Block cuts almost half its workforce and accelerates its commitment to artificial intelligence amid pressure on the payments model

The US fintech Block, co-founded by Jack Dorsey, has announced a drastic staff reduction that will affect more than 4.000 peopleThis decision is generating intense debate in the global technology and financial sectors. The company, known for its role in digital payments and services like Cash App and Square, links this restructuring to a much deeper use of artificial intelligence and the need to adjust their business model to a rapidly changing payments environment.

While the company is cutting jobs on a large scale, financial markets have responded with a strong rebound in Block's share priceinterpreting the layoffs as a sign of cost discipline and a firm commitment to automation. The move, however, raises fundamental questions about the future of office work and about to what extent AI and new payment infrastructures, such as stablecoins, can reshape the industry.

An unprecedented staff reduction at Block

The plan announced by Jack Dorsey involves eliminate more than 4.000 jobsThis translates to a reduction of nearly half in the company's current workforce. Block will thus go from a peak of over 10.000 employees reached during the pandemic to around 6.000, a size closer to pre-Covid-era rapid expansion levels.

In a letter to employees and shareholders, Dorsey explained that the company had Two possible paths: trim little by little or perform a deep adjustment all at onceAccording to the executive, he opted for the second option because successive rounds of layoffs "destroy morale, focus, and trust" among both employees and customers and investors. With this move, Block aims to avoid the so-called "layoff fatigue" seen at other tech companies.

The scale of the cuts has surprised even experts in personnel management and organization, who describe it as one of the largest concentrated reductions in corporate employment in the current wave of adjustments in the sector. At the same time, several sources emphasize that the company had already been implementing partial reductions since 2024, initially around 10% of the workforce, as part of a plan to contain the size of the organization.

This adjustment, much deeper than previous ones, indicates that the objective It is no longer just about correcting the excesses of contracting from the years of low interest rates, but adapting Block's structure to a new technological and competitive scenariowhere margins linked to card payments could be under pressure and AI allows operations with fewer staff.

In a European context, where authorities are closely monitoring the effects of digitalization on employment, moves like Block's are being watched with attention, since They set trends that can extend to subsidiaries and competitors in the EU and in Spain as automation gains ground in the payments sector.

Exit packages and conditions for affected employees

To mitigate the social impact of the cuts, Block has announced a compensation package that many analysts consider relatively generous compared to other recent adjustments in the technology industry. Dorsey explained that laid-off employees will continue to receive their base salary for 20 weeks, plus an additional week for each year of seniority with the company.

In addition to financial compensation, the company has promised to offer six months of medical coverage This applies to those leaving the company, a particularly sensitive issue in the US but also relevant for its international workforce. Share capital will continue to be consolidated until the end of May, providing some financial cushion for those affected during the transition period.

Another unique element of the package is that Block will allow employees retain your corporate devicesThis is an unusual measure, but one that facilitates reintegration into the workforce or self-employment. In addition, the company has committed to an extra payment of $5.000 per person to help in the search for new professional opportunities.

Human resources experts point out that, although the volume of layoffs is extraordinarily high, The package design reinforces Dorsey's message It appears to be a planned restructuring from a position of strength, rather than a desperate response to an impending crisis. Even so, the blow to thousands of white-collar workers is devastating.

This approach could influence how other technology companies with a presence in Europe and Spain face future restructuring, since European social protection standards and labor regulations They tend to push for more structured and transparent exit agreements.

Artificial intelligence as the cornerstone of Block's new model

At the heart of Block's corporate narrative is the idea that Artificial intelligence allows us to do more with fewer people.Dorsey has insisted that the internal tools they are developing and using are radically changing what it means to build and run a company, by enabling smaller, flatter, and highly automated teams.

The company is working on its own AI solutions, such as an internal tool known as Goose, with which it intends Automate processes, improve productivity, and reduce repetitive tasks in key areas. Although not all the details of these solutions have been published, the message is clear: some of the work that previously required large teams can now be handled by artificial intelligence systems.

In public statements, Dorsey has stated that he does not believe Block is jumping to this conclusion too soon, but rather that Many other companies are behind schedule. And they will be forced to make similar structural changes in the coming months and years. Several analysts agree that investors are rewarding companies that demonstrate tangible savings linked to the deployment of AI.

The staff reduction is thus framed as a "seminal moment" in the era of artificial intelligence, according to analysts who see the Block case as a key example. A concrete example of how technology is beginning to translate into lower personnel costs and higher marginsThis dynamic intensifies the concerns of workers and economists about the replacement of office jobs by automated systems.

