AI optimization of Block paid off: gross profit soared by 25% after cutting 40% of the workforce
Five months ago, Jack Dorsey's decision to cut 40% of Block's employees seemed controversial and sparked heated debate across the industry. However, the company's fresh second-quarter financial results have settled the matter once and for all: the bet on artificial intelligence and "lean" teams has delivered impressive results, surpassing nearly all Wall Street forecasts.
Let me recall the context: in February, Block laid off more than 4,000 people, reducing its workforce from 10,000 to fewer than 6,000. Dorsey insisted at the time that this was not a financial necessity but a strategic maneuver — smaller teams armed with AI tools can create more products. Skeptics, including OpenAI CEO Sam Altman, warned of the "AI washing" phenomenon — an attempt to disguise ordinary layoffs as a technological revolution. Critics also pointed to Block's legal troubles and the January lawsuits against the board of directors.
The numbers speak for themselves: gross profit for the second quarter reached $3.17 billion — up 25% year-over-year. Total revenue hit $6.62 billion, exceeding analysts' expectations of $6.49 billion. Earnings per share came in at $1.02. Particularly telling is the 10% growth in payment volume through Square — the best result in three years. The Cash App is also showing solid momentum: 59 million active users in June.
More results with fewer resources
Head of business operations Owen Jennings emphasizes that in the first half of 2026, the company rolled out more new features than in the same period a year earlier. "We can launch higher-quality products much faster because we are actively implementing innovations related to artificial intelligence," he notes. CFO Amrita Ahuja confirmed the long-term positive trend, updating annual guidance: the gross profit forecast has been raised from $12.33 billion to $12.51 billion, and expected earnings per share from $3.85 to $4.02. Cash App's gross profit grew 31% to $1.97 billion.
Cash App's success was driven by the launch of the NFC-enabled Magic Wand solution. Block's strategy is unfolding against a backdrop of mass layoffs across the IT sector — similar processes are underway at Oracle, Amazon, Dell, and Meta. Yet only a few can boast real growth in key metrics after optimization.
My expert perspective: Block's results are an important precedent that could change management approaches in the tech industry. If layoffs for AI were previously seen as a cynical PR move, we now see concrete financial evidence of the effectiveness of such a model. The question remains whether this experience will become a new standard or remain a rare exception — competitors are closely watching how events unfold.