The surge in shares reversed a 19 percent fall three months ago when Twitter shocked Wall Street with a similar decline in users. This time, investors welcomed Twitter removing accounts used for disinformation, hate speech and other abuse as the best way to solidify a base of high-quality users who are attractive to advertisers.

"If they are getting rid of bots, fake accounts and fighting hate speech, then it's actually good for the health of the platform overall,” said Pivotal Research Group analyst Brian Wieser. "That is certainly more appealing to advertisers."

Twitter's advertising revenue jumped 29 percent to $650 million in the third quarter from a year earlier, boosted by ad sales on broadcasts from media companies including Live Nation Entertainment, Major League Baseball and Major League Soccer.

That contributed to a similar jump in overall revenue from a year earlier to $758 million, beating analysts' average estimate of $702.6 million, according to Refinitiv data.

The company reported adjusted profit of 21 cents per share, well above the average estimate of 14 cents.

TWEET PURGE

Twitter has deleted millions of suspicious accounts after it and other social media services were used in misinformation campaigns attempting influence voters in the 2016 U.S. presidential race and other elections. Last week it disclosed it had removed some 10 million tweets that it thought were the work of Russian and Iranian government-backed influence operations.

Twitter said in a conference call on Thursday that the cleanup effort, which it launched in March and calls a "health" initiative, will allow it to grow revenue faster than users for a sustained period.

"Health ultimately is a growth factor for the service, and we do believe that's important not just for the overall experience, but in terms of making Twitter long-term enduring as well," Twitter Chief Executive Officer Jack Dorsey said during the call.

Neither Dorsey nor Chief Financial Officer Ned Segal clearly answered questions from analysts on a call after the results on how Twitter would ultimately reverse the decline users.

Monthly active users (MAUs) fell to 326 million in the third quarter, below the average analyst forecast of 331.5 million, according to FactSet. Twitter said it expects them to fall below 326 million in the current quarter, missing the average forecast of 333.4 million.

Twitter usage has been stagnant for more than a year, causing some analysts to worry that growth has peaked.

Twitter "did a superb job of explaining the monthly active user decline, which buys them time, but the stock will come under pressure if MAUs don’t start to grow again in 2019," said Michael Pachter, managing director of equity research for Wedbush Securities.

AD GAINS

Those concerns have been somewhat offset by increases in advertising sales from video which suggest the company is succeeding in efforts to generate more cash from each user and investors have been looking for solid evidence that it would lead to sustainable growth in revenue and profits.

“Twitter continues to ‘do a lot with a little.’ User growth is lackluster, but the company is eking out more from current users," said Jim Cridlin, global head of innovation at WPP's Mindshare media buying agency.

Distribution deals with U.S. Major League Baseball, video game publisher Activision, Sony Music and Vice are starting to lure advertisers to Twitter’s live premium video, he said.

Twitter said the number of its daily active users rose by 9 percent year-on-year, weaker than an 11 percent jump in the previous quarter and its slowest growth rate in two years. The company does not disclose the total number of daily users.

Twitter shares were up 17 percent at $32.05 in morning trade. They are still down about 42 percent from their 3-1/2 year high of $47.79, hit in June.

(This version of the story was refiled to add CEO Jack Dorsey after quote in paragraph 9)

(Reporting by Angela Moon and Munsif Vengattil; Writing by Jim Finkle; Editing by Patrick Graham and Bill Rigby)

By Angela Moon and Munsif Vengattil