Block’s Controversial AI Layoffs Are Paying Off, Earnings Show
Block simply proved a controversial wager proper. Five months after chopping 40% of its employees and blaming the transfer on synthetic intelligence, the funds firm posted second-quarter outcomes that beat nearly each Wall Street estimate.
A pattern within the tech sector has been growing alongside the rise of AI. Companies have cited using AI as a cause to slash jobs, with many seeing it as a ruse to masks tighter margins.
A Layoff That Split Wall Street
In February, CEO Jack Dorsey cut over 4,000 jobs at Block, shrinking the corporate from greater than 10,000 staff to below 6,000. Dorsey stated the choice got here from a place of energy, not monetary misery, and argued that smaller groups paired with AI instruments might construct extra with much less.
The transfer cut up opinion instantly. Block’s inventory jumped roughly 20% on the announcement, however critics questioned whether or not AI was the actual driver. Days earlier, OpenAI CEO Sam Altman had warned that some corporations have been partaking in what he referred to as AI washing, blaming the know-how for cuts they might have made regardless.
Commentators shortly utilized that label to Block, citing the corporate’s personal compliance troubles, together with a January ruling that allow claims in opposition to its board proceed, in an AI washing debate that has adopted Block since.
On Wednesday, Block reported gross revenue of $3.17 billion for the second quarter, up 25% 12 months over 12 months and above its personal $3.04 billion steering. Revenue reached $6.62 billion, topping the $6.49 billion analysts anticipated, whereas adjusted earnings per share hit $1.02 in opposition to an 87 cent forecast.
Square gross cost quantity grew 10%, its strongest tempo in three years, and Cash App counted 59 million month-to-month transacting customers in June.
Doing More With Less
Business lead Owen Jennings instructed MarketWatch the corporate shipped extra options within the first half of 2026 than in the identical interval final 12 months.
“We can ship higher-quality merchandise a lot, way more shortly, and that’s due to all of the innovation that we’ve been pushing on because it pertains to AI.”
— Owen Jennings,
CFO Amrita Ahuja stated the arrogance extends past one quarter, as Block raised its full 12 months outlook to $12.51 billion in gross revenue and $4.02 in adjusted earnings per share, up from $12.33 billion and $3.85 beforehand. Cash App gross revenue rose 31% to $1.97 billion, helped partly by viral merchandise just like the Cash App Magic Wand cost tags.
Block’s wager 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 clear since.
Whether rivals can level to comparable positive factors will resolve if Block’s method turns into the trade playbook or a cautionary outlier within the rising checklist of AI driven job cuts.
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