By Manya Saini and Arasu Kannagi Basil

Feb 26 (Reuters) - Block on Thursday said it will cut over 4,000 jobs, nearly half its workforce, as part of an overhaul to embed artificial intelligence across its ‌operations, sending shares of the payments firm up 25% in after-hours trading.

The layoffs signal how the AI boom ‌is translating from hype into workforce changes, fueling long-held concerns among workers and economists that the technology could eliminate roles even as it boosts productivity ​and profits.

"Intelligence tools have changed what it means to build and run a company. We're already seeing it internally. A significantly smaller team using the tools can do more and do it better," CEO Jack Dorsey said in a statement.

"I don't think we're early to this realization. I think most companies are late," he added.

AI-DRIVEN OVERHAUL

In a post on social media platform X, Dorsey said ‌Block opted for a single deep round ⁠of cuts instead of multiple smaller layoffs over time. He said a smaller company would also give it space to grow the business the right way, instead of constantly reacting to market ⁠pressures.

Investors have been rewarding companies that show AI-driven cost savings, and the sharp workforce reduction signals the scale at which the technology is starting to translate into lower expenses and higher margins in some industries.

The layoffs represent "a seminal moment" in the AI era, offering a ​glimpse ​into how the technology may fundamentally reshape the corporate world, analysts ​at Evercore ISI wrote in a note.

The company said ‌it expects to incur roughly $450 million to $500 million in restructuring charges.

Dorsey said he expects a majority of companies to reach the same conclusion Block did and make similar structural changes. "I'd rather get there honestly and on our own terms than be forced into it reactively."

Analysts at Truist said the stock was likely surging on hopes of better-than-expected 2026 margins as a result of the workforce reduction.

EARNINGS MOMENTUM

Block posted an adjusted profit of 65 cents per share in the three months ended December ‌31, compared with 47 cents a year earlier.

Gross profit grew 24% in ​the quarter, driven by a 33% surge in the Cash App business, ​which enables peer-to-peer mobile payments.

Block said it believes it ​can sustain Cash App's strong gross profit growth and continue accelerating Square's gross payment volume over ‌the next three years.

For the first quarter, Block ​forecast gross profit would rise 22% ​from a year earlier to $2.80 billion.

Jack Dorsey isn’t wasting any time. The chairman and co-founder of Block is cutting 40% of the payments company’s workforce, or more than 4,000 employees, betting artificial-intelligence tools can fill the gap.

Here’s how he explained the decision.

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This isn’t about cutting costs

Dorsey said Block, which owns Square and Cash App, is financially sound. Instead, the tech entrepreneur argues that companies need flatter structures and fewer employees to thrive in the AI era.

“Intelligence tools have changed what it means to build and run a company,” Dorsey said Thursday on a call with analysts. “A significantly smaller team using the tools we’re building can do more and do it better.”

Block is already seeing the change internally, he added, “and intelligence tool capabilities are compounding faster every single week.”

Better to move fast than slow

A big challenge for companies wanting to restructure is how to minimize disruption and maintain the morale of employees sticking around. In a memo to Block staff that was posted on X, Dorsey said he had two options: To cut gradually over time or “be honest about where we are and act on it now.”

He favors the second option. “Repeated rounds of cuts are destructive to morale, to focus, and to the trust that customers and shareholders place in our ability to lead,” Dorsey wrote.

A harbinger for U.S. Inc.?

Employees across companies should brace themselves for similar large-scale layoffs, Dorsey predicted.

“Within the next year, I believe the majority of the companies will reach the same conclusion and make similar structural changes,” Dorsey told analysts. “I don’t think we’re early to this realization. I think most companies are late.”

Cuts mean changes for customers too

Large-scale layoffs at Block won’t just impact the company’s workers. Its customers will feel the shift too, Dorsey said.

The use of AI tools means customers will be able to build their own features directly, he said, on top of the company’s capabilities.

A risky move

Dorsey acknowledged that such a big cull could risk Block’s ability to serve its customers in the short term. But he remains defiant.

“A decision at this scale carries risk. But so does standing still,” Dorsey said in his memo.

By Utkarsh Shetti and Manya Saini

Feb 27 (Reuters) - Block shares soared more than 16% on Friday after the fintech firm announced it would nearly halve its ‌workforce as part of an overhaul to embed artificial intelligence tools across its ‌operations.

The layoffs are the most visible signs of how the industry is navigating the impact of AI, with Block's ​CEO, tech billionaire Jack Dorsey, warning that most companies were "late" to realize the emerging technology's potential.

