Jack Dorsey announced that Block plans to cut its workforce by nearly 50%, reducing its staff from over 10,000 to just under 6,000. This move affects more than 4,000 employees and is part of a significant organizational restructuring, rather than a response to financial issues, as the company reports improving profitability and growing gross profits.
The decision coincided with Block's latest earnings report, which showed better-than-expected financial results. The company anticipates first-quarter operating income reaching $600 million, higher than analyst estimates of $574 million. Furthermore, gross profit guidance ranges at $2.8 billion, exceeding forecasts of $2.72 billion, and full-year gross profit is now projected to reach $12.2 billion, marking an 18% increase from the previous year.
Despite a quarterly revenue of $6.25 billion falling slightly short of the $6.29 billion consensus, investor response has been positive. Following the restructuring announcement, Block's shares rose approximately 5% during regular trading and surged nearly 25% in after-hours trading.
Dorsey emphasized that affected employees will receive a severance package, which includes 20 weeks of salary plus one week for each year of tenure, equity vested through the end of May, and six months of health care coverage, along with additional support for transitioning.
This strategic move is framed as a shift towards a more compact and focused organization, where intelligence plays a central role in operations. Dorsey believes this approach, which avoids ongoing cycles of layoffs that could harm morale, is more effective for the company’s long-term sustainability and growth.