Block XYZ Surges 25% on 40% Job Cuts, Raised Profit Outlook

Block XYZ shares rocketed 25% in after-hours trading on Thursday after the fintech company unveiled plans to eliminate more than 4,000 jobs and raised its profit guidance above Wall Street expectations. CEO Jack Dorsey described the restructuring, which will shrink Block's workforce by nearly half, as one of the most difficult decisions in the company's history.

Block Announces Largest Layoffs in Company History

Block, Inc. will reduce its headcount from more than 10,000 to just under 6,000, the company disclosed in a shareholder letter released Thursday. The cuts represent a roughly 40% reduction of the workforce as the firm restructures around artificial intelligence and a leaner operating model.

Dorsey said in a note to staff that the company weighed incremental reductions but chose a single large-scale layoff to spare employees prolonged uncertainty. "Today we're making one of the hardest decisions in the history of our company," Dorsey wrote. "We're reducing our organization by nearly half."

Displaced workers will receive 20 weeks of base pay plus an additional week for every year of tenure. Block is also providing equity vesting through May, six months of health coverage, corporate devices, and $5,000 in transition assistance, according to the shareholder letter. International staff will receive comparable packages adjusted for local regulations.

Today we're making one of the hardest decisions in the history of our company. We're reducing our organization by nearly half.

— Jack Dorsey, CEO and Co-founder of Block

Why Is Block Stock Surging After Mass Layoffs?

Investors are rewarding Block because the layoffs coincide with stronger-than-expected financial results and upgraded guidance. For the full fiscal year, Block posted gross profit of $10.36 billion, a 17% increase year over year. Gross profit growth more than doubled between the first and fourth quarters of 2025.

Block guided first-quarter 2026 operating income to $600 million, surpassing the $574 million analyst consensus. It projected Q1 gross profit of $2.8 billion versus $2.72 billion expected. It also raised its full-year gross profit outlook and beat Cash App monthly active user estimates.

Chief Financial Officer Amrita Ahuja told investors that Block is acting from a position of strength and intends to move faster for customers.

AI Tools Reshape Block's Corporate Structure

Dorsey pointed to internal "intelligence tools" as the driving force behind the overhaul. Block has invested in proprietary AI systems, including a tool called Goose, to automate workflows and boost productivity across engineering, customer service, and operations.

"Intelligence tools have changed what it means to build and run a company," Dorsey stated. "A significantly smaller team, using the tools we're building, can do more and do it better." The new structure will center on smaller, flatter teams built around AI-powered product development.

A significantly smaller team, using the tools we're building, can do more and do it better.

— Jack Dorsey, CEO and Co-founder of Block

What This Means Going Forward

Block, which operates Square, Cash App, and lending products for consumers and merchants, has been restructuring since 2024 as its stock lagged fintech peers. The company carried out performance-based layoffs over the past two years before this far larger reduction.

Dorsey acknowledged that cutting nearly half the workforce carries risk but argued inaction poses greater challenges as automation reshapes labor productivity across technology. The 25% after-hours surge suggests Wall Street believes the leaner, AI-focused model can deliver sustained margin improvement.