Twitter CEO Jack Dorsey is stepping down

Twitter CEO Jack Dorsey has resigned from the company and CTO Parag Agrawal has replaced him as chief executive, effective immediately. CNBC first reported on Dorsey's departure.

"I've decided to leave Twitter because I believe the company is ready to move on from its founders," Dorsey said in a statement. "My trust in Parag as Twitter's CEO is deep. His work over the past 10 years has been transformational. I'm deeply grateful for his skill, heart, and soul. It's his time to lead." Dorsey plans to remain on Twitter's board for the next six months or so to help with the transition before fully departing the company.

"I want you all to know that this was my decision and I own it," Dorsey told Twitter staff in an email (which he tweeted). "It was a tough one for me, of course. I love this service and company, and all of you so much. I'm really sad, yet really happy. There aren't many companies that get to this level. And there aren't many founders that choose their company over their own ego. I know we'll prove this was the right move."

"I want to thank the board for their confidence in my leadership and Jack for his continued mentorship, support, and partnership," Agrawal said. "I look forward to building on everything we have accomplished under Jack's leadership and I am incredibly energized by the opportunities ahead. By continuing to improve our execution, we will deliver tremendous value for our customers and shareholders as we reshape the future of public conversation."

Over the last six years, Dorsey had been in the unusual situation of running two notable tech companies: Twitter and Square. His first stint as Twitter CEO, which he co-founded, ended in 2008 when he was pushed out, but he was still on the board. He returned as CEO in 2015 when Dick Costolo departed.

Last year, activist investment firm Elliott Management called for Dorsey to leave his position at Twitter. The firm's founder, Paul Singer, suggested Dorsey's dual CEO role meant he wasn't able to focus enough on the social media platform. Twitter reached a deal with Elliott Management, which included a $2 billion stock buyback, to keep Dorsey in place, despite a shaky outlook for the company when the COVID-19 pandemic was starting to take hold.

Twitter missed Wall Street expectations on revenue and earnings per share last quarter. The main engagement metric, monetizable daily active users (mDAU), rose by 13 percent year-over-year to 211 million. However, average US mDAUs remained at 37 million for the second quarter running. In September, the company agreed to pay $809.5 million to settle a class-action suit, in which investors accused the company of providing misleading numbers about engagement.

Advertising is still by far the biggest driver of Twitter revenue ($1.14 billion of the $1.28 billion it generated last quarter), but the company has been exploring other ways of making money over the last couple of years. Twitter bought newsletter service Revue in January and integrated it into the core Twitter platform. Users can charge readers to read newsletters and Twitter takes a five percent cut.

More recently, the company rolled out Twitter Blue, a $3/month service geared toward power users that adds features such as an undo button, bookmark folders and a way to make threads more readable.

Along with his appointment as CEO, Agrawal has joined Twitter's board. In addition, Salesforce president and chief operating officer Bret Taylor has been named the independent chair of the board, succeeding Patrick Pichette, who remains a board member.

Update 11/29 10:45AM ET: Updated with confirmation.