On February 26, 2026, Block released its Q4 financial report, and its stock price soared after hoursmore than 23%. The market value increased overnightabout 2.4 billion US dollars.

On the same day, 4,000 employees received notices of resignation.

This contrast is the cruelest footnote of this era.

A letter detonates Silicon Valley

The thing that triggered all this was a letter.

On the same day, Block co-founder Jack Dorsey issued an open letter to all employees. He writes: "Smart tools have changed what it means to build and run a company. A significantly smaller team can do more and do it better using the tools we are building." The implication is clear: The company has decided to achieve more output with fewer, leaner people.

This isn't a troubled company scrimping. In Q4 of 2025, Block's total gross profit was US$2.87 billion, a year-on-year increase of 24%; the full-year gross profit exceeded US$10.36 billion. Cash App gross profit increased 33% year-on-year, and adjusted earnings per share were US$0.65, exceeding analyst expectations.

The financial report was beautiful, the stock price soared, and then 40% of the employees were laid off.

This set of logic has never been done before.

Block's number of employees has expanded from 3,835 at the end of 2019 to more than 10,000 during the expansion period of the epidemic. Dorsey admitted in the letter that this was a wrong growth judgment. The emergence of AI gave him the opportunity to correct his mistakes. It's not that the company is weak, but AI makes the company stronger. Dorsey calls this "intelligent native" - ​​a way to redesign the company with AI as the core productivity unit.

AI has started to work for you

The "smart tools" that Dorsey refers to do not refer to universal interfaces such as ChatGPT.

Block has quietly built an internal AI ecosystem called "Goose" over the past two years. It is deeply integrated with more than 150 software and data services within the company through the Model Context Protocol (MCP), and can read real-time financial data and perform operations directly in the code base, billing system and data dashboards, rather than just generating text suggestions.

The numbers speak for themselves:In the field of customer service, AI currently handles about 60% of Cash App's cases. In the field of engineering, since the introduction of AI-assisted programming tools in September 2025,The amount of production code delivered by each engineer has increased significantly.

In Q3 of 2025, Block launched the "G2" proxy interface based on Goose. It has completely changed the way employees work - the 6,000 remaining employees are no longer engaged in data entry or preliminary code writing, but direct the AI ​​cluster to complete complex tasks through the G2 interface. Legal document review, HR preliminary screening, and video asset preliminary editing are now all completed by G2.

People have changed from "operators" to "curators".

The newly launched "Neighborhoods" function also proves the efficiency of this model - from concept to launch, it only took less than six months. In Dorsey's vision, 6,000 people plus Goose can do things that 10,000 people could not do before. This set of logic is the real underlying support for this layoff.

"Gentle Knife"

Compared with Musk's layoffs after acquiring Twitter in 2022, Dorsey's approach is completely different.

Musk's method is:Suddenly lock the system, issue a "hard-core" ultimatum, and only provide the legal minimum compensation, which subsequently triggered a large number of legal actions.

Dorsey's approach is: Basic salary compensation starting at 20 weeks (one additional week for each additional year of service, and it is said that the industry standard is usually only 12 to 14 weeks), 6 months of complete medical insurance, a $5,000 cash transition subsidy, the stock option vesting period is extended to the end of May 2026, and employees can also keep company-issued computers and mobile devices.

This plan is almost a ceiling level in the history of layoffs in the technology industry. But that doesn't make the knife any less sharp.

According to feedback from Wired magazine and the internal anonymous platform Blind, Block's internal culture is on the "brink of collapse." Dorsey accused some employees of "perfunctory work." , blaming structural optimization on individual performance has triggered widespread anxiety among retained employees. Those who are left behind have to double their workload on the one hand, and on the other hand they have to worry about whether the next "AI performance evaluation" will be directed at them.

The generous severance package, on the one hand, eliminates the risk of class-action lawsuits; on the other hand, it also helps Dorsey maintain the image of a "decent employer" in the public eye. Let the focus of the outside world fall more on the AI efficiency narrative rather than the reality of 4,000 families losing their livelihoods. This "cold business decision" wrapped in an "emotional letter to all employees" constitutes a complex management sample.

Why Wall Street cheers layoffs

The logic of the capital market can be calculated faster than anyone else.

The stock price soared 23% after the bell, and the market value increased by approximately US$2.4 billion. Rough calculation means that every time one employee is eliminated, it creates a book value of approximately US$600,000 for the company.

Longer-term estimates are even more astonishing. In 2026, Block is expected to generate a gross profit of approximately US$12.2 billion. With less than 6,000 employees, the per capita gross profit will be close to US$2 million, far exceeding top technology companies such as Google and Meta.

In 2026, when the Federal Reserve maintains high interest rates and technology companies tighten financing, the aesthetics of the capital market have shifted from "growth premium" to "profit premium" and "unit productivity premium." Block successfully exceeded the "40 principle" (the sum of revenue growth rate and profit margin is no less than 40%) and completed stock repurchases of US$790 million in Q4, bringing the full-year repurchase volume to US$2.3 billion.

This script is understood by the board of directors.

Block's case may force the entire financial technology industry to re-evaluate its labor cost structure. Layoffs "in the name of AI" are becoming a very attractive strategic script. If CEOs find that announcing "AI replacement layoffs" can achieve more than 20% stock price gains, mass white-collar layoffs will no longer need a recession as a justification.

Summary

From "layoffs due to weakness" to "layoffs due to strength"This change has posed an unprecedented challenge to the employment security of white-collar workers. Block was just the first to say it publicly.

When a company cuts the number of employees by 40%, but its stock price soars in the opposite direction, it sends a clear signal to the market:In future corporate valuations, the number of people is no longer an asset, but may be regarded as an "operational friction" that needs to be optimized through technology.

The success of Dorsey's gamble depends on whether the 6,000 remaining employees can truly control Goose, whether the AI-assisted code can withstand the test of time in complex systems, and whether a company that has been streamlined to the extreme can continue to maintain the speed of innovation.

The answer may not be known until a few years.

But the experiment has begun, and no one knows where it will end.