"At its core, it's about how some companies may be run going forward – not just doomsday headcount reductions, but also enabling higher ROI investments in growth and FCF," analysts at Evercore ISI ‌wrote, referring to free cash ⁠flow.

Accelerating AI adoption is helping companies to cut jobs in divisions most exposed to automation. Economists at Goldman Sachs have estimated that AI was ⁠responsible for job losses amounting to a 5,000 to 10,000 hit to average monthly job growth in the industries most exposed to it in 2025.

"The long-term impact of dramatically reducing staff and betting ​on ​AI productivity gains is uncertain... In the near ​term, the decision should materially boost ‌margins, but it is unclear whether that can be maintained," Morningstar analyst Brett Horn said.

Block said on Thursday it expects an adjusted operating margin of 26% for the year, compared with the 20% it reported in 2025.

The stock was on pace for its biggest single-day jump since November 2022, if the gains hold.

PANDEMIC-ERA OVERHIRING

Block was among the many companies that aggressively ‌hired during the pandemic as the use of digital ​payments and online commerce spiked.

"In Block's case, this looks ​like a mix of AI efficiency ​gains and an overdue clean-up of corporate bloat," said Matt Britzman, an ‌analyst at Hargreaves Lansdown.

The company's workforce jumped ​from about 3,800 employees ​in 2019 to more than 10,000 in 2025 as it battled intensifying competition in its payments and buy-now-pay-later segments.

"While the RIF (reduction in force) is large, it does bring ​Block's headcount back toward ‌pandemic-era levels, making it a standout in gross profit per employee, well ahead of ​its peers including Visa," J.P. Morgan analysts said.

(Reporting by Utkarsh Shetti and ​Manya Saini in Bengaluru; Editing by Sriraj Kalluvila)

Fintech company Block announced that it would be laying off 4,000 of its 10,000 employees because of gains in AI productivity.

“Intelligence tools have changed what it means to build and run a company,” Jack Dorsey, Block’s CEO, said in a letter to shareholders on Thursday. “We’re already seeing it internally. 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.” Block is the parent company for online payment platforms such as Square and Cash App.

Investors so far appear encouraged by Dorsey’s assertion that the cuts, and increased reliance on AI, will drive profitability, analysts said. Shares increased more than 20% in pre-market trading on Friday.

Block’s layoffs speak to larger fears about job cuts driven by a growing use of AI. Goldman Sachs noted in February that the increasing pace of AI adoption could drive up unemployment this year, and estimated that the technology had already resulted in 5,000 to 10,000 monthly net job losses last year. A November study from the Massachusetts Institute of Technology found that AI could already replace nearly 12% of the workforce in the US.

Related: Keen bosses, strange mistakes and a looming threat: workers on training AI to do their jobs

The tech sector is among the most hit, and workers at other tech companies are feeling the heat, too. Marc Benioff’s Salesforce cut about 4,000 jobs last year, with the CEO saying that he “needs less heads” given AI’s efficiency.

Dorsey claimed on Thursday that the decision to almost halve Block’s workforce wasn’t because the business was in trouble, and that economic performance had actually been strong. (Block beat Wall Street expectations for its fourth quarter, reporting $6.25 bn in total revenue).

Dorsey said on X that he had two choices: gradually cut his workforce over months and years – “or be honest about where we are and act on it now”.

He wrote: “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 executives said on Thursday’s earnings call that the company had been increasing its reliance on AI for years, noting that some AI work streams were “nearly fully rolled out, others are earlier in their maturity”.

Block had already laid off hundreds of workers in early February. Earlier this month, employees still at the company reported that there was rapidly deteriorating employee morale and that there were requirements to use generative AI, according to Wired.

BANGKOK (AP) — Shares in the financial technology company Block soared more than 20% in premarket trading Friday after its CEO announced it was laying off more than 4,000 of its 10,000 plus employees, reconfiguring to capitalize on its use of artificial intelligence.

“The core thesis is simple. Intelligence tools have changed what it means to build and run a company,” Jack Dorsey said in a letter to shareholders in Block, the parent company to online payment platforms such as Square and Cash App. “A significantly smaller team, using the tools we’re building, can do more and do it better,” he said.

Dorsey's comments explicitly naming AI as a key driver behind the move were also posted on X, or Twitter, a company he co-founded. The assertion that the job cuts will add to Block's profitability and efficiency led investors to jump in and buy, analysts said.

Block’s shares gained 5% Thursday to $54.53, before it reported its earnings. They shot up to nearly $69 in after-hours trading. The mobile payments services provider reported its fourth quarter gross profit jumped 24% from a year earlier.

