Why are Block shares rocketing 30% on Friday?

Block Inc (ASX: XYZ) shares are ending the week with a bang.

At the time of writing, the payments giant’s shares are up 30% to $96.60.

This follows the release of its fourth-quarter and full-year results this morning.

Block shares rocket on results day

For the three months ended 31 December, Block reported a 24% increase in gross profit to US$2.87 billion.

This was driven by a 33% lift in Cash App gross profit to US$1.83 billion and a 7% increase in Square gross profit to US$993 million.

For the 12 months, gross profit increased 17% to US$10.36 billion. This reflects a 21% jump in Cash App gross profit to US$6.34 billion and a 9% lift in Square gross profit to US$3.94 billion.

FY 2025 adjusted operating income came in at US$2.08 billion, representing a 20% margin.

But there was something else that gave Block shares a huge lift today. Job cuts.

What was announced?

Block has announced that AI tools are making it possible to undertake a major reduction in its head count. Block’s founder and CEO, Jack Dorsey, explained:

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. I want to use this letter to explain why I believe this is the right path for our company, and what Block looks like going forward.

The core thesis is simple. Intelligence tools have changed what it means to build and run a company. We’re already seeing it internally. 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. I don’t think we’re early to this realization. I think most companies are late. Within the next year, I believe 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.

Outlook

Looking ahead, the company is guiding to gross profit of US$12.2 billion, which represents 18% annual growth.

This is expected to be achieved with an operating income margin of 26%.

The company’s COO and CFO, Amrita Ahuja, commented:

We’re executing well on our growth strategies across the business. At Investor Day we shared our preliminary view of gross profit for 2026, which called for 17% year-over-year gross profit growth. We now expect to deliver gross profit growth of 18% year over year in 2026, to $12.20 billion. We are focused on sustaining momentum and we plan to continue to invest in significant long term growth initiatives across our agentic AI infrastructure, proactive intelligence products, high ROI go to market expansion, Neighborhoods, and high return on capital lending products.

The post Why are Block shares rocketing 30% on Friday? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.