Dick Costolo, CEO of Twitter, during an interview in San Francisco, April 29, 2015.
camera (Getty Images) Dick Costolo, CEO of Twitter, during an interview in San Francisco, April 29, 2015.

Dick Costolo is set to step down from his position as Twitter's CEO effective July 1, the company announced today.

Jack Dorsey, co-founder of the micro-blogging platform, will serve as interim CEO as a committee searches for a new chief executive.

Dorsey will also maintain his position as CEO of Square, the payments company he co-founded in 2009. Costolo will remain on Twitter's board of directors.

In a conference call with investors this afternoon, Dorsey thanked Costolo for his five years of leading Twitter, noting "despite all we have accomplished, the company still has huge unmet potential."

Costolo said he initiated discussions with Twitter's board last year on the possibility of a CEO transition. The final decision was made at a meeting last week, he said.

The transition comes as Twitter has faced a difficult time convincing investors it has a strategy for growth. The company’s stock price and user growth have lagged behind investors' expectations.

Costolo said Twitter was in a "unique position" having Dorsey able to fill in as CEO and help facilitate a smooth transition.

"Jack thinks elegantly and deeply about the product," Costolo said. "It's been a total delight to have worked alongside everybody and such a great team."

As a committee vets internal and external candidates for the top position, Dorsey said it's vital whoever takes the reins is "someone who uses and loves the product in every single way."

Twitter sought to give reassurance to shareholders in a statement that stressed the company's second quarter revenue outlook to be in the range of $470 million to $485 million.

Shares of $TWTR rallied in after hours trading, up more than 6 percent to $38.05.

Widely respected among Twitter employees, Costolo made it clear he wanted to give investors a road map for Twitter's future and his ability to let advertisers harness the service's incredible reach.

At its first ever Analyst Day conference last November, Costolo shared his vision for helping Twitter grow and find new ways to engage its audience.

Among the changes that have been introduced since then are a more seamless video experience within tweets, the ability to direct message multiple people and a “what you missed” feature to make sure users see the most relevant tweets.

Twitter also rolled out two new products -- Fabric and Periscope -- with plans to debut more later this year, Dorsey said.