Block lays off 4,000 employees, stock price soars 24%, AI-driven efficiency restructuring roadmap established

Jack Dorsey co-founded the payment company Block Inc. (NYSE: XYZ), which announced on Thursday that it will lay off over 4,000 employees, about half of its global workforce. The company’s size will shrink from over 10,000 to less than 6,000 employees. Boosted by the news, Block’s stock surged over 24% in after-hours trading. The core driver behind the layoffs is AI automation.

Layoff Decision: An Active Choice to Focus on an Elite Team

In a public letter to shareholders, Jack Dorsey admitted that laying off more than 4,000 staff was a “difficult decision,” but emphasized that taking proactive action is better than gradually cutting staff over the next few months or years. “Repeated layoffs would hurt morale, distract us, and damage trust from customers and shareholders in our leadership,” he wrote on X.

Dorsey further predicted that most companies will reach similar conclusions and make similar structural adjustments within the next year, implying that Block’s move signals an industry-wide restructuring driven by AI, rather than an isolated case. Companies like Pinterest, CrowdStrike, and Chegg have also recently announced layoffs, directly attributing their decisions to AI reshaping their workforce needs.

Block Layoffs and Key Financial Data

Layoff Scale: Over 4,000 employees, nearly 50% of the total global workforce (10,205 employees)

Post-layoff Employee Count: Less than 6,000

Restructuring Costs Estimate: Approximately $450 million to $500 million (severance, employee benefits, and non-cash stock vesting expenses)

Most restructuring costs: Expected to be recognized mainly in Q1 2026

Stock Price Reaction: Surged over 24% in after-hours trading

Q4 Earnings Surpass Expectations: Gross Profit Up 24% Year-over-Year, Full-Year EPS Guidance Significantly Raised

Alongside the layoffs, Block also released its Q4 financial results. According to data from the London Stock Exchange Group (LSEG), adjusted EPS for Q4 was $0.65, in line with analyst expectations; revenue for Q4 was $6.25 billion, slightly above the estimated $6.24 billion; gross profit reached $2.87 billion, up 24% year-over-year.

For the full year, Block forecasted an adjusted EPS of $3.66 in 2026, significantly above the previous analyst estimate of $3.22. The strong earnings report combined with a clear AI-driven restructuring strategy fueled a strong after-hours stock rally.

CFO Amrita Ahuja emphasized that the timing of layoffs coincides with a period of accelerated business growth, as Block sees opportunities to automate work with AI, maintaining faster growth with a smaller, more talented team.

Frequently Asked Questions

Why did Block’s stock rise 24% after nearly halving its workforce?

Block’s layoff strategy involves using AI automation to reduce headcount, enabling faster growth with a smaller but more efficient team. Meanwhile, Q4 earnings exceeded expectations, and full-year EPS guidance was raised to $3.66 (above the analyst forecast of $3.22). These positive factors combined to lead investors to reevaluate the company’s long-term profitability.

What is Block’s business focus after the layoffs?

CEO Jack Dorsey clearly stated that the core of this restructuring is to leverage AI tools to automate more tasks, driving growth with a smaller but highly talented team. He predicts that the industry will follow similar structural adjustments within the next year, indicating that AI efficiency improvements are central to Block’s long-term growth strategy.

How much restructuring cost does Block expect from the layoffs?

Block estimates that the layoffs will incur approximately $450 million to $500 million in restructuring expenses, mainly covering severance, employee benefits, and non-cash stock vesting costs. Most of these costs are expected to be recognized in Q1 2026.