Jack Dorsey touts Block's AI-driven restructuring

• Key insights: Following a large AI-driven downsizing, Block's earnings beat Wall Street analysts expectations. 
• What's at stake: Investors are looking for how AI-driven staff changes are affecting performance, and are supporting Block's moves thus far.  
• Forward look: Block projected full-year 2026 EPS of $3.85, or annual growth of 62%. That's better than analyst estimates of $3.64.

A little over two months since Block announced artificial intelligence-driven job cuts that affected nearly half of the company, CEO Jack Dorsey said the impact of the new technology is showing results despite a short-term financial loss.   

"A significantly smaller team, using the tools we are building, can do more and do it better," Dorsey said in an investor letter that accompanied Block's first quarter earnings. 

The technology industry will closely watch Block's earnings as it looks for signs of how AI-driven job reductions and workflow automation impact performance. 

"We continued to deliver strong financial performance in the first quarter as AI became more central to how Block operates," Dorsey said. 

Block's performance

For the quarter ending March 31, Block reported gross profit of $2.91 billion, up 27% over the prior year. Block also reported adjusted earnings per share of $0.85, up from $0.56 the previous year and better than the Zacks Investment Research estimate of $0.68 per share. Block projected full-year 2026 EPS of $3.85, or annual growth of 62%. That's better than analyst estimates of $3.64. The payment company additionally expects 2026 gross profit of $12.33 billion, or 19% growth over 2025. 

Square, Block's business-facing unit, reported gross payment volume of $61.2 billion, up 13% over the prior year; and Cash App's gross profit grew 38% from the prior year. 

Block's layoffs did come with a short-term cost to the company, with an $852 million restructuring and legal contingency outlay that Block attributed to "costs tied to organizational changes." 

That led Block's net income to fall to a loss of $309 million in the first quarter, down from a gross profit of $116 million in the fourth quarter of 2025. Block's net income was $190 million in the first quarter of 2025, and $1.6 million in the fourth quarter of 2024. 

Despite these costs, Block contends AI is driving productivity and supporting future growth. As of mid-April, production code changes per engineer are up over 2.5 times compared to January. Incident rates after a production code change were down over 70% in the first quarter of 2026 compared to the first quarter of 2025. "And in the months since our organizational change, incident rates have continued to improve," Dorsey said. 

Internally, Block has used its Builderbot AI assistant to improve development. Builderbot evaluates proposed programming changes against a broader view of Block's systems, so teams can move faster without creating avoidable complexity. In the first two weeks of April, Builderbot and other AI tools reviewed over 90% of production code change requests that were made. As of early April, Builderbot is executing 200,000 more operations per day and is making 15% of production code changes nearly fully autonomously, with people intervening to make a final decision. 

AI-powered products are also expanding. Moneybot (Cash App's AI financial management tool) is live across Cash App; Managerbot (Square's AI-native operating layer) is available to more than 1 million Square sellers, with general availability in the U.S. expected in June.

"AI is helping us move faster and improve quality," Dorsey said. 

What the market thinks

Investors have largely applauded Block's earnings and its AI moves thus far. Block's stock was up more than 4% Friday morning, and it's up more than 18% over the past month. 

"Block is the only truly innovative traditional processor, leveraging a software-first culture enabling accelerating POS share gains, particularly internationally," William Blair analysts said in a research note. 

In another research note, Keefe, Bruyette & Woods analysts said "following the AI-driven headcount reductions, management noted they are well-prepared for any initial challenges and are hitting on their expectations. They noted AI-driven productivity improvements in both customer and internal operations."

KBW also said Block's more traditional operations are also performing well. March and April were record months for new gross payment volume from onboarded merchant sellers; with  particularly strong performance among independent sales organizations. 

"Early execution on AI-driven workforce reduction appears to be on track, with improved efficiency and limited disruption," KBW said.

And analysts at KeyBanc Capital Markets said, "Block delivered a strong first quarter that supports the AI transformation thesis."

On the product front, early data suggests cross‑sell, retention and engagement upside, though monetization is still early, according to a research note from TD Securities. 

"AI investments appear to be lowering the cost of growth, a key differentiator vs. peers still absorbing higher opex for innovation," TD Securities said.