Block Inc. reported second-quarter earnings that blew past Wall Street estimates Thursday, just months after slashing more than 4,000 jobs — roughly 40% of its workforce. The company's stock jumped about 20% on the layoff announcement in February, and the latest results are giving CEO Jack Dorsey ammunition for his argument that smaller teams paired with AI tools can build more with less.
The Numbers Behind the Cuts
Block's Q2 gross profit hit $3.17 billion, up 25% year-over-year and above the company's own $3.04 billion guidance. Revenue reached $6.62 billion, beating the $6.49 billion analyst estimate. Adjusted earnings per share came in at $1.02, well ahead of the 87-cent forecast. CFO Amrita Ahuja raised the full-year outlook to $12.51 billion in gross profit and $4.02 in adjusted earnings per share, up from $12.33 billion and $3.85 previously.
Square's gross payment volume grew 3% — its strongest pace in three years. Cash App, which had 59 million monthly transacting users in June, saw gross profit rise 31% to $1.97 billion, helped partly by viral products like Cash App Magic Wand payment tags. Business lead Owen Jennings said the company shipped more features in the first half of 2026 than in the same period last year.
Dorsey's AI Argument
Dorsey has framed the layoffs as a move from a position of strength, not financial distress. He argued that smaller teams, supercharged by artificial intelligence, can deliver more output with fewer people. The stock's 20% jump on the layoff announcement suggested investors bought the pitch — at least initially.
But the strong earnings after the cuts raise a sharper question: Was the headcount reduction a smart efficiency play, or a gamble that paid off this quarter but could backfire later?
The Skeptics' View
Critics have questioned whether AI was the real driver of the layoffs. OpenAI CEO Sam Altman warned earlier this year about 'AI washing' — companies blaming AI for cuts they would have made anyway. Block's compliance troubles add another layer: in January, a judge allowed a shareholder lawsuit against the company's board to proceed, alleging failures in oversight.
Block's layoffs are part of a broader wave of tech cuts tied to AI, including moves at Oracle, Amazon, Dell, and Meta. But the company's ability to post accelerating growth after such deep cuts is unusual.
A Broader Trend or a Cautionary Tale?
Block's results will likely be studied by other tech leaders weighing similar moves. The company's gross profit growth accelerated even as its headcount shrank by thousands. Cash App's 31% gross profit jump, driven by viral features, suggests product innovation didn't stall after the layoffs.
Yet the compliance overhang remains. The shareholder lawsuit is still active, and regulators are watching how companies justify mass layoffs. If Block's AI narrative turns out to be more about cost-cutting than genuine productivity gains, the company could face a credibility problem down the road.
For now, Dorsey's bet is paying off on paper. The question is whether this quarter's results become a playbook for the industry — or a cautionary outlier.
