Block is cutting more than 4,000 employees, reducing its headcount from over 10,000 to just under 6,000. CEO Jack Dorsey announced the move Thursday in a shareholder letter alongside the company's Q4 2025 earnings, framing it as an inevitable consequence of what he calls "intelligence tools." The company behind Square, Cash App, and Afterpay isn't struggling. Gross profit for the quarter jumped 24% year-over-year to $2.87 billion.
Investors loved every word of it. Block shares surged more than 22% in after-hours trading.
The math that should bother you
Block ended 2019 with 3,835 employees. By the end of 2025 that number had ballooned past 10,000. So what Dorsey is really doing is unwinding a pandemic-era hiring binge and dressing it up in AI language. That's not a knock on Dorsey specifically. Nearly every major tech company that tripled headcount between 2020 and 2022 is doing versions of the same thing.
The financial picture complicates the narrative, though. Full-year 2025 gross profit hit $10.36 billion, up 17%. Block's 2026 guidance calls for $12.2 billion in gross profit and adjusted earnings per share of $3.66, well ahead of the $3.22 analysts expected. Dorsey insists this isn't about financial distress. "Our business is strong... gross profit continues to grow," he wrote on X.
Strong business, record profits, and 4,000 people out. The stock market's response tells you everything about who these decisions are actually for.
Dorsey's prediction
"Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes," Dorsey told shareholders. That's a bold claim, and one that conveniently positions him as a visionary rather than a cost-cutter.
He chose a single massive round of layoffs over gradual reductions, which he framed as merciful. "Repeated rounds of cuts are destructive to morale, to focus, and to the trust that customers and shareholders place in our ability to lead." Block already laid off around 1,000 people in 2025. So the "single decisive action" framing only works if you don't count last year.
Block has been building an internal AI tool called Codename Goose, an open-source agent framework that automates engineering workflows. About 5,000 Block employees were using it weekly as of mid-2025, according to reports. CFO Amrita Ahuja leaned into the AI angle: the cuts will let the company "move faster with smaller, highly talented teams using AI to automate more work."
Is this AI or is this AI-washing?
The timing here is awkward. A Forrester report published in January found that many companies citing AI in layoff announcements lack mature AI systems to fill those roles. Forrester calls it "AI-washing," and predicts that over half of AI-attributed layoffs will be quietly reversed as companies realize they moved too fast. Separately, 55% of employers surveyed already report regretting AI-driven cuts.
TechCrunch noted the tension just weeks ago. Of the 1.2 million U.S. job cuts announced in 2025, AI was cited in only about 55,000, or roughly 4.5%. The rest were plain old restructuring.
Block may be different. Goose is a real product, used internally at scale, and the company has been collaborating with Anthropic on the Model Context Protocol that powers it. But there's a gap between "our engineers use an AI coding agent" and "we can do the same work with 40% fewer people across the entire company." Whether Dorsey is right about that will show up in the next few earnings reports, not in today's stock price.
What laid-off employees get
Severance includes 20 weeks of base salary plus one additional week per year of tenure, equity vested through the end of May 2026, six months of healthcare coverage, corporate devices, and $5,000 in transition support. The restructuring will cost Block between $450 million and $500 million, with most charges landing in Q1. Those affected will have email and Slack access through Thursday evening to say goodbye to colleagues.
Block expects to complete the workforce reduction by the end of Q2 2026.
