CFO Anthony Noto blamed the decline on iOS 8 saying, "We lost approximately 4 million net users due to rollouts of iOS 8."
How could iOS 8 affect Twitter's active users? In iOS 7 if you are logged into Twitter, the Shared Links section would automatically refresh showing you recent tweets. iOS 8 stopped that automatic polling. In addition, there apparently was an issue where users could not log in following the update to iOS 8.
CEO Dick Costolo offered some more details to Business Insider in a followup call:
"There were two issues. One was Safari auto-polling, and that was 3 million users and we don't expect to get those users back. The other issue that was more complex was an encryption issue related to the Twitter integration into iOS, such that when users integrated, a lot of them weren't able to launch Twitter successfully. That was a much more complex issue, it did not have a one-size-fits-all fix, so the team here worked as quickly as possible to address it but it caused a large number of users to not be able to use the product, even those who were trying repeatedly to figure out ways to get in."
Twitter had 288 million active users during the quarter, missing expectations by 7 million.