Dive Brief:

• Digital payments company Block announced Thursday that it would slash thousands of jobs and lean on artificial intelligence to replace the eliminated workers.
• The Oakland, California-based company's headcount will shrink from 10,000 employees to just over 6,000, the company’s chief executive, Jack Dorsey, wrote in a letter to shareholders Thursday.
• "The core thesis is simple," he wrote. "Intelligence tools have changed what it means to build and run a company. We're already seeing it internally. A significantly smaller team, using the tools we're building, can do more and do it better. And intelligence tool capabilities are compounding faster every week."

Dive Insight:

Block owns the digital payments tool Cash App as well as the point-of-sale service Square, in addition to buy now, pay later business Afterpay.

Dorsey, who is also the company’s chair and its co-founder, also used his letter to foreshadow more AI related job cuts across the broader economy. 

"I don't think we're early to this realization," he said. "I think most companies are late. Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes."

The CEO provided a few examples of how Block is already using artificial intelligence, including within its Square dashboard to give sellers “real-time insights on menus, staffing, and customer behavior, with clear recommendations they can act on in seconds," Dorsey wrote.

Dorsey recognized the move as a difficult milestone for Block. “Today we're making one of the hardest decisions in the history of our company: we're reducing our organization by nearly half,” he wrote in a post on X. The decision wasn’t prompted by “trouble,” Dorsey said, but rather by the prospect to grow in a way that’s “rapidly accelerating.”

“Something has changed,” he said in the X post. “We're already seeing that the intelligence tools we’re creating and using, paired with smaller and flatter teams, are enabling a new way of working.”

While Dorsey acknowledged that there is risk in the decision, he explained on a call with analysts to discuss the company’s earnings that he wants to be in front of the corporate pack rushing to AI.

“A big part of me wanting to do this right now is I wanted to get ahead of it, and I'm confident that we've laid the foundation in order to do that, and to push really fast,”  Dorsey told analysts on the webcast.

The chief executive apologized to those workers that were being cut, and made a plea to others to stick around for growth via AI.

Dorsey outlined the benefits for workers who are separating from the company, with all employees finding out Thursday if they were being asked to leave, stay or entering into what he called “consultation.”  

Taking into account the labor cost reduction, the company’s executives increased expectations for revenue and profit this year, while stopping short of doing so for future years.

“We believe the actions we're taking today will enable us to deliver faster product innovation for customers in the future, while also enabling us to invest meaningfully in our business,” Block’s chief financial officer, Amrita Ahuja, told analysts on the webcast.

Despite the significant cutback, the company is targeting ongoing investments in three areas, including hiring, Ahuja said. Specifically, she pointed to the need to spend on adding “senior AI engineering talent;” ramping sales and marketing; and continuing to build Block’s AI infrastructure.

The company said 2025 fourth-quarter gross profit increased 24% over the year-ago period to $2.87 billion as revenue for the quarter rose 3.6% to $6.25 billion, according to the earnings report delivered Thursday. Fourth-quarter net income for last year, which was impacted by bitcoin and tax accounting, was $116 million, compared to $1.95 billion in the year-ago period.

This is a developing story. Please check back for updates.