In a bold strategic move, Block Inc. has unveiled plans to reduce its workforce by approximately 4,000 employees, equating to nearly 40% of its total staff, and leaving the company with around 6,000 personnel. This significant restructuring, announced by CEO Jack Dorsey on February 26, 2026, has already started to pay dividends, as the company’s stock surged over 31% in early trading, opening at $96.58, a substantial leap from the prior close of $73.65.
The layoffs come as Block, formerly known as Square, seeks to streamline its operations amid rapidly advancing artificial intelligence capabilities. Dorsey attributes this drastic reduction in headcount to the efficiency gains that AI tools have introduced, allowing smaller teams to manage larger workloads. “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,” he stated in a letter shared on social media platform X.
In an effort to support those impacted by the cuts, Block has announced a generous severance package. Affected employees will receive 20 weeks of salary, plus an additional week for each year of tenure, alongside six months of healthcare coverage, their company devices, and a $5,000 lump sum to assist with personal needs. The notifications regarding layoffs were delivered the same day as the announcement, marking a decisive approach to the workforce reduction.
This latest round of job cuts represents Block’s most significant reduction yet, far surpassing the earlier projected 10% cuts cited by analysts. Dorsey noted, however, that he felt compelled to take immediate action rather than prolong a drawn-out process that might dampen morale among remaining employees. He also predicted that many companies would soon find themselves in a similar position as Block, stating, “I don’t think we’re early to this realization. I think most companies are late.”
Reflecting the impact of these cuts, Block’s quarterly earnings results for Q4 2025 indicated a gross profit of $2.87 billion, marking a 24% year-over-year increase. Additionally, the Cash App segment reported a 33% rise in revenue, bringing in $1.83 billion for the quarter. Despite the positive earnings, it is noteworthy that Block’s stock remains approximately 80% below its peak during the pandemic.
While Dorsey seems to position AI as the main catalyst for these workforce cuts, industry analysts have pointed to an underlying challenge that Block faces: the rise of stablecoin-based payment systems. Historically, Block’s revenue has been chiefly derived from card-based transaction fees, which typically range between 2% to 3%. However, the advent of stablecoins threatens to disrupt this fee-based model, enabling transactions to be processed at near-zero cost.
Research indicates that concepts like “agentic shopping,” where AI tools autonomously manage payment routing, could accelerate this transition away from traditional card networks entirely. Legislative movements, such as the GENIUS Act and Circle’s IPO, hint at a future where stablecoins could see mainstream adoption, potentially exacerbating pressure on Block’s traditional business model.
Despite these challenges, Block’s recent earnings suggest that the company is still navigating a profitable course in this evolving landscape. However, skepticism remains about the rationale behind the layoffs, with some critics suggesting that the AI-driven narrative may simply serve as a convenient excuse for previous overhiring. As Block continues to adapt to a rapidly changing market, it will be crucial to watch how these developments unfold in the coming months.
