Twitter Inc. reported quarterly revenue and gave a sales forecast that fell far short of Wall Street’s estimates, saying privacy issues involving its advertising business will continue to weigh on its performance. The shares plunged.

Third-quarter sales increased 8.6 per cent to US$823.7 million, well short of the US$876 million analysts estimated. Sales in the period ending in December will be US$940 million to US$1.01 billion, the San Francisco-based company said Thursday in a statement. Analysts projected US$1.06 billion.

In a letter to shareholders, the social-media company blamed “greater-than-expected advertising seasonality” in July and August for the third-quarter results, and also referenced “revenue product issues” that reduced sales by 3 or more percentage points.

In a blog post last quarter, Twitter outlined two settings issues that let the company access user data without permission to show targeted ads or measure the success of those ads for marketers. Removing that data from the advertising arsenal hurt the company’s business.

Twitter reported profit, excluding some items, of 17 cents a share, compared with analysts’ estimates of 20 cents.

User growth, on the other hand, provided a positive note for Twitter, which has historically struggled to increase its audience despite widespread social and cultural awareness. The company added 6 million new daily active users to 145 million in the third quarter, a 17 per cent increase from a year earlier and a 4 per cent gain from the previous quarter.

Twitter’s user growth has fueled a share increase of 35 per cent this year to US$38.83 through Wednesday’s close in New York. The shares plunged 15 per cent in early trading after the results.

The company has been making a concerted effort to clean up its service and make it easier for users to have conversations with one another. One of Twitter’s top product initiatives is to help people find more content that they might find interesting, even if they don’t know which specific users they should follow. The company started testing the ability for users to follow specific topics last quarter, like sports or gaming. It will continue that test, with plans to add more categories such as celebrities and television shows moving forward.

The effort is aimed at one of Twitter’s biggest issues, which is helping new and existing users find new content outside of their existing network.