Costolo will be replaced by co-founder Jack Dorsey on an interim basis.

The company's shares rose 7.7 percent to $38.60 in after-market trading.

"Unfortunately this news isn't surprising," said Nate Elliott of management consultant Forrester Research. "The bottom line is that Twitter isn't very good right now at serving either its users or its marketers."

In a statement, Costolo said he was "tremendously proud" of his six years at Twitter.

"I am deeply appreciative of the confidence the board, the management team and the employees have placed in me over the years," Costolo said.

Costolo, who will step down on July 1, will continue to serve on the board, the company said in a regulatory filing.

Costolo has agreed to cancel all of his remaining unvested equity in Twitter after July 1. Dorsey, who will continue to serve as CEO of Square Inc., had served as Twitter's president and CEO from May 2007 to October 2008.

Twitter has long struggled to gain users at the rate of other social media companies, such as Facebook Inc., Instagram and Snapchat.

"Twitter has never been great at giving its users reasons to come back. While other social sites have introduced new features and functionality the past few years, Twitter has mostly stood still. The result has been excruciatingly slow user growth," Forrester's Elliott said.

Data firm eMarketer projects that Twitter's monthly user base will grow at 14.1 percent this year, compared to more than 30 percent two years ago.

Twitter reaffirmed its outlook for the second quarter of 2015, expecting revenue of $470 million to $485 million and adjusted earnings before interest, taxes, depreciation and amortization of $97 million to $102 million.

It sees stock-based compensation expense of $190 million to $200 million, excluding equity awards that may be granted in connection with potential future acquisitions

The company disappointed investors in its first quarter results when it reported that its number of monthly average users was growing at a slower pace than Wall Street's expectations.

It also cut its full-year forecast because of weak demand for its new direct response advertising, intended to encourage actions such as clicking on a link to an advertiser's website.