The market appears to have lost patience with Twitter (NYSE: TWTR). Recently the company reported its third quarter results that failed to meet market expectations and sent the stock plummeting 19% in the after-hours trading session.

Twitter’s Financials

Revenues for the quarter revenue grew a modest 9% over the year to $823.7 million, significantly short of the market’s expectations of $874 million. Net income fell to $37 million from $789 million last year primarily due to the release of deferred tax asset valuation allowances of $683 million. On an adjusted basis, net income was $106 million, or $0.17 per share versus analyst estimates of $0.20 per share.

During the quarter, advertising revenues grew 8% to $702 million with total ad engagements up 23% and the cost per engagement falling 12% over the year. The market was looking for advertising revenues of $756 million for the quarter. Data licensing and other revenues grew 12% to $121 million. By region, revenues from the US markets grew 10% to $465 million and from international markets grew 7% to $358 million.

The only silver lining in Twitter’s results were its user metrics. It ended the quarter with a daily active user base of 145 million, up 17% and surpassing the analyst estimate of 141 million users. Among operating metrics, average monetizable daily active usage (mDAU) grew from 124 million last year and 139 million last quarter to 145 million. Average US mDAU grew to 30 million and average international mDAU grew to 115 million.

For the current quarter, Twitter expects revenues of $0.94-$1.01 billion with an operating income of $130-$170 million. The Street was looking for revenues of $1.06 billion for the quarter.

Twitter’s Issues

Twitter attributed the miss in performance to product issues and seasonality in July and August. It claimed that during the quarter, it was not able to deliver on targeted advertising due to bugs in its legacy mobile-application-promotion product. For instance, one bug continued to collect user-specific data even when the user responded in the negative to a prompt seeking permission to allow the application to use device-specific settings to personalize the user’s timeline.

Once Twitter realized the issue, it shut off the feature entirely, thus eliminating its ability to target and sell ads. It did not just err on the data collection but also on data sharing. It ended up sharing some data with advertising partners that the users had declined to share.

Twitter realized the impact of these issues for only part of the third quarter. But it expects the aftermath to continue in the current quarter, thus leading to a lower outlook.

Twitter’s Focus Areas

Despite the issues, Twitter continued to focus on product innovation to drive user engagement. During the quarter it simplified the use of lists to allow users to create and consume. Users can pin lists directly to their Home timeline, thus enabling a faster switch between their Home timeline and list of accounts that they want to stay connected with without directly following them. It will continue to strengthen the list feature over time.

Other experiments to drive engagement include allowing the user the option to follow a topic. Users will be able to choose to either follow or un-follow a topic at the click of a button at the end of a Tweet relating to the topic.

Twitter has also been in the news recently on account of its stance on political advertising. Whereas Facebook has reaffirmed that it will not fact check political advertisements, Twitter has maintained that it will not air any political advertisements. Twitter does not want to become a platform where politicians can buy their way to targeted audience.

Its stock is trading at $29.34 with a market capitalization of $23 billion. It touched a 52-week high of $45.86 in September this year. The stock has climbed from the 52-week low of $26.26 that it had fallen to in December last year.