Block's 40% Layoffs Will Drive 62% Earnings Growth: 'If You Don't Have Time to Use AI, You Don't Have a Job'

"Block cut over 4,000 people in February 2026, taking headcount from over 10,000 to under 6,000. Three months later, the company posted Q1 2026 adjusted diluted EPS growth of 51.8% ($0.85 against $0.56 in the prior-year quarter), and raised full-year 2026 adjusted EPS guidance from $3.66 to $3.85, a 62% year-over-year growth target. The stock closed at $74.85 on May 8, up 6.72% on the day and up 19.13% over the prior month."

"The point is, companies are increasingly seeing that reducing headcount increases profits. Even if they don't want to slash jobs, their hand can eventually be forced because they'll otherwise lose to a competitor with a better cost structure. Calacanis framed the structural argument bluntly: "If there is a gain to be had, you have no choice but to take it. That's capitalism. Because if you don't take it, your competitor takes it. Their earnings go up. They can attract the best talent. You can't.""

"As of early April, 100% of Block employees are using AI tools to do their work, and production code changes per engineer are up more than 2.5x since the start of the year. Builderbot, Block's internal AI agent, is reviewing more than 90% of production code change requests. CEO Jack Dorsey told analysts, "a significantly smaller team, using the tools we are building, can do more and do it better.""

"The same week brought parallel moves across the sector. Cloudflare ( NYSE:NET) announced a 20% workforce cut, with CEO Matthew Prince citing an "agentic AI-first operating model." Shares fell to $196.13, down over 20% from highs. Coinbase ( NASDAQ:COIN) announced a 14% cut, equating to 700 people, alongside a GAAP loss of"

Block reduced headcount by cutting over 4,000 employees, dropping total headcount from above 10,000 to below 6,000. After the reduction, Block reported strong Q1 2026 adjusted diluted EPS growth and raised full-year adjusted EPS guidance. The results were framed as evidence that lowering costs can improve profitability. The competitive dynamic was described as a prisoner’s dilemma: if one company captures productivity gains, rivals can benefit more, attracting talent and improving earnings. Block reported that all employees used AI tools, with production code changes per engineer rising more than 2.5x and an internal AI agent reviewing most production code change requests. Similar workforce cuts occurred at Cloudflare and Coinbase, tied to agentic AI operating models.

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