Block Slashes Workforce in AI Push

The move reduces Block's headcount from over 10,000 to just under 6,000, impacting more than 4,000 employees. CEO Jack Dorsey opted for a single, large-scale reduction to avoid the prolonged uncertainty and morale damage associated with gradual layoffs. Despite the dramatic cuts, Dorsey emphasized the decision was not due to financial distress, pointing to strong growth in gross profit. The company's fourth-quarter gross profit jumped 24% year-over-year, and it raised its 2026 profitability targets after the announcement. Investors reacted positively, with Block's stock surging more than 20% in after-hours trading following the news. The market's embrace of the AI-driven strategy suggests a growing investor appetite for aggressive, technology-led efficiency plays. Dorsey's memo explicitly stated that "intelligence tools" are fundamentally changing how the company operates, enabling smaller teams to be more effective. This contrasts with other tech firms that have been less direct about AI's role in recent workforce reductions. While the company is reducing its overall workforce, it is also actively hiring for "senior AI engineering talent" to build out its AI infrastructure. Dorsey also admitted to over-hiring during the COVID-19 pandemic due to what he described as an incorrect internal company structure. The severance package for departing employees includes 20 weeks of base pay, plus one week per year of tenure, vested equity through May, and six months of healthcare coverage. This restructuring is one of the most significant examples of a profitable company directly attributing such a large-scale layoff to a strategic pivot toward AI-powered automation. Dorsey predicted that a majority of companies will reach the same conclusion and make similar structural changes within the next year.