Block Inc. Cuts 40% of Staff to ~6,000 in AI-Driven Restructuring, Shares Jump 20%+

Block Inc. (NYSE: XYZ), the fintech company led by Twitter co-founder Jack Dorsey, announced on February 26, 2026, that it is reducing its global workforce by approximately 4,000 employees, or nearly 40%, from over 10,000 to just under 6,000, citing the transformative impact of artificial intelligence on its operations.

Shares surged more than 20% in after-hours trading following the announcement, which accompanied fourth-quarter earnings that exceeded analyst expectations, as the company pivots to a “smaller, flatter” structure centered on intelligence tools.

Workforce Reduction and Strategic Rationale

Jack Dorsey communicated the decision in a shareholder letter and a post on X, framing the layoffs as a proactive response to fundamental changes in how companies are built and run. “Intelligence tools have changed what it means to build and run a company. We’re already seeing it internally,” Dorsey wrote. “A significantly smaller team, using the tools we’re building, can do more and do it better. And intelligence tool capabilities are compounding faster every week.”

The reduction will bring Block’s headcount from 10,205 employees as of December 31, 2025, to under 6,000. Dorsey emphasized that the cuts are a one-time action rather than a series of gradual reductions, which he said are “destructive to morale, to focus, and to the trust that customers and shareholders place in our ability to lead.” Affected employees will receive 20 weeks’ pay plus one additional week per year of tenure.

Dorsey acknowledged the scale of the decision carries risk, stating, “I accept that we may have gotten some of them wrong, and we’ve built in flexibility to account for that, and do the right thing for our customers.” He added that he expects “the majority of companies will reach the same conclusion and make similar structural changes” within the next year.

Block expects to incur restructuring charges of approximately $450 million to $500 million, primarily consisting of severance payments, employee benefits, and noncash expenses related to share vesting, with most costs anticipated in the first quarter of 2026.

Financial Performance and Market Reaction

The layoff announcement accompanied Block’s fourth-quarter 2025 earnings report, which showed strong financial performance. The company reported adjusted earnings per share of $0.65 on revenue of $6.25 billion, in line with analyst expectations of $0.65 per share and $6.24 billion in revenue, according to consensus estimates. Gross profit increased 24% year-over-year to $2.87 billion.

For the full year 2026, Block projected adjusted earnings per share of $3.66, exceeding analyst expectations of $3.22 per share.

Following the announcement, Block’s stock surged more than 20% in after-hours trading, climbing from its closing price of $54.53 per share. The stock had declined approximately 16% over the preceding year, giving the company a market capitalization of approximately $31 billion prior to the announcement.

AI Integration and Industry Context

Block’s restructuring is among the most explicit links between artificial intelligence and large-scale workforce reduction by a major technology company. Dorsey positioned the move as part of a broader industry trend, noting that “intelligence tools” are enabling new ways of working with smaller, flatter teams.

The company owns multiple business units including payment processor Square, consumer financial app CashApp, and music streaming service Tidal. Its strategy includes a significant bet on bitcoin, with Dorsey being a prominent “bitcoin maximalist” who has expressed belief that the cryptocurrency will eventually eclipse the dollar. In the fourth quarter, Block reported nearly $2 billion in bitcoin revenue, accounting for approximately one-third of total revenue, though the company took a $234 million hit on its bitcoin holdings due to price declines during the year.

Block’s move follows similar actions by other technology companies citing AI as a factor in workforce planning. Amazon has conducted multiple rounds of layoffs totaling tens of thousands of employees, while Meta CEO Mark Zuckerberg has stated he expects “2026 to be the year that AI dramatically changes the way we work,” noting that “projects that used to take big teams now be accomplished by a single, very talented person.”

Companies including Pinterest, CrowdStrike, and Chegg have also recently announced job cuts directly attributed to AI reshaping their workforces. The technology sector is increasingly adopting AI tools such as Claude Code from Anthropic and Codex from OpenAI that automate software development tasks previously performed by human programmers.

Block CFO Amrita Ahuja framed the job cuts as positioning the company “for our next phase of long term growth,” adding: “We are choosing to shift how we operate at a time when our business is accelerating and we see an opportunity to move faster with smaller, highly talented teams using AI to automate more work.”

The layoffs come approximately one year after Block reduced its workforce by more than 900 employees, and about four years after the company underwent significant growth during the pandemic-era digital payments boom.

FAQ: Understanding Block’s Restructuring

Q: How many employees is Block laying off and why?

A: Block is reducing its workforce by approximately 4,000 employees, or nearly 40%, from over 10,000 to under 6,000. CEO Jack Dorsey cited the transformative impact of artificial intelligence and intelligence tools on company operations, stating that smaller, flatter teams using AI can accomplish more than larger traditional teams.

Q: What severance and benefits are affected employees receiving?

A: Affected employees will receive 20 weeks of pay plus one additional week per year of tenure. The company expects to incur total restructuring charges of approximately $450 million to $500 million, including severance payments, employee benefits, and noncash expenses related to share vesting.

Q: How did the market react to the announcement?

A: Block’s stock surged more than 20% in after-hours trading following the announcement, rising from its closing price of $54.53 per share. The positive reaction was driven by the restructuring announcement combined with fourth-quarter earnings that met expectations and full-year 2026 guidance that exceeded analyst forecasts.

Q: What is Block’s strategy regarding bitcoin and AI?

A: Block maintains a contrarian bet on bitcoin under Dorsey’s leadership, offering bitcoin payment services and holding the cryptocurrency on its balance sheet. The company is simultaneously developing and deploying AI tools internally, with Dorsey stating that intelligence tools are enabling a new way of working that requires fewer employees to achieve greater output.