Dick Costolo, who helped turn the message start-up Twitter into a global town square, is stepping down amid criticism over the company's disappointing financial performance and a recent stock slide.

Jack Dorsey, a co-founder who served as CEO during Twitter's early years, will temporarily take the reins while the San Francisco company looks for a permanent replacement.

However, both Dorsey, 38, and Costolo, 51, expressed confidence on Thursday in the company's direction and said the board is not seeking major changes.

"I believe in the course the company is on and the management team's ability to fulfil that and execute on it," Dorsey, who is also board chairman, said during a joint conference call with Costolo and Wall Street analysts.

Both men characterised Costolo's departure, effective from July 1, as voluntary.

No severance package

Costolo said he began talking with Twitter directors about leaving last year, although he did not say what he plans to do next.

He will not receive any severance package.

Costolo had been Twitter's CEO for five years and led the company through a successful stock market debut in 2013.

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Though Costolo once worked as a stand-up comedian, he has a degree in computer science and led three earlier tech start-ups, including one that he sold to Google.

He was hired as chief operating officer for Twitter in 2009, three years after its launch.

But even though Twitter Inc had $1.4bn in revenue last year, primarily from digital ads, it has not made a profit as a public company.

And its shares have not recovered since they lost almost a third of their value after the company's last quarterly financial report in April, when it missed Wall Street revenue estimates and prompted some analysts to question the company's leadership.

At that time, Twitter also lowered its financial outlook.

Wall Street reacted positively to Thursday's development, as Twitter shares rose to $37.17, up 3.6 percent, after the announcement, meaning investors thought Twitter was worth $900m more without Costolo than with him.

For his part, Dorsey said the company is making no further changes in its financial projections.

Daunting terminology

While Twitter reported 301 million monthly users in the first quarter of this year, up 18 percent from a year earlier, it has not seen the kind of growth that Facebook has enjoyed.

Under Costolo, the company introduced new advertising products and user features, including Periscope, which allows users to post live streaming video.

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Critics say newcomers still find it daunting to learn Twitter's quirky terminology and customs.

Costolo will remain on Twitter's board of directors. Dorsey said the company will consider internal and external candidates for his permanent replacement.

According to a company filing, the board will not decide until later this year if he is to receive extra pay for taking on the CEO duties.

Dorsey said he will also continue to run Square, the payment processing start-up he founded after a previous stint as Twitter's CEO ended in 2008.

Costolo commented about the change on Twitter on Thursday afternoon.

Greeting Dorsey by his Twitter handle, Costolo wrote "Welcome back, @jack" and linked to the official Twitter announcement.

While Dorsey said a search committee will set criteria for selecting the next CEO, he said: "We're looking for someone who really uses and loves the product."

Source: Agencies