Exclusive: Block’s CFO discusses the advancements in AI over the past 18 months that resulted in the choice to cut almost 50% of its staff

Why Now and Why So Many Layoffs?

These questions circulated rapidly in the business community after Block revealed it would eliminate 4,000 positions—almost half of its staff. Despite reporting a 24% year-over-year increase in Q4 gross profit to $2.9 billion, and a nearly 20% surge in its stock price following the announcement, the company chose to make significant workforce reductions. Why make such cuts during a period of growth and profitability? Amrita Ahuja, Block’s CFO and COO, explained to Fortune that the decision was made from a position of strength, allowing the company to act decisively while continuing to deliver value to customers and stakeholders.

A Long-Term Transformation, Not a Quick Reaction

Ahuja emphasized that the decision to reduce the workforce by nearly half was the result of a multi-year transformation, not a hasty response to market conditions. “This is a two-year journey for us,” she noted, clarifying that the move was carefully planned rather than impulsive.

AI at the Core of Block’s Strategy

The workforce reduction is closely tied to Block’s efforts to deeply integrate artificial intelligence throughout the organization. According to Ahuja, the adoption of AI has already boosted productivity and enabled the company to raise its 2026 financial targets, even with a smaller team.

A key element of this approach is “goose,” Block’s proprietary AI agent built on large language models. Goose automates tasks such as drafting emails and streamlining workflows, and has been in use internally for about 18 months. The tool has been open-sourced, allowing other organizations to experiment with it. Since September, Block has seen a 40% increase in developer productivity, as engineers use AI tools to accelerate code and feature deployment.

For example, a risk assessment model that previously required an entire quarter to develop was completed in a fraction of the time using these AI tools. This has given leadership confidence that smaller teams can now handle substantial projects effectively.

Strategic Decision-Making and Principles

In shaping Block’s future, Ahuja’s role involves challenging ideas and ensuring strong execution for employees, customers, and investors. She clarified that there was no predetermined percentage for job cuts. Instead, leaders across the company developed plans based on three guiding principles: safeguarding the reliability and security of Block’s platforms, maintaining compliance and risk management across financial services, and ensuring the company can continue to innovate and grow its product offerings.

Anticipated Financial Impact

Block has also raised its outlook for 2026, now projecting an 18% annual increase in gross profit and a 54% rise in overall profits. These expectations are based on the belief that AI-driven efficiencies will lead to higher profit margins.

“Look at the Data”

Block’s layoffs are part of a larger trend in the tech industry, where tens of thousands of jobs have been cut in recent months. While some companies have avoided linking these reductions directly to AI, Block’s leadership, including CEO Jack Dorsey, has openly attributed the cuts to productivity improvements enabled by technology.

In a post on X (formerly Twitter), Dorsey addressed criticism that the layoffs were simply a result of over-hiring during the pandemic. He acknowledged that the company expanded rapidly, partly due to building separate teams for Square and Cash App, but said that focusing solely on over-hiring overlooks the complexity of Block’s evolution, including its expansion into new financial services and its drive for greater efficiency.

For those skeptical of Block’s AI narrative, Ahuja pointed to the numbers: In 2019, Block generated about $500,000 in gross profit per employee—a figure that remained steady even as the workforce grew to 13,000. Recently, however, that metric has climbed to $750,000 in 2024 and is projected to reach $1 million in 2025. If Block achieves its latest targets, gross profit per employee could double to $2 million by 2026.

“This isn’t about organizational bloat,” Ahuja stated. “It’s about equipping our teams with the best tools available to help them work more efficiently.”

Effects on Employees

While large-scale layoffs may be part of a strategic plan for companies, they have significant effects on the remaining workforce. Employee engagement in the U.S. has already dropped to its lowest level in a decade, according to Gallup.

Within Block, leadership considered two options: a single, bold restructuring to align with their vision for the future, or a series of smaller, ongoing cuts that would require constant adjustments. They chose the former, partly to minimize ongoing uncertainty and its impact on morale.

“It’s a difficult transition for everyone,” Ahuja said. “We are saddened to see colleagues leave and deeply appreciate their contributions to building Block.”

She acknowledged the emotional impact of these changes and the increased workload for those who remain. However, she emphasized that investing in advanced tools, reskilling, and recognition will better position employees for future success, whether at Block or elsewhere.

Those affected by the layoffs received a severance package that included 20 weeks of base pay, with an additional week for each year of service. Equity continued to vest through May, and healthcare coverage was extended for six months. Employees also received a $5,000 transition stipend and were allowed to keep their work devices.

Looking Forward

Ahuja noted that Block is not enforcing a strict limit on headcount and expects to continue hiring in targeted areas, especially in sales and AI-focused engineering roles that drive revenue and innovation.

Dorsey has predicted that many companies will ultimately restructure around AI, following a similar path to Block.

“Predicting the future is challenging,” Ahuja said. “But given the rapid progress and capabilities of this technology, I believe this is the direction the world is moving. The pace will vary for each company, depending on their willingness to experiment and adapt.”