For Europe and Spain, where the debate on the impact of AI on the labor market is very much present on public agendas, business moves of this magnitude fuel the discussion on the need for retraining policies, social protection and regulatory updates that accompany the transition to a more automated environment.

Solid financial results and market reaction

The announcement of mass layoffs was accompanied by accounts that show a robust financial performanceBlock reported significantly higher adjusted earnings per share than the previous year in the latest available quarter, and remarkable growth in gross profit, driven largely by the strong performance of Cash App.

For the year as a whole, the company reported a gross profit approaching $10.400 billionThis represents a double-digit year-over-year increase. Dorsey highlighted that they have successfully revived Cash App user growth, while also expanding their credit product offerings and accelerating the gross volume of payments processed by Square.

Looking ahead to the next few quarters, Block anticipates that its gross profit continues to grow at high ratesWith estimates pointing to increases of over 20% in the short term and sustained growth in the coming years, the company has even slightly revised its growth forecasts for future years upwards, although it insists it maintains a cautious approach when communicating targets.

The combination of strong results and such aggressive cost-cutting has been enthusiastically received by investors. Following the news, Block's shares rose. They rose between 20% and 25% in after-hours trading., stringing together a strong rebound after months of erratic stock market performance.

However, despite the rebound, the stock continues to trade well below the highs reached during the pandemic, which highlights the adjustment of expectations that has occurred throughout the digital payments sector with respect to the boom years. In Europe, where other key players in the payments ecosystem are listed, the decisions of companies like Block often serve as a benchmark when calibrating valuations and growth strategies.

Structural pressure on the payments model and the rise of stablecoins

Beyond AI, several analysts point out that the background to Block's restructuring includes a profound change in the electronic payments economyHistorically, the company's business has been based on charging merchants a percentage of each transaction, a scheme that could be seriously eroded by the rise of stablecoin networks.

These stablecoins, typically backed by dollars or other low-risk assets, They allow payments to be settled almost in real time and at very low costs.Recent reports argue that, in an environment where AI assistants autonomously compare prices and payment routes, the traditional 2% or 3% commission that businesses pay Card networks are becoming increasingly difficult to justify.

According to this analysis, the pressure would not come so much from specific competitors, but from a structural compression of margins As stablecoin-based infrastructure gains traction and payment friction approaches zero, this could be a game-changer for companies like Block, which are heavily reliant on the transaction fee model, in the coming years.

Until recently, many stablecoins were seen primarily as instruments linked to the crypto ecosystemWhile not playing a central role in everyday payments, greater regulatory clarity in various markets—including the planned European MiCA regulations and other initiatives equivalent to the GENIUS Act in the US—along with the increasing institutionalization of the sector, is strengthening its position within the conventional financial system.

In this context, Block's aggressive cost-cutting can also be interpreted as a advance preparation for a scenario of greater competition and lower commissions, in which the company will need to be leaner, more flexible and more dependent on automation to maintain its profitability.

A warning for white-collar workers and the technology sector

The Block case has quickly become a symbol of the vulnerability of office jobs in the new wave of automation. Dorsey's decision to implement a single massive cut, rather than a series of layoffs, breaks with the pattern that many large tech companies have followed in recent years.

In his message to the staff, the executive insisted that repeated layoffs generate "chronic anxiety" and damage the internal culture, an opinion shared by organizational management specialists, who recommend a single clear adjustment versus fragmented cutsHowever, these same experts emphasize that the scale of the measure gives an idea of ​​the magnitude of the change the company wants to undertake.

The move adds to warnings from various technology leaders about a possible erosion of white-collar jobsFrom warnings of a "bloodbath" in office jobs to the realization by executives of major technology companies that AI multiplies individual capacity, the message is that many cognitive tasks will be taken over by automated systems.

At the same time, international reports indicate that, although millions of jobs could disappear or be transformed, New jobs will also be created related to the development, supervision, and deployment of AI.The key, according to these analyses, will be the ability of economies—including the European one—to facilitate the retraining of workers towards higher value-added functions.

The example of Block, which combines good financial results, a strong commitment to artificial intelligence and a massive reduction in executive and technical staffIt raises a debate that goes beyond a single company: how to balance innovation, efficiency and job protection in an increasingly automated economy.

Taken together, Block's restructuring demonstrates the extent to which artificial intelligence and new payment infrastructures are reshaping the fintech sector: a company growing in revenue and profits, yet choosing to operate with significantly fewer employees, relying on automated systems and anticipating profound changes to the traditional commission model. For Europe and Spain, where the digitization of payments and the regulation of AI are progressing rapidly, moves like this serve as a benchmark for the challenges ahead. Smaller workforces, more automated processes, and a competitive environment where efficiency is as important as the ability to innovate.