Block Cuts 40% of Workforce in AI-Driven Restructuring Effort

Block Inc., formerly known as Square, has undergone significant restructuring after announcing a workforce reduction of approximately 40% on February 26. The move affected around 4,000 jobs, with the company now having roughly 6,000 employees.

The CEO, Jack Dorsey, framed this decision as an 'AI reset', aiming to create a smaller and flatter operating model powered by artificial intelligence tools rather than human middle management.

Dorsey emphasized that the restructuring will drive margin expansion, citing the company's sustained financial strength and continued growth in gross profit. This move seems to have resonated with investors, as shares surged over 16% on February 27, extending gains to as much as 24% in after-hours trading.

Block is a crypto-native public company with various products, including Cash App, Bitkey, and Proto. While these were not directly mentioned in the workforce reduction announcement, the broader context suggests that the AI-driven cost reduction will be crucial for the company's survival amidst competitive pressure from stablecoins like USDC and USDT.

Analysts appear cautiously optimistic about the restructuring's potential to catalyze higher margins and a genuine new earnings phase.