But being frank is not enough.

To generate long-term earnings growth and satisfy investors, Twitter needs to broaden its portfolio and create an ecosystem of products similar to that of Google Inc. and Facebook Inc.

Wall Street analysts took a dim view of the management's commentary on a post-earnings call on Tuesday. At least 15 brokerages cut their price target on Twitter to as low as $30 — 18 percent lower than Tuesday's close of 36.54.

Investors were harsher. Twitter's shares fell 12 percent to $32.15 in premarket trading, set to erase nearly $3 billion of the company's market value.

Dorsey warned on Tuesday that the company is unlikely to see sustained meaningful growth in monthly active users (MAU) until it can reach the mass market, after it reported its the slowest growth in MAU since it went public in 2013.

RBC analyst Mark Mahaney said improvements in monetization would not be enough to sustain high growth rates.

"That's why MAU growth matters. That's why user and usage metrics matter. And that's why hitting metrics growth walls really matters."

Dorsey said the company would focus on more disciplined product execution, simplify the website and better communicate Twitter's purpose.

Edison Investment Research analyst Richard Windsor disagreed. "I think that these areas are simply dancing around the edge of the real problem."

"In essence it must go from being a one product company to an ecosystem and this will require a radical shift in strategy from where the company is today," Windsor said.

Twitter, which is in the midst of a management change after Chief Executive Dick Costolo stepped down in June, said core MAUs rose only 2 million in the second quarter to 304 million.

That number pales in comparison to social-media rival Facebook Inc.'s 1.4 billion users.