Authors: Bao Yilong and Long Yue , Wall Street Insights

Jack Dorsey’s fintech company Block announced layoffs of approximately 4,000 people, cutting nearly half of its workforce , citing a complete organizational restructuring driven by artificial intelligence to improve efficiency.

On Thursday, February 26, Block announced its layoff plan in a letter to shareholders. CEO Jack Dorsey admitted in the letter that employees were only informed of the layoffs that day and predicted that most companies would be forced to make similar structural adjustments within the next year. He wrote:

I don't think we realized this early enough, and I think most companies were slow to react. I believe that within the next year, most companies will come to the same conclusion and make similar structural adjustments. I would rather proactively and honestly take this step than react passively.

Subsequently, Block's Chief Financial Officer, Amrita Ahuja, stated in an interview with Bloomberg:

We are taking bold and decisive actions, but we are building on our strengths. We believe this approach will allow us to serve our customers more quickly.

Since 2024, Block has been restructuring its business model and staffing due to poor stock performance. At the same time, the company has also heavily invested in artificial intelligence tools to improve operational efficiency, including developing its own tool called Goose.

Following the announcement, Block's stock price rose by more than 24% in after-hours trading.

Strong growth provides confidence for restructuring

Ahuja's so-called "foundation of strength" is supported by performance data.

In its shareholder letter, Block disclosed that its gross profit for the full year of 2025 reached $10.36 billion, a year-on-year increase of 17%, and that the gross profit growth rate more than doubled from the first quarter to the fourth quarter.

In the letter, Dorsey listed several growth highlights: user growth for its peer-to-peer payment app, Cash App, has regained momentum; the scale of its lending products continues to expand; and Square's total payment volume also maintains its accelerating trend. This strong financial performance provides the company with relatively ample buffer space to proceed with a large-scale restructuring at this time.

In his letter to shareholders, Dorsey stated that he believes most companies will reach the same conclusion and make similar structural adjustments within the next year.

This round of layoffs is a continuation of multiple rounds of rolling job reductions, with previous layoffs often linked to annual performance evaluations. This concentrated announcement escalates this process, resulting in the reduction of nearly half of the workforce in one go.

Analysts believe that the sharp jump in after-hours stock price indicates that the capital market is positively evaluating the company's strategic approach of proactively using AI to restructure efficiency, even at the cost of large-scale employee reductions.

The full text of Jack Dorsey's letter to all staff is as follows:

Today, we are scaling down @blocks. Below is an internal memo I sent to the entire company.

Today, we have made one of the most difficult decisions in our company's history: we will be reducing our size by nearly half, from over 10,000 people to less than 6,000. This means that more than 4,000 of you will be asked to leave or will be in severance negotiations. I will be frank with you about the current situation, the reasons, and what this means for everyone.

First, if you are one of the employees affected by this layoff, you will receive 20 weeks of basic severance pay, plus an additional week's pay based on each year of service; you will also retain equity vested up to the end of May, 6 months of health insurance, and company-issued equipment; in addition, we will provide $5,000 to cover any expenses you may incur during the transition period. (If you are outside the United States, you will receive similar support, but specific details may vary depending on local laws and regulations).

Before we talk about anything else, I want to make this clear to everyone. Today, everyone receives clear notification—whether they are asked to leave, enter severance negotiations, or are asked to stay.

We made this decision not because the company is in trouble. In fact, our business remains strong. Gross profit continues to grow, we serve a growing number of clients, and profitability is improving. However, the environment has changed. We've seen the intelligent tools we're developing and using, coupled with smaller, flatter team structures, give rise to a completely new way of working. This approach is fundamentally changing how a company is built and operated, and this transformation is accelerating rapidly.

I was faced with two choices: one was to gradually reduce staff over the next few months or even years as the change progressed; the other was to honestly face the current situation and take immediate action. I chose the latter.

Repeated rounds of layoffs are extremely damaging to team morale, focus, and the trust of customers and shareholders in our leadership. I would rather take decisive, clear action now to start afresh on the ground we believe in than face the same outcome through a prolonged downsizing. Furthermore, a smaller company will provide us with enough space to grow the business at our own pace and in the right way, rather than being overwhelmed by market pressures.

Making decisions of this scale undoubtedly carries risks, but stagnation is equally risky. We have conducted a comprehensive review to identify the key roles and personnel needed to robustly grow our business on our current foundation, and have repeatedly stress-tested these decisions from multiple angles. I acknowledge that we may have misjudged some decisions, so we have maintained flexibility in execution to address these potential deviations and always remain committed to doing what is best for our clients.

We won't abruptly and abruptly delete everyone's Slack and email accounts, or pretend that colleagues who leave never existed. Internal communication channels will remain open until Thursday evening Pacific Time so everyone can say goodbye gracefully and freely share what they have to say. Additionally, I will host a live video conference at 3:35 PM Pacific Time to express my gratitude. I know this approach might feel a little awkward, but I'd rather it be awkward yet humane than cold and indifferent in pursuit of so-called "efficiency."

To my departing colleagues: I am filled with gratitude and deeply sorry for making you go through all this. You are the ones who have made this company what it is today, a fact I will always remember and respect. This decision does not negate your past contributions. Wherever you go in the future, I firmly believe you will shine brightly.

To my remaining colleagues: This decision was mine, and I will take full responsibility. Now, I ask that you stand with me. We will rebuild this company by making intelligent technology the core of everything we do. This involves how we work, how we innovate, and how we serve our customers.

Our customers will also feel this shift, and we will help them adapt to this change: moving towards a completely new future—a future where customers can leverage our underlying capabilities and, through our interfaces, directly build their own custom functionalities. This is my current focus. I look forward to receiving my internal email about this tomorrow.

Jack