Block Cuts 4,000 Jobs, Citing AI Productivity Gains

Block Announces Major Workforce Reduction

Block, the parent company of Square and Cash App, has announced it is cutting 4,000 jobs, nearly half its workforce. The company directly attributed the decision to AI-driven productivity gains, according to CFO and COO Amrita Ahuja.

AI Transformation Over 18 Months

Ahuja described the layoffs as the culmination of an 18-month AI transformation, not a sudden reaction to market pressure. She said the move was part of a two-year journey and was not an overnight decision. Central to this strategy is an internally built AI agent codenamed goose, which sits on top of large language models to execute actions, draft emails, and automate workflows. Goose has been in production internally for about 18 months and has been open-sourced.

Since September, developer productivity at Block has improved with a 40% increase per engineer use of AI tools to push code and features to production faster, Ahuja said. One risk underwriting model that previously took a full quarter to build was completed in a fraction of the time with these tools, giving leaders confidence that smaller teams can now handle meaningful bodies of work.

Financial Context and Outlook

Block reported Q4 gross profits of $2.9 billion, up 24% year over year. Its shares jumped almost 20% in the trading sessions on Feb. 26 following the earnings release and the announcement of the workforce reduction. The company simultaneously raised its 2026 outlook, now expecting gross profit to grow 18% year over year and profits to climb 54%, reflecting expectations that AI-driven efficiency will translate into margin expansion.

Ahuja said there was no top-down percentage target for reductions. Instead, leaders across the company built plans from the ground up around three principles: protecting the resilience and trustworthiness of Block’s platforms; maintaining compliance and risk capabilities across money movement, savings, and commerce; and preserving the ability to execute on a growth-oriented product roadmap.

CEO Addresses Over-Hiring Claims

CEO Jack Dorsey explicitly tied the layoffs to productivity gains from AI technology. In a post on X, he addressed pushback that the layoffs were mainly due to over-hiring. Dorsey said the company over-hired during COVID, which he attributed in part to building separate organizational structures for Square and Cash App—a setup he said was corrected in 2024. But he said attributing layoffs solely to over-hiring misses all the complexity, pointing to the company’s expansion into lending, banking and buy now, pay later, as well as its goal of boosting efficiency.

Data on Productivity

To those who view Block’s position on AI as a convenient label for classic over-hiring and cutting cycles, Ahuja said to look at the data. In 2019, she noted, Block generated about $500,000 in gross profit per employee, a figure that remained roughly unchanged even as the company expanded from a few thousand workers to around 13,000 during the hyper-growth years. Over the last few years, however, that metric has climbed to roughly $750,000 in 2024 and $1 million in 2025, and if Block meets the targets it laid out last week, gross profit per employee in 2026 would reach about $2 million.

Broader Tech Layoff Wave

Block’s layoffs come amid a broader wave of tech-sector layoffs that have eliminated tens of thousands of jobs in recent months. Some companies have downplayed linking cuts directly to AI. Dorsey, however, explicitly tied Block’s layoffs to productivity gains from the technology.

Sources

• Exclusive: Block’s CFO explains the AI leaps over 18 months that led to the decision to slash nearly half its workforce