Author: Baoyi Long, Long Yue, Wall Street News

Jack Dorsey's fintech company Block has announced layoffs of approximately 4,000 people, cutting nearly half of its workforce, completing a comprehensive organizational restructuring under the guise of improving efficiency driven by artificial intelligence.

On Thursday, February 26, Block announced its layoff plan in a letter to shareholders. CEO Jack Dorsey candidly stated in the shareholder letter that employees learned of the layoffs that day, and anticipates that most companies will be forced to make similar structural adjustments within the next year. He wrote:

I believe we did not realize this early enough; I think most companies are slow to react. I believe that most companies will draw the same conclusion and make similar structural adjustments within the next year. I would rather take the initiative and be straightforward than react passively.

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

We are taking bold and decisive action, but we are building on a foundation of strength. We believe this approach will allow us to serve our customers more quickly.

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

After the announcement, Block's stock price rose 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.

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

Dorsey highlighted several growth points in the letter: user growth in its peer-to-peer payment app Cash App regained momentum, the scale of its loan products continued to expand, and Square's total payment volume also maintained an acceleration trend. Strong financial performance provides a relatively ample buffer for the company to push forward large-scale restructuring at this time.

Dorsey explicitly stated in the shareholder letter that he believes most companies will draw the same conclusion within the next year and make similar structural adjustments.

This round of layoffs is a continuation of multiple rounds of rolling job cuts, with previous layoffs often linked to annual performance evaluations. This concentrated announcement pushed the process to a peak, resulting in a one-time reduction of nearly half the workforce.

Analysts believe the significant jump in after-hours stock prices indicates that the capital market is positively evaluating the company's proactive strategy of restructuring efficiency with AI, even at the cost of large-scale employee reductions.

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

Today, we are reducing the size of @blocks. Below is the internal letter I sent to the entire company.

Today, we made one of the most difficult decisions in the company’s history: we will reduce the size of the company by nearly half, from over 10,000 employees to less than 6,000. This means that more than 4,000 of you will be asked to leave or enter the exit negotiation phase. I will candidly explain 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 salary for each year of service; you will also retain vested equity as of the end of May, six months of health insurance, and company-provided equipment; in addition, we will provide $5,000 for any expenses you may incur during the transition period. (If you are outside the United States, similar support will also be provided, but specific details will vary according to local laws and regulations).

I want everyone to understand this before discussing anything else. Today, everyone will receive a clear notification—whether being asked to leave, enter the exit negotiation phase, or stay.

We did not make this decision because the company is in trouble. In fact, our business momentum remains strong. Gross profit continues to grow, we have more and more customers, and our profitability is improving. However, the overall environment has changed. We have seen that the intelligent tools we are developing and using, along with a leaner, flatter team structure, are fostering a whole new way of working. This fundamentally changes the way to build and operate a company, and this transformation is accelerating rapidly.

I faced two choices: one was to gradually lay off personnel over the next few months or even years as this change progresses; the other was to honestly confront the situation and take immediate action. I chose the latter.

Repeated rounds of layoffs are extremely destructive to team morale, focus, and the trust that customers and shareholders have in our leadership. I would rather take decisive and clear action now to restart from a position we firmly believe in than to face the same result through a lengthy staff reduction. Furthermore, a smaller company can provide us with enough space to develop our business at our own pace and in the right manner, rather than scrambling to cope with market pressures.

A decision of this magnitude undoubtedly carries risks, but inaction is also fraught with risks. We have conducted a comprehensive review to identify the key roles and personnel necessary for healthy business development on the existing foundation, and we have repeatedly stress-tested these decisions from multiple angles. I acknowledge that we may have misjudged certain decisions, which is why we have retained flexibility in execution to address these potential deviations and always strive to do what is beneficial for our customers.

We will not directly and abruptly cancel everyone’s Slack and email accounts, pretending that the departing colleagues never existed. The company’s internal communication channels will remain open until Thursday evening Pacific Time so that everyone can say goodbye decently and freely share your thoughts. In addition, I will host a live video meeting at 3:35 PM Pacific Time to express my gratitude. I know that this approach may feel somewhat awkward, but I would rather it feel awkward yet human than pursue a so-called "efficiency" that appears cold and unfeeling.

To departing colleagues: I am grateful to you and deeply sorry to have put you through this. You have made this company what it is today, and that is a fact I will forever remember and respect. This decision does not reflect a negation of your past contributions. Wherever you go in the future, I am confident that you will shine brightly.

To the colleagues who remain: This decision was made by me, and I will take full responsibility. Now, I ask you to stand with me. We will make intelligent technology the core of all company operations and rebuild this company. 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 whole new future—in that future, customers can harness our underlying capabilities through our interface to build their own exclusive features. This is my current focus. I look forward to receiving my internal letter about this matter tomorrow.

Jack

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