By Janet H. Cho

Shares of payment services company Block jumped 19% in premarket trading Friday after rising nearly 25% on Thursday afternoon. The moves came after after it said it was cutting 4,000 workers, or 40% of its workforce, and raised its 2026 guidance.

The Oakland, Calif.-based fintech better known for its Square and CashApp platforms, told shareholders in a letter along with its fourth-quarter earnings report that it is making the cuts because of changes in its industry from artificial intelligence.

On the back of a successful 2025, Block now expects 2026 adjusted earnings of $3.66 a share, up 54% from the prior year, and gross profit of $12.2 billion, up 18%.

It projects first-quarter earnings of 67 cents a share , up 20% from the same time last year, and gross profit of $2.8 billion, up 22%.

Block's stock rose 18.9% to $64.9 a share in premarket trading Friday, after closing up 5% at $54.53 in regular trading. The stock is down 16.2% year to date and down 16.5% over the past 12 months.

"Today we shared a difficult decision with our team. We're reducing Block by nearly half, from over 10,000 people to just under 6,000, which means that over 4,000 people are being asked to leave or entering into consultation," co-founder and CEO Jack Dorsey wrote. He called it "the right path for our company," explaining that although 2025 was a strong year for the company, with gross profit growth more than doubling from the first to the fourth quarter, "intelligence tools have changed what it means to build and run a company."

Dorsey said in a social media post that they weren't making this decision because they're in trouble. "our business is strong. gross profit continues to grow, we continue to serve more and more customers, and profitability is improving, but something has changed."

Dorsey said he had two options, either cut gradually over months and years or act now. He says he chose the latter route because repeated rounds of cuts are destructive to morale, to focus, and to the trust customers and shareholders place in our ability to lead.

In his letter, Dorsey said that a "significantly smaller team, using the tools we're building, can do more and do it better. And intelligence tool capabilities are compounding faster every week." He said that within the next year, the majority of companies will reach the same conclusion and make similar structural changes. "I'd rather get there honestly and on our own terms than be forced into it reactively."

Dorsey said the changes will make Block faster and more nimble. "A company of our new size has no excuse for being slow," he wrote. "We will decide faster, ship faster, and learn faster. ... We believe Block will be significantly more valuable as a smaller, faster, intelligence-native company."

Block reported fourth-quarter gross profit of $2.87 billion, up 24% from a year earlier. That includes $1.83 billion in Cash App gross profit, up 33%, and $993 million from Square gross profit, up 7%.

Dorsey said Square's gross payment volume grew 10% in the fourth quarter from the same time a year earlier, including 7% in the U.S. and 24% internationally. The number of Cash App monthly active users grew to 59 million in the fourth quarter.

Write to Janet H. Cho at janet.cho@dowjones.com

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(END) Dow Jones Newswires

February 27, 2026 05:59 ET (10:59 GMT)

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