Block revealed on Thursday plans to reduce its workforce by almost 50% as part of a significant reorganization aimed at integrating artificial intelligence (AI) throughout the company.
This move will impact over 4,000 jobs. CEO Jack Dorsey mentioned that this single, larger round of layoffs, as opposed to multiple smaller cuts, is intended to provide the company room for growth as it embraces AI.
Dorsey shared his thoughts on X, the social media platform he once led, clarifying that the layoffs are not due to financial struggles. Instead, he believes that having fewer employees will allow the company to expand “on our own terms, rather than constantly reacting to market pressures.”
In a memo, he referred to this decision as one of the hardest he’s faced in the company’s history. The workforce will shrink from over 10,000 to just under 6,000, meaning more than 4,000 employees will need to exit or enter discussions about their future.
Block is supporting affected workers by providing a package that includes a $5,000 donation covering 20 weeks of salary, one week of pay for each year of service, stock vesting by the end of May, six months of health benefits, and other necessary resources for a smooth transition.
Dorsey noted that the innovative tools being developed, coupled with leaner teams, are changing the nature of running a business, and this transformation is speeding up.
He also acknowledged that the company had overhired during the pandemic, attributing the situation to a mistake in establishing two different structures for Square & Cash App. He intends to simplify operations going forward.
Following the announcement, Block’s stock surged, climbing 17% in morning trading. While it’s seen a 22% increase in the past week, it remains over 2% down for the year.