“For years, we have debated whether AI would dent jobs at the margin. Now we have a public case study in which the CEO explicitly says that intelligence tools have changed what it means to build and run a company,” Stephen Innes of SPI Asset Management said in a commentary.

“Other large employers have announced tens of thousands of cuts in recent months. Some have downplayed the AI link. Block did not,” he said.

A global technology company founded in 2009, San Francisco-based Block operates in the United States, Canada, parts of Europe, Australia and Japan.

In a post on Twitter, Dorsey outlined various ways the company will support those laid off. For employees overseas, the terms might differ, he said.

It was unclear which employees would be laid off where.

Layoffs by American companies remain at relatively healthy levels, but the job cuts at Block are the latest among thousands announced in recent months.

A number of other high-profile companies have announced layoffs recently, including UPS, Amazon, Dow and the Washington Post.

Square and Cash App parent Block (XYZ) made history on Thursday when it announced it would lay off 40% of its 10,000 employees, part of a bet that CEO Jack Dorsey said is related to "a new way of working which fundamentally changes what it means to build and run a company."

Immediately, shares of the company jumped 20% in the after-hours trade, a sign that Wall Street was cheering "the largest workforce reduction as a share of total employees in the S&P 500." And what gave the moment gravity wasn't just the sheer scale of the layoffs; it was the implication that the company is doing well. In Dorsey's own email to staff, he says, "Our business is strong. Gross profit continues to grow, we continue to serve more and more customers, and profitability is improving."

"But something has changed." He says AI is the difference-maker.

Block's AI layoffs: The first in a series of labor dominoes?

It feels like a "Citrini moment," a foreboding of the creative destruction set to be unleashed by Corporate America waking up to AI's potential. You can sense the scores of company insiders and executives taking this as permission to conduct similar downsizings under the guise of technological transformation.

Only, if that's the case, Block is a terrible company to make it — unless you want "AI" to become the latest buzzword used to excuse managerial incompetence.

In case it has been lost in the buzz: Block is down 72% over the last five years (while the S&P is up by almost 80%); it is still down on a year-to-date basis even after today's bump. And that years-long decline is louder than a one-day pop. For the most part, it's the result of pandemic-era over-hiring, the blind pursuit of unpromising verticals like "bitcoin mining," and overspending on vanity ventures — like a $68 million company anniversary party. (Yes, seriously.)

Maybe that's the problem is that, all along, there has been ridiculousness. That's especially the case in software. I don't know why Block had over 10,000 employees, but it did.

But if the conclusion is that AI is the reason for cutting its workforce, today's events demonstrate that investors — like with crypto, robotics, and other largely misunderstood trends before — will let you substitute reality for more complex truths.

In some cases, they will reward it, too. Then, the market would know that it's not so much about over-hiring, business plans, or overspending on non-necessities. Instead, it's about this new thing that is actually good (and which is, still, not critically understood.)

The founder of Twitter has cut 4,000 roles at his tech company, in what is believed to be the deepest round of job cuts in US stock market history.

Jack Dorsey confirmed plans to axe nearly half of Block’s 10,000-strong workforce overnight on Thursday, telling investors that AI had “changed what it means to build and run a company”.

The axing of 40pc of the company’s workforce in a single blow is thought to be the biggest proportion of job losses ever carried out by a company listed on the benchmark S&P 500 on Wall Street.

It marks one of the most damning examples yet of AI’s threat to the jobs market, as the announcement was made despite the company posting strong results.

Block, which is the parent of online payment platforms such as Square and Cash App, said on Thursday that it increased profits by 17pc last year to $10.4bn (£7.7bn).

The company’s shares rose by as much as 27pc in the wake of Mr Dorsey’s announcement, as investors welcomed the prospect of radical cost savings.

Mr Dorsey said: “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 Block boss, who founded Twitter in 2006 and posted the first ever tweet, said he had opted for an immediate cull because “repeated rounds of cuts are destructive to morale, to focus, and to the trust that customers and shareholders place in our ability to lead”.

He said: “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.”

While admitting the business had over-hired during Covid – when its headcount swelled from 3,900 to 12,500 in three years – the Block boss rejected suggestions of managerial incompetence on social media.

He wrote on X: “We have and do run an efficient company...better than most.”

Although the overall number of people axed by Block has often been surpassed on Wall Street, the proportion of the job losses is unprecedented.

Citigroup announced it was cutting around 13pc of its entire workforce in 2008, equivalent to 50,000 people, while Meta announced a 13pc reduction in its headcount – around 11,000 people – in 2022.