Block, the financial technology firm behind subsidiaries such as Square, Cash App, and Afterpay, is laying off workers amid ongoing turbulence within the tech industry. As relayed in an internal memo by CEO Jack Dorsey, first obtained by Business Insider, this decision springs from the company’s growth surpassing that of its business and revenue.
Reportedly, the layoffs, amounting to around 1,000 employees or 10% of Block’s workforce, were carried out recently, affecting personnel across the Cash App, foundational, and Square divisions of the company.
Dorsey in the note to Block staff said; “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. When we know we need to take an action, we want to take it immediately, rather than let things linger on forever.”
The job cuts at Block are not entirely unexpected. During an earnings call last year, Block had announced a reduction in its workforce from 13,000 in Q3 2023 to a hard cap of 12,000 by the end of the current year. However, this adds to the growing concerns in the fintech and broader tech sector, which has witnessed numerous layoffs in recent weeks.
PayPal announced the layoff of 2,500 employees, or 9% of its workforce, today, while expense management startup Brex let go of 20% of its staff last week. Additionally, Treasure Financial retrenched 14 employees, leaving the company with about a third of its former staff.
Block has experienced a string of difficulties in the past year. Revenues from Cash App have fallen drastically, while Afterpay, the buy now, pay later service acquired by Block in 2021, has sustained major losses. Block’s Bitcoin revenue has also taken a hit, corresponding with the fall in Bitcoin’s value last year. Meanwhile, Square faces escalating competition from the likes of Fiserv’s Clover, Toast, and Stripe.
Shareholders are discontented as Square’s stock value has fallen approximately 30% from January 2023 to October following Dorsey’s takeover from former Square head, Alyssa Henry. To revitalize its business, Block has initiated several efforts such as adding generative AI features to Square, acquiring music-oriented fintech startup Hifi, and launching a self-governed Bitcoin wallet, Bitkey.
For Q3 2023, Block reported $5.62 billion in revenue and $44 million in profit from Bitcoin holdings.
