Block cut 40% of its staff this year betting that AI would make the company leaner and faster. On Wednesday it posted numbers that missed on nearly every headline metric anyway.
Block’s shares fell as much as 11% in after-hours trading on October 29 after the fintech company, known for Square and Cash App, reported third-quarter adjusted earnings of $0.54 a share against a Wall Street consensus of $0.63, according to LSEG data cited by multiple outlets. Revenue came in at $6.11 billion, short of the $6.33 billion analysts expected. Gross payment volume, the measure of money moving through Square and Cash App, landed at $56.8 billion versus the $58 billion StreetAccount had forecast.
That’s not a rounding error. It’s a double-digit miss on the bottom line, and it lands eight months after Block eliminated more than 4,000 jobs, roughly 40% of its workforce, in a restructuring CEO Jack Dorsey framed as a deliberate shift toward AI-driven operations rather than a response to financial distress. Dorsey told shareholders in February that smaller teams armed with what he called “intelligence tools” could move faster and produce better results than the company’s old headcount ever did. Wall Street rewarded that announcement at the time, sending the stock up as much as 24%.
Wednesday’s report complicates that story. If leaner really meant faster and sharper, the quarter should have shown it. Instead, the company missed on the two numbers that matter most to anyone grading an earnings season: what it earned and what it sold.
Square’s slice of the business is the clearer problem. Gross payment volume still grew 12% year over year, but gross profit growth for Square slowed to 9%, down from 11% the previous quarter. Block’s own management pointed to a change in processing partners made for operational flexibility, plus a shift toward lower-margin hardware sales, as the drag. Neither of those is an AI story. They’re the ordinary friction of running a payments business, the kind no amount of intelligence tooling fixes by itself.
Cash App told a different story entirely. Gross profit there rose 24% year over year to $1.62 billion, and combined gross profit across both platforms climbed 18% to $2.66 billion. Block also raised its full-year gross profit guidance to $10.243 billion, which implies better than 15% growth for the year, and management told investors it expects fourth-quarter gross profit growth to accelerate past 19%. None of that is small. It’s the part of the earnings call that gave bulls something to hold onto while the stock was dropping.
That split matters for how you read the AI-restructuring narrative that’s been running across fintech all year. Block was supposed to be the proof case. Cut the org by 40%, lean on AI tooling, and watch margins expand without top-line pain. Cash App’s 24% gross profit growth is a real data point in favor of that thesis. But a company can’t claim the efficiency win on one segment and let the other segment eat the headline. Investors, reasonably, are grading the consolidated number, not the half that cooperated.
Frankly, this is the gut-check the AI-efficiency story needed. Cutting staff is the easy part. Dorsey did it in a single announcement in February and the market applauded instantly. Translating that into earnings beats quarter after quarter is the harder, slower part, and Wednesday’s print shows Block hasn’t cracked it yet, at least not on the Square side. The company isn’t struggling. Full-year guidance went up, not down. But “we raised guidance while missing the quarter” is a strange sentence for a business that just spent eight months arguing leaner is simply better. It’s not simply better. It’s better in the places where the restructuring actually fits the problem, and still ordinary everywhere else.
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