Block’s Controversial AI Layoffs Are Paying Off, Earnings Show

Block just proved a controversial bet right. Five months after cutting 40% of its staff and blaming the move on artificial intelligence, the payments company posted second-quarter results that beat almost every Wall Street estimate.

A trend in the tech sector has been developing alongside the rise of AI. Companies have cited the use of AI as a reason to slash jobs, with many seeing it as a ruse to mask tighter margins.

A Layoff That Split Wall Street

In February, CEO Jack Dorsey cut over 4,000 jobs at Block, shrinking the company from more than 10,000 employees to under 6,000. Dorsey said the decision came from a position of strength, not financial distress, and argued that smaller teams paired with AI tools could build more with less.

The move split opinion immediately. Block’s stock jumped roughly 20% on the announcement, but critics questioned whether AI was the real driver. Days earlier, OpenAI CEO Sam Altman had warned that some companies were engaging in what he called AI washing, blaming the technology for cuts they would have made regardless.

Commentators quickly applied that label to Block, citing the company’s own compliance troubles, including a January ruling that let claims against its board proceed, in an AI washing debate that has followed Block since.

On Wednesday, Block reported gross profit of $3.17 billion for the second quarter, up 25% year over year and above its own $3.04 billion guidance. Revenue reached $6.62 billion, topping the $6.49 billion analysts expected, while adjusted earnings per share hit $1.02 against an 87 cent forecast.

Block Inc. has seen positive growth since its decision to cut staff. Image Source: Trading View

Square gross payment volume grew 10%, its strongest pace in three years, and Cash App counted 59 million monthly transacting users in June.

Doing More With Less

Business lead Owen Jennings told MarketWatch the company shipped more features in the first half of 2026 than in the same period last year.

“We can ship higher-quality products much, much more quickly, and that’s because of all the innovation that we’ve been pushing on as it relates to AI.”

— Owen Jennings,

CFO Amrita Ahuja said the confidence extends beyond one quarter, as Block raised its full year outlook to $12.51 billion in gross profit and $4.02 in adjusted earnings per share, up from $12.33 billion and $3.85 previously. Cash App gross profit rose 31% to $1.97 billion, helped partly by viral products like the Cash App Magic Wand payment tags.

Block’s bet lands amid a broader wave of tech layoffs tied to AI, from Oracle’s cuts to Amazon, Dell, and Meta trimming their ranks. Few have posted a beat-and-raise quarter this clean since.

Whether rivals can point to similar gains will decide if Block’s approach becomes the industry playbook or a cautionary outlier in the growing list of AI driven job cuts.

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