Those were the two questions that ran through the business world following Mr. Bullock’s bombshell announcement that the company would cut 4,000 jobs, nearly half its workforce. The parent company of Square and Cash App reported fourth-quarter gross profit of $2.9 billion, up 24% year over year. The company’s stock price rose about 20% in trading on February 26 following the announcement of financial results and significant layoffs.
But if the company is profitable and growing, why cut headcount now? Amrita Ahuja, Block’s CFO and COO, said: “We believe we are in a really strong position to take this action with confidence and do it in a way that continues to serve our customers and stakeholders.” luck.
Mr Ahuja said the decision to cut almost half of the workforce was part of a long-term transformation rather than a sudden reaction to market pressures. “This is a two-year journey for us,” she said. “This was not an overnight decision.”
Ahuja describes the move as the culmination of efforts to deeply embed AI within the company. Block’s internal use of AI is already improving employee productivity and is helping support the company’s decision to reduce its workforce while raising its 2026 outlook, he said.
Central to that strategy is the code name goose. This is an AI agent that Block built in-house that sits on top of a large language model to take actions, draft emails, and automate workflows. Ahuja said Goose has been running internally for about 18 months and is open sourced so other companies can experiment with it. Since September, developer productivity at Block has increased by 40%, with usage per engineer using AI tools to push code and features to production faster, she added.
One risk underwriting model that previously took a quarter of an hour to build was completed in a fraction of the time using these tools, Ahuja said, giving leaders confidence that even small teams can handle “a really meaningful body of work.”
In key strategic discussions, Ahuja said his role as CFO and COO is to rigorously discuss ideas and focus on successfully executing them for employees, customers and investors.
Ahuja said there was no top-down reduction target. Instead, leaders across the company developed a plan from the ground up based on three principles. It protects the resilience and reliability of Block’s platform. Maintain compliance and risk functions across funds transfers, savings, and commercial transactions. Maintains ability to execute growth-oriented product roadmap.
The company also raised its 2026 outlook, expecting gross profit to rise 18% and profits to rise 54% from a year ago, reflecting expectations that efficiencies from AI will lead to higher profits, he said.
“Look at the data”
Mr. Bullock’s firing comes amid a wave of layoffs in the tech industry, where tens of thousands of jobs have been lost in recent months. Some companies are downplaying tying savings directly to AI. But Mr. Dorsey explicitly linked Mr. Bullock’s firing to increased productivity through technology.
CEO Jack Dorsey, in a post on co-founder Dorsey said the company was “overhired due to the impact of COVID-19,” in part because it created separate organizational structures for Square and Cash App, which he said were revised in 2024. But he blamed the layoffs on simply overhiring and “missed all the complexity,” pointing to the company’s expansion into lending, banking, buy now, pay later, and its goal of increasing efficiency.
To those who see Block’s position on AI as a convenient label for classic overemployment and subsequent cycle reduction, Ahuja says, “Look at the data.” In 2019, Block generated gross profits of about $500,000 per employee, he said, a number that has remained largely unchanged even as the company expanded from a few thousand employees to about 13,000 during its hyper-growth period. But in recent years, that metric has risen to about $750,000 in 2024 and $1 million in 2025, and if Block meets the goals it laid out last week, gross profits per employee will reach about $2 million in 2026, double last year’s levels.
“I don’t think this is a swelling issue,” Ahuja says. “This is about giving teams the most world-class and powerful tools we have to help them work more efficiently.”
Impact on employees
For companies, there is a strategy behind large-scale layoffs, but it certainly has an impact on the employees who remain. And according to Gallup, employee engagement in the U.S. is already at its lowest level in a decade.
Within the bloc, leaders considered two paths forward, Ahuja said. One option is a “bold and decisive” reorganization in line with the direction Block and Ahuja believe the world is headed, or a series of smaller, reactive cuts that require constant rewiring of how the company operates. They chose the former, in part because of the impact on morale.
“It’s great news for everyone to get through this,” Ahuja said. “I’m sad to see my colleagues leave, and I’m incredibly grateful to the people who helped build Block.”
Ahuja acknowledged the emotional toll of losing colleagues and the reality that remaining employees will have more work to do in the short term. But by equipping these employees with “the most powerful tools in the world,” investing in their reskilling, and backing that up with rewards and recognition, they will be better positioned for the future, whether it’s Brock or others, she said.
Mr. Block’s laid-off employees received a severance package that included 20 weeks of base pay and one additional week of pay for each year of employment. They also continued to vest their shares through May and received six months of medical insurance. In addition, employees were given a $5,000 transition allowance to keep their work devices.
Looking ahead, Ahuja said Block has not set hard limits on the number of employees. She expects the company to continue hiring in targeted areas, particularly in sales and AI-focused engineering roles directly related to revenue growth and product innovation.
Dorsey predicted that many other companies will come to a similar conclusion and restructure their organizations around AI.
“It’s difficult to talk about the future,” Ahuja said. “But I think this is definitely where the world is headed, given the pace of technology advancement and the power that I’ve seen, and the moments of wonder that are unlocked when people actually start using it.” He said this could happen at different paces for different companies, depending on how readily and experimentally they’ve been using the technology.
