Block Jumps 9% as 4000 Layoffs Show Up in the Numbers

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•  08 May 2026
 

$SQ Block surged approximately 9% in premarket trading after the fintech company reported first-quarter results that beat analyst estimates and raised its full-year 2026 earnings guidance, delivering a clear earnings momentum catalyst for a stock that had spent months under pressure. The company, which operates Cash App and the Square payments platform, reported adjusted earnings per share of $0.85 against a consensus estimate of $0.68, while revenues rose 4.9% year over year to $6.06 billion, modestly above the $6.03 billion forecast. The guidance raise to $3.85 in adjusted EPS for 2026 from a prior target of $3.66 is the primary driver of the institutional flows response, as it signals that management has visibility into sustained profitability improvement following a year of deep structural adjustment.

The operational context behind the beat is the February decision to cut approximately 4,000 employees, representing roughly 40% of the total workforce. The company attributed the reduction to structural shifts in the fintech industry and accelerating AI adoption, which it argued allows materially smaller teams to maintain or increase output quality. CEO Jack Dorsey addressed the cuts directly in his shareholder letter, stating that AI tools are enabling engineers to write code faster alongside a measurable decline in error rates following code changes. This quarter represents the first datapoint confirming that the business can sustain stable operational performance after that scale of headcount reduction.

Square transaction volumes increased during the quarter and Cash App Borrow, the lending product, delivered stronger activity, with both segments contributing to the consensus beat. The adjusted earnings figure excludes restructuring charges related to the February layoffs. The combination of a volume-driven revenue beat and a guidance raise positions Block within the broader technology sector pattern of demonstrating AI-driven margin expansion to investors, which is the framing the market is currently rewarding with multiple expansion across the group.

The next key condition to watch is whether Block can sustain the trajectory in adjusted EPS through the second quarter without restructuring charges as a buffer, as that result will determine whether the guidance raise reflects durable operating leverage or a one-cycle benefit from the cost reset.

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