--- title: "Block: US 'Alipay' slashes headcount by 40%; is compute displacing labor?" description: "The U.S. counterpart to Alipay — $Block(XYZ.US) (XYZ.US) reported Q4 2025 after hours on Feb 27. The surprise plan to cut headcount by 40% overshadowed the print.Driven in part by that announcement, t" type: "topic" locale: "en" url: "https://longbridge.com/en/topics/38941588.md" published_at: "2026-02-27T11:47:28.000Z" author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)" --- # Block: US 'Alipay' slashes headcount by 40%; is compute displacing labor? 'US Alipay' — $Block(XYZ.US) (XYZ.US) announced its Q4 FY2025 results after the US market closed this morning (Feb 27). More striking than the numbers was a bombshell plan to cut headcount by 40% across the company, which helped drive the stock up over 20% post-earnings. As usual, we first review the quarter’s performance. We will then share our take on this near 'half-the-company' move. **1) Core revenue and Adj. profit beat:** Ex-BTC core revenue rose 22% YoY, with growth accelerating by ~5ppt vs. last quarter and clearly beating expectations. The reacceleration that started in Q3 continued this quarter. On profitability, Adj. OP was approx. $590 mn, up 46% YoY and ahead of the Street’s ~$550 mn. Adj. OPM (OP/GP) reached 20.5%, improving YoY and QoQ as operating leverage kicked in. **2) Square was soft:** By segment, Square underwhelmed. Revenue and GP missed, and YoY growth decelerated vs. last quarter. Monetization lagged as the core metric, Square GPV, slowed from 12% YoY in Q3 to 10% in Q4. In the US, GPV growth eased from ~9% to 7%. Intl GPV growth was flat on a constant-FX basis, but slower when translated into USD. With Europe the main Intl footprint, EUR/USD weakness in Q4 created unusual FX headwinds. **3) Cash App remained strong:** Group strength was driven by Cash App, with ex-BTC core revenue growth near 29% and GP growth near 35%, both accelerating and well above estimates. The robust prints reflect continued improvement across the Cash App ecosystem. Engagement and monetization trended higher. Cash App MAUs rose by another 1 mn QoQ to 59 mn this quarter. In-app Banking Activities grew 22% YoY vs. 18% last quarter. Credit and BNPL, both relatively new, added meaningful monetization channels. New consumer lending via Cash App reached 18.5 bn, up 69% YoY. **4) Opex a bit higher:** Total expenses grew nearly 4% YoY, slightly above expectations. Part of the miss was due to an overly low forecast that had penciled in a 2% decline. R&D and G&A were already down markedly YoY, signaling aggressive internal cuts even before the layoff announcement. The lift in total opex was driven mainly by S&M, up ~19% YoY, and credit losses, which nearly doubled. **Dolphin Research View:** 1) Beyond the major layoff, Block made another key change — it revised its disclosure taxonomy. Segments still align to Square (merchant), Cash App (consumer), and Other; the three buckets remain unchanged. The bigger tweak is the revenue-type classification shifting from Transaction/Service/Hardware/Crypto to three buckets: Commerce-related, Financial-related, and Bitcoin-related. The goal is to carve out financial and lending revenue from the prior catch-all Service bucket and disclose it separately. This should help the market track the company’s core growth drivers more clearly. (Below are the new taxonomy charts for reference.) Charts are for reference. 2) In sum, Block delivered a solid quarter. Square was only okay, but the company’s growth engine — Cash App — was strong across ecosystem health, revenue growth, and margin leverage.This drove top-line and profit beats vs. expectations. Management’s prior claim that results had bottomed and were turning up was validated. 