Block layoff 4,000, jobs shares surge 25%

Block Inc. (the parent company of Square and Cash App) announced a radical restructuring plan to lay off 4,000 employees—nearly 40% of its workforce.

Despite the massive job cuts, the market’s reaction was overwhelmingly positive. Block’s stock (XYZ) surged as much as 25% in after-hours trading, as investors cheered the company’s aggressive pivot toward an “AI-native” operating model and its significantly raised profit guidance.

The “AI Efficiency” Thesis

In a direct letter to shareholders and a post on X, CEO Jack Dorsey reframed the layoffs not as a sign of financial distress, but as a proactive strategic shift.

• Doing More with Less: Dorsey argued that the “transformative power of artificial intelligence” allows a smaller, flatter team to perform better than a larger, more traditional organization.
• Shrinking the Scale: The move will reduce Block’s headcount from over 10,000 to just under 6,000.
• The “Goose” Tool: The company revealed it has been heavily utilizing an internal proprietary AI tool called Goose to automate workflows across engineering, customer service, and operations.
• A Warning to the Industry: Dorsey stated that Block isn’t “early” to this realization, but that most other companies are “late” and will likely follow suit within the next year.

Financial Breakdown: Growth vs. Cuts

The layoffs coincided with a strong Q4 2025 earnings report, proving the company is acting from a position of momentum rather than crisis.

• The Cash App Boom: Growth was largely driven by a 33% jump in the Cash App segment’s gross profit.
• Restructuring Costs: Block expects to incur $450 million to $500 million in charges related to severance and benefits, primarily in the first quarter of 2026.

Severance & Support

Dorsey opted for a single, deep round of cuts to avoid the “morale-destroying” impact of repeated smaller layoffs. Affected employees are reportedly receiving:

• 20 weeks of base salary (plus one week per year of tenure).
• Vested equity through the end of May 2026.
• 6 months of health coverage.
• $5,000 in transition support and the ability to keep their corporate devices.

Strategic Impact: “Intelligence at the Core”

The 2026 roadmap for Block is now entirely centered on “Intelligence-Native” development. This includes building proactive AI that understands customer needs in real-time and an “orchestration model” that handles internal operations.

“I’d rather take a hard, clear action now and build from a position we believe in than manage a slow reduction of people toward the same outcome.” — Jack Dorsey