Jack Dorsey’s payments company Block — which powers the point-of-sale software on many iPad checkout screens — told staffers this week that as many as 10% will be laid off in the coming months, according to a report.
CEO Dorsey announced the headcount reduction in a companywide memo obtained by Business Insider, where he also admitted that spending at the firm, which operates the popular business payments platform Square, “is not sustainable.”
“Square’s number of people has far outpaced our growth and performance,” Dorsey added despite the company experiencing a three-fold increase in profits over the last four years.
“In fact, I believe it’s slowing us down and frustrating everyone. Which is not fair to you all, or our customers,” the 46-year-old tech mogul added.
In the latest quarter, Square — whose software has gained attention for its seemingly ubiquitous requests for tips — reportedly processed as much as $46.22 billion worth of transactions — the equivalent of $513 million a day — and makes as much as a 3.5% plus 15-cent fee depending if customers use contactless payment or a virtual terminal.
On Block’s third quarter earnings call last week, chief financial officer Amrita Ahuja said the company’s headcount currently lies just over 13,000 people — slightly over the 12,400 workforce Block said it had in a Securities and Exchange Commission filing at the end of 2022.
The roughly 600-staffer increase Block experienced so far this year was to fill roles for engineering, according to Insider.
However, a forthcoming 10% reduction could see as many as 1,300 employees at Block getting pink slips.
A person familiar with the company told Insider that more like some 1,000 staffers will lose their jobs.
Dorsey said that his workforce “is going to be smaller than we are today by the end of next year,” which he plans to achieve “through performance management, scoping our work and restructuring to remove duplication and redundancy,” per the memo obtained by Insider.
Dorsey — who also founded Twitter and Cash App — continued: “Therefore we will not take a single action, but rather look critically at everything we’re doing and act thoughtfully.”
He also noted in the message that it would be “perfectly reasonable” for staffers who want to quit amid news of the headcount reduction, to which Dorsey said he’d “rather us provide the information than to work secretly in the dark.”
In its message to shareholders following the release of its third-quarter earnings report last week — when Block posted $5.62 in revenue and a 21% year-over-year increase in profits, to $1.9 billion — Dorsey said he’s placing “an absolute cap” on the number of employees it would have.
That cap will be “held firm at 12,000 people until we feel the growth of the business has meaningfully outpaced the growth of the company. We know the inverse is true today,” the 46-year-old tech mogul added.
Reps for Block declined to comment beyond the letter and the company’s conference call.
Here is the full note Dorsey sent to Block’s workforce, according to Insider: As I said in my note to Block, the growth of our company has far outpaced the growth of our business and revenue.
It’s not sustainable. And Square’s number of people has far outpaced our growth and performance. In fact, I believe it’s slowing us down and frustrating everyone. Which is not fair to you all, or our customers.
So, Square is going to be smaller than we are today by the end of next year. We are going to do so through performance management, scoping our work, and restructuring to remove duplication and redundancy. Therefore we will not take a single action, but rather look critically at everything we’re doing and act thoughtfully.
I also believe it’s important to be upfront and transparent about all this, so you all can make your own decisions if you need to. You may not be up for the uncertainty or shrinking our team, and want to leave. That’s perfectly reasonable. But I’d rather us provide the information than to work secretly in the dark.
Everything square-core and I do will be done with transparency and straightforward reasoning you’ll have access to. You may not agree with our decisions, but we’ll do our best to explain why we believe they are right.
Thank you all,