3) Guidance: For next quarter, GP is guided to $2.8 bn (+22% YoY), ~3% above consensus. Adj. OP is guided to $600 mn, also above the ~$575 mn Street view.The implied margin is roughly in line with expectations, with the beat mainly driven by stronger GP growth. Near-term outlook remains constructive. For the long term, FY26 GP is guided to grow 18% to $12.2 bn, with Adj. OP around $3.2 bn and OPM at 26% (vs. 20.5% this quarter). Versus prior guidance and market expectations, Adj. OP is raised from about $2.7 bn. 4) The trend has indeed improved since Q3 and deserves credit. After the solid Q3, shares still corrected ~15% on sentiment, setting the stage for a rebound. Outside the numbers, the headline is the plan to cut ~40% of staff — from slightly above 10,000 to around 6,000. Nearly halving the company is understandably shocking. Management said the layoff is not financially driven, given improving operations. Rather, it is motivated by two goals: a. To slim the workforce and layers to regain a startup-like operating rhythm, enabling faster decision-making and execution; shedding non-core functions to focus on core businesses and goals. This increases strategic focus. b. To leverage AI tools so a smaller team can achieve the same or more output than with a larger workforce. Management expects efficiency gains. What could the impact be from such a large layoff? Potential effects are as follows. a. If operations truly remain unaffected after a 40% headcount cut, payroll and related costs should drop materially. This would run through R&D, G&A, S&M, etc., and push margins higher. b. More exciting for markets, the layoff neatly fits the current 'AI/compute replacing labor' narrative. Investors can now imagine how high operating leverage could go with efficient, tireless AI. However, while b) is more exciting, a) could be the underlying driver. It is still an open question whether today’s AI can genuinely replace nearly half of the workforce. In fact, during the pandemic, Block’s headcount surged from under 4,000 at end-2019 to over 12,000 by end-2022. That was a massive build. But until signs of improvement in the last two quarters, operating performance from 2023 onward was not great. Total revenue rose only from roughly $22 bn to $24 bn between 2023 and 2025. In other words, even if AI cannot truly replace labor, Block has reason to streamline a bloated scale and org to restore execution — i.e., motivation a). We should keep a cool head about the layoff. On valuation, based on FY26 Adj. OP of ~$3.2 bn, the post-market cap implies roughly 14x–15x PE on after-tax profit. That is reasonable for a financial-like business and not expensive for a tech company.If, after the layoff, the operating trend stays on track, this could be an opportunity. Below are key charts: **I. Square** **II. Cash App** **III. GP trends** **IV. Opex** **Dolphin’s prior Block coverage:** **Earnings reviews** Nov 7, 2025 minutes: '[**Block (Trans): Bitcoin payments coming soon**](https://longbridge.com/zh-CN/topics/36139000)' Nov 7, 2025 earnings review: '[**Down 15%, North America’s Alipay Block’s selloff wasn’t deserved**](https://longportapp.cn/zh-CN/topics/36138884)' May 6, 2025 earnings review: '[**Block: -20%, small players hurt more in headwinds**](https://longportapp.cn/zh-CN/topics/29378345)' Feb 21, 2025 call minutes: '[**Block (Trans): Expect Q1 to be the growth trough, then gradually improve**](https://longportapp.cn/zh-CN/topics/27426116)' Feb 21, 2025 earnings review: '[**Block: dual misses in guidance, no highlights!**](https://longportapp.cn/zh-CN/topics/27422860)' Nov 8, 2024 earnings review: '[**Block: Square in a rut, Cash App can’t carry it alone**](https://longportapp.cn/zh-CN/topics/25232783)' Aug 2, 2024 earnings review: '[Block: cost control can squeeze profit, but not a long-term fix](https://longportapp.cn/zh-CN/topics/22891092)' May 5, 2024 earnings review: '[Block: finally squeezed out profit, but clouds loom?](https://longbridgeapp.com/zh-CN/topics/20907713?app_id=longbridge)' Feb 23, 2024 earnings review: '[US equities euphoric — can the whipsawing Block be trusted?](https://longportapp.cn/zh-CN/topics/11713252?app_id=longbridge)' **Deep dives** Jul 19, 2022: '[Promises unmet — Square’s bubble still needs deflating](https://longbridgeapp.com/topics/3148314)' Jun 21, 2022: '[Payments’ trillion-dollar choice — Square vs. PayPal, who wins?](https://longbridgeapp.com/topics/2942886)' **Risk disclosure & statement:** [**Dolphin Research disclaimer & general disclosures**](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [XYZ.US - Block](https://longbridge.com/en/quote/XYZ.US.md) - [CASH.US - Pathward Fin](https://longbridge.com/en/quote/CASH.US.md) - [BTC.US - Grayscale Bitcoin Mini Trust ETF](https://longbridge.com/en/quote/BTC.US.md) - [SQ.US - Block](https://longbridge.com/en/quote/SQ.US.md) --- > **Disclaimer**: This article is for reference only and does not constitute any investment advice.