Jessica Guynn

USA TODAY

SAN FRANCISCO — Twitter fourth-quarter performance in 140 characters or less? Not great.

Shares (TWTR) fell nearly 4% Thursday, the day after Twitter's quarterly results showed once again just how mightily the social media service is struggling to attract new users. In the fourth quarter, user growth essentially ground to a halt.

Twitter reported it had 320 million users in the December quarter, flat with the previous quarter and up 9% year-over-year. Analysts expected Twitter to report 325 million users, up 1.5% from the third quarter.

Excluding so-called "fast followers" who access the service via text message, Twitter had 305 million monthly active users in the quarter, up 6% year-over-year and a decline from 307 million in the previous quarter.

In a letter Twitter sought to reassure shareholders. "As of the end of January, we have already seen total (monthly active users), excluding SMS Fast Followers, return to Q3 levels," the company wrote.

Twitter's chief financial officer Anthony Noto told analysts during a conference call that the company has been welcoming back "resurrected" as well as new users. And co-founder and CEO Jack Dorsey pledged to make significant changes to improve the Twitter service from increasing streaming video to getting rid of confusing rules that drive away users.

Yet the lackluster numbers showed investors that Twitter's recent attempts under Dorsey have yet to pull the service out of a lengthy growth slump.

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The timing isn't ideal for the nine-year-old company, which is facing growing investor scrutiny. While popular with media outlets, politicians and celebrities, Twitter has never been able to match the mass market appeal of Facebook which, at 1.59 billion users, is five times the size of Twitter. The problem: many people do not understand how or why they should use the service. As a result, even Instagram, the photo-sharing app owned by Facebook, has eclipsed Twitter with 400 million users and a faster growth rate.

Dorsey, who is pulling double duty as CEO of Twitter and digital payments company Square, has pledged to reignite growth at Twitter but says change won't happen overnight.

Twitter's user growth is a key metric for investors because it suggests whether Twitter will be able to more effectively compete for digital advertising dollars against Facebook, which has about five times as many users.

Facebook's advertising business dwarfs Twitter. Twitter is expected to capture a 9% share of global social network ad spending in 2016, according to research firm eMarketer. Facebook is forecast to have 65.1%.

In the fourth quarter, Twitter generated $710 million in revenue, an increase of 48% year-over-year, in line with analyst estimates.

Twitter earned 13 cents a share, excluding certain expenses. Analysts expected 12 cents a share. Including those expenses, Twitter lost 16 cents a share. Analysts had forecast a loss of 17 cents a share.

Twitter’s outlook was lower than Wall Street forecast. The company estimated revenue of $595 million to $610 million in the current quarter. Wall Street expected $628 million.

"Earnings were notably better and the revenues were in line but the MAU number continues to be the company's nemesis," said S&P Global Market Intelligence analyst Scott Kessler. "We'll see how they address that because clearly it's the elephant in the room. They created this problem in more ways than one and hopefully they can figure out a way to either solve or address it."

Twitter have plummeted over the last year, losing 67% of their value. Twitter shares closed up 4% to $14.98 in regular trading Wednesday, then slid 3% after hours. The company announced fourth-quarter results after the close of trading.

Follow USA TODAY senior technology writer Jessica Guynn @jguynn