Prime Highlights
- Block shares surged over 24% after the company announced major workforce changes and strong earnings.
- The company plans to operate with a leaner structure to improve efficiency and support long-term growth.
Key Facts
- Block will lay off more than 4,000 employees, reducing its workforce from over 10,000 to under 6,000.
- The company reported quarterly revenue of $6.25 billion with a 24% rise in gross profit year-on-year.
Background:
Shares of Block jumped more than 24% in extended trading after the company announced a major workforce reduction and reported strong financial results. The payments firm said it will lay off over 4,000 employees, nearly half of its total workforce, as part of a broader effort to improve efficiency and focus on long-term growth.
Chief Executive Officer Jack Dorsey said the decision, though difficult, was necessary to prepare the company for the future. He confirmed that Block will reduce its workforce from more than 10,000 employees to just under 6,000. Dorsey emphasized that acting quickly would avoid repeated rounds of layoffs, which could harm employee morale and business focus.
Chief Financial Officer Amrita Ahuja explained that the move will allow the company to operate with smaller, more skilled teams while increasing the use of artificial intelligence to automate tasks. She added that the restructuring positions Block for its next phase of growth as the business continues to expand.
The announcement came alongside the company’s fourth-quarter earnings report. Block posted adjusted earnings of 65 cents per share on revenue of $6.25 billion, slightly above market expectations. Gross profit rose 24% year-on-year to $2.87 billion, showing strong business momentum. The company also forecast full-year earnings of $3.66 per share, exceeding analyst estimates.
Block expects to incur restructuring costs between $450 million and $500 million, mainly due to severance payments and employee-related expenses. Most of these charges will be recorded in the first quarter.
Dorsey said more companies may soon make similar changes to improve efficiency. Firms like Pinterest, CrowdStrike, and Chegg have already announced job cuts.
Despite the layoffs, investors responded positively, showing confidence in Block’s plan to streamline operations and grow faster.