Block, a fintech business with companies including Square, Cash App, and Afterpay, is laying off employees at a difficult moment for tech professionals.
According to an internal document acquired by company Insider, CEO Jack Dorsey stated that “the growth of [Block] has far outpaced the growth of … business and revenue.”
Layoffs were carried out this morning, affecting employees at Block’s Cash App, Foundational, and Square arms. According to reports, approximately 1,000 people were affected, accounting for 10% of Block’s total workforce.
“We decided it would be better to do at once rather than arbitrarily space them out, which didn’t seem fair to the individuals or to the company,” said Dorsey in the note to Block staff. “When we know we need to take an action, we want to take it immediately, rather than let things linger on forever.”
The firings are not entirely unexpected. Block stated in an earnings call last year that it plans to cut its personnel from 13,000 in Q3 2023 to a “absolute cap” of 12,000 by the end of this year.
However, they contribute to a sense of melancholy in the fintech and larger IT sectors, which have seen tens of thousands of employees laid off in recent weeks.
PayPal announced today that it would lay off approximately 2,500 employees, accounting for 9% of the company. Last Monday, Brex, an expense management firm, lay off 282 people, or 20% of its workforce. And Treasure Financial, a platform that provides cash management software to businesses, laid off 14 people, leaving the company with around one-third of its prior personnel. Block’s had a terrible, down-trending year and change.
Cash App, a peer-to-peer payment business, has experienced a significant reduction in revenue. Meanwhile, Afterpay, a buy-now, pay-later service that Block acquired for $29 billion in 2021, has reported significant losses. Block’s Bitcoin revenue has plummeted in tandem with the cryptocurrency’s price drop last year (which has since recovered). Square also confronts increasing competition on numerous fronts, including Fiserv’s Clover, Toast, and Stripe.
Investors are dissatisfied. Square shares fell almost 30% between January 2023 and October when Block creator Dorsey took over from former Square CEO Alyssa Henry.
Block’s recent efforts to revitalize the firm include adding generative AI tools to Square, acquiring music-focused fintech startup Hifi, and introducing Bitkey, a self-custody Bitcoin wallet in the form of a smartphone app and physical storage.
Block reported $5.62 billion in revenue for the third quarter of 2023, with a $44 million profit on its Bitcoin holdings.
