Dick Costolo is stepping down as chief executive of Twitter Inc. on July 1, as the social media company struggles to convince Wall Street of its growth strategy.
The company said Chairman and co-founder Jack Dorsey will take over as interim chief executive. Twitter will search for a permanent CEO both within the company and outside it, with the search committee consisting of board members Peter Currie, Peter Fentonand Evan Williams.
Twitter shares rallied sharply in after-hours trading, up 7.3% to $38.45.
“I am deeply appreciative of the confidence the board, the management team and the employees have placed in me over the years, and I look forward to supporting Twitter however I can going forward,” Costolo said in a statement.
The abrupt change comes after months of growing pressure from investors amid mixed messages, a series of executive changes and disappointing growth.
Costolo has attempted to right the ship in recent months, trying to get investors to focus on the size of Twitter’s reach—an audience that sees Twitter content but doesn’t use the service—instead of the 302 million monthly active users who sign in, a user base that has only grown 18% over the last year and remains about one fifth the size of users who log into Facebook Inc.
But his efforts appear to have fallen short. What’s more, in April, Twitter’s first-quarter revenue missed estimates due to less than expected demand for its advertising products, marking the first time its advertising strategy faltered.
In its announcement Thursday, Twitter sought to give confidence to investors. The company reaffirmed its second-quarter outlook, expecting revenue of $470 million to $485 million and earnings before interest, taxes, depreciation and amortization of $97 million to $102 million.