Dive Brief:
- Job cuts disclosed Tuesday at digital payments company Block affected 931 employees, or about 8% of the firm’s total workforce of 11,300, according to analysts at TD Cowen who provided the information in a note to investment clients Wednesday.
- The cuts were likely made in the name of efficiency and streamlining of the digital payments company, TD Cowen analysts wrote. Block is the parent company to the payments companies Square, Cash App and Afterpay.
- “We see this as additional evidence of active engagement by the CEO to accelerate product velocity and improve profitability,” the analysts said.
Dive Insight:
The cuts were disclosed in a company-wide email from Block’s cofounder and chairman, Jack Dorsey, Tuesday which was earlier reported by the tech focused news website TechCrunch. Dorsey is also effectively the CEO.
Of the 931 jobs that will be eliminated, 391 were cut for “strategy” reasons, while 460 were cut for performance reasons, and 80 manager positions were eliminated in order to “flatten” the company’s hierarchy, the email says. The message provides few additional details.
Block is also closing 748 open positions, with some exceptions, Dorsey’s email says.
“None of the above points are trying to hit a specific financial target, replacing folks with AI, or changing our headcount cap,” Dorsey wrote in the email, according to TechCrunch. “They are specific to our needs around strategy.”
Flattening the company’s hierarchy should ultimately benefit Block by reducing the amount of time it takes to move new products to the market, the TD Cowen analysts wrote.
“We believe this should bolster direct sales teams' ability to ramp up quickly,” the analysts’ note says.
The Oakland, California-based company began integrating Afterpay onto its Cash App debit card in February.
“Why do this all at once instead of over time?” Dorsey wrote to employees Tuesday. “We’re behind in our actions, and that’s not fair to the individuals who work here. When we know, we should move, and there hasn’t been enough movement.”
Block has a history of trimming its workforce. In November 2023, CFO Amrita Ahuja announced the company would shed around 8% of its workforce throughout 2024.
A Block spokesperson did not respond to a request for comment
