It was a brutal Thursday at Block.
Block, the payments firm behind Square, Cash App, and Afterpay, announced it will cut more than 4,000 employees, about 40% of its workforce. The move reduces headcount from over 10,000 to just under 6,000.
CEO Jack Dorsey shared the news in a lengthy note to staff posted on X:
“today we’re making one of the hardest decisions in the history of our company: we’re reducing our organization by nearly half, from over 10,000 people to just under 6,000,” Dorsey wrote on X.
He made clear the layoffs are not tied to weak performance. “we’re not making this decision because we’re in trouble. our business is strong. gross profit continues to grow,” he wrote.
Block’s latest earnings appear to support that claim. The company reported adjusted earnings of 65 cents per share in the fourth quarter, up from 47 cents a year earlier. Gross profit rose 24%, driven in part by strong growth at Cash App. Shares surged more than 20% in extended trading following the announcement.
Dorsey said the cuts reflect a deeper shift in how companies operate as artificial intelligence tools become more capable.
“we’re already seeing that the intelligence tools we’re creating and using, paired with smaller and flatter teams, are enabling a new way of working which fundamentally changes what it means to build and run a company. and that’s accelerating rapidly,” he wrote.
In comments reported by Reuters, Dorsey added:
“Intelligence tools have changed what it means to build and run a company. We’re already seeing it internally. A significantly smaller team using the tools can do more and do it better.” He also predicted that others would follow. “Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes,” he wrote.
The company expects to incur roughly $450 million to $500 million in restructuring charges as it pivots to what it describes as an AI-embedded operating model.
Pandemic hiring, now reversed
The massive cut also addresses what some critics called “managerial incompetence” during the pandemic. Responding to a critic on X, Dorsey admitted the company over-hired during the COVID-19 era due to a fractured internal structure between Square and Cash App.
However, he defended the current pivot as a drive toward extreme efficiency, stating the company is now targeting “$2M+ gross profit per person,” which would be four times its pre-COVID efficiency levels.
Dorsey said he chose a single deep round of layoffs instead of smaller, repeated cuts. “I had two options: cut gradually over months or years as this shift plays out, or be honest about where we are and act on it now. I chose the latter,” he wrote.
Not alone in the woods
Block isn’t the only tech company swinging the ax and blaming AI.
- Amazon cut 16,000 employees in January, following 14,000 layoffs a few months earlier.
- Meta has trimmed hundreds from its AI unit and plans to cut 10% of its Reality Labs division.
- Pinterest announced layoffs of “less than 15 percent” and, like Block, pointed to shifting resources toward AI.
- eBay cut about 800 roles, roughly 6% of its workforce, the same day Block announced its cuts.
As tools like Anthropic’s Claude and OpenAI’s Codex begin to automate tasks that once required large teams of highly trained humans, the AI-driven overhaul at Block may indeed be the “seminal moment” analysts are calling it, a glimpse into a future where the most successful companies are the ones with the fewest people.
Related reading: Learn how AI-driven restructuring could disproportionately impact women in the workforce.