Block Layoffs Reshape Workforce as AI Tools Cut Jobs
Block layoffs and quarterly results put severance costs and fiscal gross-profit guidance at center of near-term margin and flow decisions for traders.
KEY TAKEAWAYS
- More than 4,000 roles cut, trimming headcount from over 10,000 to under 6,000.
- Severance and related charges estimated at $450-$500 million will pressure near-term margins and free cash flow.
- Q4 2025 adjusted EPS $0.65 met estimates; FY2026 gross profit outlook $12.2 billion frames cost tradeoffs.
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Block Inc. said on Feb. 26, 2026, that it would lay off staff as it reoriented operations around internal AI tools, including Goose, announcing the Block layoffs alongside Q4 2025 results and a fiscal 2026 outlook.
Job Cuts, Severance, and Cost Impact
Block will cut more than 4,000 positions, reducing its workforce from over 10,000 to under 6,000. The company outlined severance packages that include 20 weeks of pay plus one additional week per year of service, continued equity vesting through May 2026, six months of health-care coverage, return of corporate devices, and a $5,000 transition payment for international employees.
Reports following the announcement estimated severance and related charges will total between $450 million and $500 million. These costs will weigh on near-term margins and free cash flow, shaping investor expectations against the company’s guidance.
Q4 Results and Fiscal 2026 Guidance
Block posted its Q4 2025 results on its investor site at 16:05 ET on Feb. 26, 2026, alongside an earnings call. The company reported adjusted earnings per share of $0.65, meeting estimates, and revenue of $6.25 billion, slightly above the $6.24 billion consensus. Gross profit rose 24.0% year over year to $2.87 billion. Cash App gross profit increased 33.0% to $1.83 billion, while full-year gross profit reached $10.36 billion, up 17.0%.
For fiscal 2026, Block projected gross profit of $12.2 billion and adjusted EPS of $3.66. First-quarter guidance includes gross profit of $2.8 billion and operating income of $600 million, both exceeding recent consensus estimates. These targets provide the financial context for assessing whether productivity gains from the reorganization will offset the upfront charges.
AI-Driven Restructuring Strategy
Management described the layoffs as part of a shift toward an "intelligence-native" operating model, leveraging internal AI tools like Goose to automate workflows in engineering, customer service, and operations. Jack Dorsey posted a memo on Feb. 26, 2026, around 16:36 ET, explaining the decision to act promptly, detailing employee support, and linking the reorganization to the AI transition.
The company aims to operate with smaller, flatter teams that move faster and enable customers to build features using Block’s capabilities. This strategy is intended to boost productivity and increase operating leverage as Block executes its intelligence-native plan.
