Block Inc (NYSE:XYZ) is reportedly considering a workforce reduction of up to 10%, according to a Bloomberg report that said “hundreds” of employees have been informed their roles may be cut during annual performance reviews.
The company had fewer than 11,000 employees as of late November, down from 11,400 at the end of 2024.
Jefferies analysts wrote that the potential reduction-in-force (RIF) would signal continued efforts to rationalize fixed costs and could bolster confidence in Block’s longer-term profitability targets.
They estimate a 10% staff cut could translate into roughly $500 million to $600 million in operating expense savings, equivalent to about a seven percentage-point annualized tailwind to adjusted operating expense growth.
“Continued fixed-cost rationalization is needed to hit the targets set out at last year’s investor day,” the analysts wrote, pointing to Block’s goal of lifting incremental margins to more than 50% by fiscal 2028 from about 33% in fiscal 2025.
Those targets have been viewed by some investors as aggressive, given ongoing investments in Square’s go-to-market initiatives and a shift in gross profit mix toward lower-margin credit products.
Jefferies cautioned that some cost reductions may already be reflected in Block’s fiscal 2026 adjusted operating income guidance and said it would not expect a significant upward revision tied to the fourth-quarter earnings print.
The firm also noted that the number of open roles listed on Block’s careers site remains broadly unchanged, with about 306 positions currently posted.
The analysts have a ‘Buy’ rating and $75 price target on Block, implying upside from current levels of about $57.