Block Inc., a company focused on blockchain and payment services and headed by Twitter founder Jack Dorsey, has laid off 1000 employees. Block layoffs align with its earlier announcement to reduce its workforce by up to 10% by the end of 2024. The firm, which owns Square Inc., Cash App, and Tidal, indicated during last year’s earnings call that its workforce would decrease from 13,000 employees in the third quarter of 2023 to no more than 12,000 by the end of the year.

Key Takeaways

• Layoffs and Workforce Reduction: Block Inc. is laying off nearly 1,000 employees, which accounts for 10% of its workforce, as part of a plan to reduce its employee count to a maximum of 12,000 by the end of 2024.
• Challenges and Strategic Adjustments: CEO Jack Dorsey cited the mismatch between the company’s rapid hiring during the pandemic and its business growth, necessitating decisive action to address the resulting imbalances and inefficiencies.
• Financial Performance and Competitive Pressures: Block reported significant revenue from its third-quarter earnings, with $5.62 billion in revenue and a 21% increase in profits year-over-year, despite substantial losses from its Afterpay acquisition and competitive pressures on its Square subsidiary.
• Future Workforce Management: Dorsey emphasized a careful approach to restructuring, focusing on performance management, refining work scope, and eliminating redundancy, with an ongoing commitment to transparency and open communication with employees.

Block Layoffs: Company to Lay Off Nearly 1,000 Employees Amid Business Challenges

Jack Dorsey‘s financial services company, Block, dismisses nearly 1,000 employees, representing 10% of its workforce. This reduction has impacted employees at its Afterpay, Square, and Cash App subsidiaries. CEO Jack Dorsey has openly discussed the challenges facing Block. The company experienced a surge in hiring during the pandemic, which brought a significant influx of talent and supported its earlier growth trajectory. According to an internal memo from CEO Jack Dorsey, the company’s expansion has significantly exceeded its business and revenue growth.

In the memo, Dorsey explained that implementing these layoffs was made to avoid dragging out the process, which he felt would be unfair to the employees and the company. He emphasized the importance of acting decisively rather than allowing unresolved issues to persist.

Dorsey also outlined in the memo that his company will have a smaller workforce by the end of next year. He plans to achieve this through performance management, refining the scope of work, and restructuring to eliminate overlap and redundancy.

During an earnings call last year, Block announced its plan to decrease its workforce from 13,000 employees in the third quarter of 2023 to a maximum of 12,000 by the end of the year. This limit will remain until the company’s business growth substantially exceeds its employee growth. However, in his February 22nd quarterly letter to shareholders, CEO Jack Dorsey reported that Block currently employs fewer than the 12,000-person cap they had set. As of December 31, 2023, the company had 12,985 employees globally, including 3,154 based outside the U.S.

Additionally, the company reported a significant drop in revenue from Cash App, its peer-to-peer payment service.

Block’s BNPL (buy now, pay later) services, Afterpay, acquired in 2021 for $29 billion, has reported substantial losses. Additionally, its subsidiary Square is contending with multiple competitors, such as Clover and Stripe.

Block announced its fourth-quarter revenue for 2023 as approximately $5.8 billion, an increase from $4.7 billion in the same quarter of the previous year. The company also reported a net income of $178.1 million for common shareholders in the fourth quarter, in contrast to a net loss of $122.5 million in the final quarter of 2022.

For 2023, Block recorded a net income of $9.8 million for common shareholders, a significant recovery from a net loss of $540.7 million in 2022. The company’s total revenue for 2023 reached $21.9 billion, showing a substantial rise from $17.5 billion in 2022.

Dorsey explained that this limit compels the company to focus on more effective and significant projects, which he believes will drive growth. He indicated that Block would maintain this cap until it restricts their progress, a point he sees as several years away. Meanwhile, the company will critically assess its organizational structure and priorities.

Additionally, Dorsey shared that Block is restructuring its team divisions to a streamlined Product/Engineering/Design/Sales framework. He noted that previous structures were detrimental, slowing progress and diluting expertise. He also outlined plans to expand its Cash App services, making it the primary banking choice for households earning up to $150,000 annually, among other strategies.

Dorsey, the founder of Twitter and Cash App, explained that this will not be a single action but a thorough examination and careful approach to their operations.

He also mentioned that considering the anticipated workforce reductions, it would be understandable for employees to consider leaving. Dorsey preferred transparency, stating he would rather employees openly discuss their plans than hide them.

In September of the previous year, Jack Dorsey was named Head and Chairperson of Block, known initially as Square, which he co-founded in 2009. Concurrent with this appointment, Dorsey’s role shifted from CEO, President, and Chairperson to Head and Chairperson of Block, effective immediately.

Block stated in a document submitted to the US Securities and Exchange Commission (SEC) that Jack Dorsey’s roles and responsibilities within the company will remain unchanged, and he will continue as the principal executive officer.

About Block Inc.

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Block, Inc. and its affiliated companies develop systems for commerce and finance both domestically and abroad. The organization functions in two primary divisions: Square and Cash App. The Square division delivers products for various commercial entities, including solutions for restaurant management, retail operations, and online sales. This includes tools for handling transactions, software and hardware for making payments, and banking services like loans and account management. Additionally, this division offers services for customer loyalty programs, marketing, employee management, payroll, and gift cards.

The Cash App division provides financial management tools through its mobile app, enabling services such as money transfers, investments in bitcoin and stocks, and issuing a debit card named Cash App Card. It also provides direct deposits, promotional offers, tax filing assistance, and a deferred payment option called Afterpay. This division further offers business accounts and different cards under the Afterpay brand.

Plus, Block manages TIDAL, a music platform; TBD, which focuses on decentralized finance; Bitkey, a Bitcoin wallet; and Spiral, which is dedicated to Bitcoin’s open-source development. Previously known as Square, Inc., the company renamed itself Block, Inc. in December 2021. Established in 2009, its headquarters are located in Oakland, California. Block caters to a broad client base through digital and physical distribution networks.

Conclusion

Block Inc.’s decision to reduce its workforce reflects the company’s significant challenges in aligning its rapid expansion with its business performance. CEO Jack Dorsey’s memo highlights the necessity of decisive action to ensure fairness and efficiency, avoiding prolonged uncertainty for employees. The layoffs, primarily affecting Afterpay, Square, and Cash App, underscore the company’s strategy to streamline operations amid competitive pressures and declining revenues, particularly from Cash App.

Despite a profitable year, with $5.62 billion in revenue and a 21% increase in profits, the company’s growth has not matched its hiring surge during the pandemic. Block aims to stabilize its 12,000 employees, focusing on performance management and operational refinement. As the company navigates these transitions, its commitment to transparency and a thorough evaluation of its operations remains pivotal.