$10.36 billion. That's what Block Inc generated in gross profit across 2025, a year the company's chief executive Jack Dorsey described as "strong." And yet, on the same day those results landed, Dorsey announced he was cutting around 4,000 people — roughly 40 per cent of his entire workforce — and pointing squarely at artificial intelligence as the reason why.
The market loved it. Block's share price jumped about 23 per cent in after-hours trading, according to The Register, which first reported the earnings announcement. Let that sink in: a company that fired nearly half its staff was rewarded with a valuation surge before the ink was dry on the redundancy notices.
For Australian small business owners, this story has a direct dimension. Block's Square payment platform operates actively in Australia, and the company's investor filings confirm Australia among its key international markets. Block also owns Afterpay, the Melbourne-born buy-now-pay-later platform used by millions of Australians. Any substantive shift in how Block allocates engineering and support resources globally could ripple through to the merchants and consumers who rely on those products here.
In his shareholder letter accompanying Block's fourth-quarter earnings, Dorsey made no effort to soften the rationale. "Intelligence tools have changed what it means to build and run a company," he wrote. "A significantly smaller team, using the tools we're building, can do more and do it better." Quarterly revenue came in at about $6.25 billion, up 3.6 per cent year-on-year, with gross profit of around $2.9 billion. December 2025 alone produced $1 billion in gross profit. Full-year revenue was approximately $24.2 billion.
Here's the thing: those are not the numbers of a company in crisis. Dorsey himself acknowledged as much, insisting the cuts were not driven by financial distress but by a conviction that leaner, AI-augmented teams are simply more effective. He framed the decision as a deliberate choice between a slow drip of redundancies over months or years and one decisive structural reset. "Repeated rounds of cuts are destructive to morale, to focus, and to the trust that customers and shareholders place in our ability to lead," he posted on X.
In that same post on X, Dorsey went further, predicting that Block would not be alone. "Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes," he wrote. If he is right, the Block announcement is not a one-off corporate event. It is a preview.
That prediction deserves scrutiny, not dismissal. Other companies including Pinterest, CrowdStrike, and Chegg have recently attributed job cuts directly to AI reshaping their workforces, as reported by CNBC. Amazon has spoken of needing "fewer layers" as AI transforms operations. The pattern is becoming familiar enough to suggest a structural shift rather than isolated cost-cutting exercises.
There are legitimate grounds, though, for scepticism about the AI framing. Labour market researchers and economists have increasingly pointed out that many technology companies swelled dramatically during the pandemic years and are now correcting. Block itself employed 3,835 people at the end of 2019 and grew to over 10,000 before Thursday's announcement, according to CNBC. Wharton professor Ethan Mollick has noted publicly that genuine firm-wide efficiency gains of the magnitude needed to justify cuts of this scale are difficult to attribute convincingly to AI tools that are still relatively new in deployment. An Oxford Economics report released in January found that many layoffs companies labelled AI-related were substantially the result of pandemic-era overhiring.
Dorsey himself offered a partial concession on this point, acknowledging in statements that the cuts also reflect overhiring during the COVID period. That admission, buried beneath the AI narrative, is worth examining carefully. The two explanations are not mutually exclusive, but they do complicate the clean story that AI alone made 4,000 jobs redundant.
Follow the money and a different picture emerges, at least partly. Block's share price has fallen around 80 per cent from its 2021 peak, leaving shareholders nursing years of underperformance. A dramatic restructuring that strips costs and signals strategic clarity is precisely the kind of move that can reset investor sentiment, regardless of whether the underlying productivity gains from AI fully materialise. Analysts at Truist noted the stock surge was largely driven by hopes of better-than-expected 2026 margins as a result of the workforce reduction.
The severance terms Dorsey outlined are worth acknowledging: departing employees will receive redundancy pay, six months of health coverage, and a $5,000 transition payment, according to Bloomberg. That does not make losing one's livelihood in a sluggish global economy any less confronting, but it is a more considered package than many large-scale redundancies produce.
For policymakers and economists in Australia, Block's announcement arrives as the Fair Work Commission and various Senate committees are beginning to grapple with how existing labour frameworks apply when AI-driven efficiency becomes a stated ground for mass redundancies. The legal and regulatory settings that govern dismissal, consultation obligations, and redeployment requirements were not designed with this kind of disruption in mind.
The honest read is that both things can be true simultaneously. AI is genuinely becoming more capable at a pace that justifies businesses rethinking how they staff functions from coding to compliance. And companies that hired aggressively between 2020 and 2022 have had a structural correction coming regardless. Dorsey's instinct to make the cut cleanly rather than through years of quiet attrition has a defensible management logic. Whether it reflects the AI revolution he claims, a long-overdue headcount reset, or some proportion of both, will become clearer as 2026 unfolds and other companies reveal their own calculations.
What seems undeniable is the signal the market has sent: rewarding a 40 per cent workforce reduction with a 23 per cent share price gain concentrates minds in boardrooms everywhere. The question for workers, regulators, and the broader economy is whether the productivity gains Dorsey is betting on actually arrive, or whether the jobs simply disappear while the promised efficiency remains, like so many technology promises before it, perpetually around the corner.