Block plans to lay off nearly half its staff in 'deliberate and bold' embrace of AI

By Emily Bary

Block's stock surges 24% as Wall Street rewards massive job cuts at the parent company of Square and the Cash App

Jack Dorsey thinks other companies will follow Block with dramatic workforce cuts.

Block, the parent company of Square and the Cash App, is conducting a major reorganization in the age of artificial intelligence, and investors are rewarding the move.

The payment-technology company plans to cut almost half of its workforce, it announced Thursday. The restructuring will bring Block's (XYZ) employee count below 6,000 versus more than 10,000 today.

Shares of Block soared 23.5% in after-hours action on Thursday.

The layoffs at Block come just days after Citrini Research rattled markets with the publication of a blog post detailing a fictional scenario in which AI productivity tools were so powerful that they forced widespread shifts in the U.S. labor market. These particularly impacted knowledge workers.

'Intelligence tools have changed what it means to build and run a company," CEO Jack Dorsey said in a shareholder letter. "We're already seeing it internally. A significantly smaller team, using the tools we're building, can do more and do it better."

By "intelligence tools," the company is referring to AI and automation. CFO Amrita Ahuja said that Block has seen sizable productivity gains recently, not just among programmers but also within the broader company.

Within a year, Dorsey expects other companies to follow suit with "similar structural changes."

"I'd rather get there honestly and on our own terms than be forced into it reactively," he added.

Mizuho analyst Dan Dolev also wondered whether the move would set a precedent for other technology companies.

Block's "deliberate and bold" decision to dramatically reduce its workforce comes "from a position of strength," according to Ahuja, as the company just exceeded expectations with various financial metrics and lifted its outlook.

In its fourth-quarter earnings report Thursday, Block reported earnings per share of 65 cents, down from 71 cents a year before but ahead of the FactSet consensus by a penny. Gross profit, which is seen by Wall Street as a reasonably clean barometer for Block's top-line performance, was up 24% from a year before to $2.87 billion. Analysts were looking for $2.74 billion.

Block now expects 18% growth in gross profit for the full year, above the 17% target it set at an investor day late last year.

That new outlook reflects a "recognition of our ability to continue to drive against our roadmap" with a "smaller, more nimble, flatter organizational structure," Ahuja said.

-Emily Bary

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02-26-26 2307ET