Dive Brief:
- With a new round of job cuts, digital payments provider Block is reducing overhead costs and keeping its headcount under a 12,000-employee cap the company adopted in 2023, according to analysts.
- The reductions amount to up to 10% of Block's workforce, or roughly between 1,100 to 1,150 employees, Baird analyst David Koning estimated in a note to investors Sunday.
- Block declined Monday to provide a precise figure of job cuts or to comment on the reduction, which Bloomberg News reported Saturday. Bloomberg’s report did not offer a timeline for the layoffs, but said that Block has been notifying employees during annual performance reviews that their jobs will be eliminated.
Dive Insight:
“We assume these cost savings are likely at least partially offset by the hiring of new talent for their current initiatives (sales, AI development, etc.),” Koning wrote in his investor note.
A Block spokesperson declined to comment Monday.
In late 2023, Block CFO Amrita Ahuja said the payments firm would cap its employee headcount at 12,000 following a similar round of layoffs in which 8% of the company's workforce was let go.
The Oakland, California-based company also cut around 8% of its staff last year.
The latest job cuts will provide as much as $235 million in annual cost savings, Koning estimated.
RBC Capital Markets Daniel Perlin noted that Block is leaning into AI development. Advances in artificial intelligence have sparked fears of job losses throughout the broader economy.
Block is becoming more automated, company head Jack Dorsey said at the company's annual investor day in November. “This is really important to me because it allows us to move much faster at a much lower cost of doing business," he said.
Block operates across several business units, including the Square point-of-sale business; the Afterpay buy now pay later business; and Cash App, the consumer banking and money-transfer app.
The company’s fourth quarter earnings call is scheduled for Feb. 26. Block reported a net income of $461.6 million in the third quarter of last year, a 64% year-over-year increase.
Block shares have declined 13% this year and 34% over the past 12 months.
