Jack Dorsey Says AI Models' Progress, Push Toward Functionalization Spurred Block's Mega Job Cuts - Stock Surges 23% After-Hours

Block, Inc. (NYSE:XYZ) CEO Jack Dorsey said Thursday that advancements in artificial intelligence models and efforts to streamline operations drove the company’s choice to lay off nearly half its workforce.

Push Toward ‘Functionalization

During the company’s fourth-quarter earnings call, Dorsey was probed about the timing and rationale behind the neary 40% workforce reduction.

“We have been working very hard to functionalize the company. That's a big part of what gives us more confidence in making this move,” he responded.

Dorsey said that Block effectively houses two separate companies—likely referring to Square and Cash App—with independent corporate structures, but with a lot of “duplication.”

“As we functionalized, it allowed us to act more like one company and recognize where there are common capabilities and common foundation, and we're still doing a lot of that work, but I have the confidence that we're in a place that we can move much faster there,” the top executive said.

AI Opened Up New Possibilities, Says Dorsey

Dorsey further pointed out that AI models became “an order of magnitude” more capable and intelligent. This breakthrough, he said, has opened up new possibilities for applying AI to most of the organization, enabling accelerated product delivery.

Block Fires 4,000 Employees In ‘Hardest Decision’

The justification comes after Block reduced its headcount by nearly half, from over 10,000 people to just under 6,000.

Dorsey described the decision as one of the “hardest” in the company’s history. The affected employees would receive 20+ weeks of salary, vested equity, six months of health coverage and $5,000 transition cash.

In other news, Block reported earnings of 65 cents per share for the fourth quarter, in line with the Street estimate, while revenue missed expectations.

Price Action: Block shares surged 23.52% in after-hours trading after closing 4.99% higher at $54.53 during Thursday’s regular trading session, according to data from Benzinga Pro. Year-to-date, the stock has tumbled 16.22%.

The stock exhibited weaker price trends in short, medium, and long terms, though its Growth score remained high, according to Benzinga's Edge Rankings.

Photo Courtesy: Frederic Legrand – COMEO on Shutterstock.com