Block Lays Off Half Its Staff, Citing AI
Block, the payments firm led by Jack Dorsey, is laying off nearly half its workforce, or about 4,000 employees, in a move attributed to efficiencies gained from artificial intelligence. Dorsey warned that most other companies will likely do the same within a year. The move comes as e-commerce firm eBay also announced it is cutting 800 positions, or 6% of its workforce, to streamline operations.
The move reduces Block's headcount from over 10,000 to just under 6,000, a more drastic cut than the 10% reduction that was reported as a possibility earlier in the year. CEO Jack Dorsey framed the decision as a one-time action to avoid the prolonged uncertainty and morale damage that comes with repeated rounds of layoffs. This restructuring isn't a cost-cutting measure due to poor performance; Block's fourth-quarter gross profit rose 24% year-over-year to $2.87 billion. Instead, Dorsey stated the company is proactively reorganizing around AI, creating smaller, more efficient teams that can leverage "intelligence tools" to accelerate product delivery. The company anticipates incurring $450 million to $500 million in restructuring charges, mostly in the first quarter of 2026, which are primarily related to severance and employee benefits. Affected employees are slated to receive 20 weeks of salary, plus additional pay based on tenure, along with six months of health coverage. This isn't Block's first foray into AI-driven efficiency. The company has been developing an in-house AI productivity tool called "Goose" and has noted that 90% of its code submissions are already AI-authored, leading to a 30% increase in engineering velocity. Block, alongside OpenAI and Anthropic, also launched the Agentic AI Foundation to advance open-source AI agents. Despite the emphasis on AI, some analysts point to Block's rapid expansion during the pandemic as a contributing factor. The company's workforce more than tripled in three years, growing from about 3,900 in December 2019 to over 12,500 by the end of 2022. Investors have responded positively to the strategic shift, with Block's shares surging more than 20% in after-hours trading following the announcement. The company raised its full-year 2026 guidance, projecting a gross profit of $12.2 billion and an adjusted operating income of $3.2 billion.
