows, our technology machine learning gets you impressions and you get a value back that we’ve delivered 100% for you, so it literally is a subscription product like you’d use in other formats. It’s early. It’s being tested but the initial signs are promising and that’s as a result of the innovation of our product team and our leadership team.”

However, at least one analyst wasn’t impressed. “There’s nothing here that suggests this is the beginning of a longer-term recovery,” said James Cakmak, an analyst at Monness Crespi Hardt & Co. “You can extract pockets of bright spots certainly, but in totality, the story still needs work.”

For the third quarter ended Sept. 30, Twitter reported:

  • $502.8 million in ad revenue, down 7.7% from $545.0 million a year earlier.
  • $589.6 million in total revenue, down 4.3% from $615.9 million.
  • 330 million monthly active users worldwide, up 4.1% from 317 million in the same period a year earlier.
  • $21.1 million net loss compared with a $102.9 million loss a year earlier.

For the first three quarters of the year, Twitter reported:

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  • $1.466 billion in ad revenue, down 8.9% from $1.610 billion a year earlier.
  • $1.712 billion in total revenue, down 5.5% from $1.812 billion.
  • $199.1 million net loss compared with a $289.8 million loss a year earlier.

Bloomberg contributed to this report. 

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