The number of active users on the social network reached 255 million in the first three months of 2014, up 5.8% on the previous quarter but below analysts' expectations.
Twitter also reported a net loss of $132m (Â£78m) for the latest quarter.
But it posted revenue of $250m, $226m of which came through advertising.
Despite higher user growth than the previous quarter, when Twitter saw just a 3.8% rise, Twitter's stocks fell by more than 11% in after-hours trading, sending the price below its initial public offering of $38.80 per share.
The rise in Twitter active users comes after four consecutive quarters of declining growth, but the turnaround was not strong enough to convince investors.
Twitter's chief executive Dick Costolo highlighted the company's revenue increase, and said it was "fuelled by increased engagement and user growth".
The integration of advertising management software MoPub had helped Twitter "reach more than 1bn iOS and Android users each month", he added.
Another measure of user engagement, timeline views, increased 15% in the first three months of 2014 to 157 billion.
But the number of Twitter users is still well below its most high-profile competitor, Facebook, which boasts 1.28 billion active users.
WhatsApp, the messaging app Facebook bought for $19bn, recently passed the 500 million user milestone.
Shares in Twitter dropped to their lowest levels since the company's stock market flotation, as it reported slower than expected user growth.