Block's 10% Cuts: A $5B Buyback and $4.6B Income Target

The scale of the potential workforce reduction is stark. Block is considering up to a 10% cut to its staff, which translates to as many as 1,100 jobs from a base of fewer than 11,000 employees. This move is a direct lever to meet aggressive financial targets. The company's new three-year outlook, unveiled at its November 2025 Investor Day, projects adjusted operating income to grow about 30% annually, aiming to reach $4.6 billion by 2028. The layoff plan is the operational execution of that margin expansion goal.

This pressure is acute ahead of the next earnings report. The stock has been under severe strain, falling more than 30% in 2025 while broader indexes have risen. The company reported quarterly results just two weeks before its investor day, missing revenue estimates for the sixth straight time. The combination of a depressed share price and a string of weak reports has created a clear mandate for management to deliver on its promised profitability ramp.

The financial targets are ambitious but specific. To hit the $4.6 billion adjusted operating income by 2028, the company needs to compound its earnings at a high rate. This requires not just top-line growth but significant cost discipline, which the potential job cuts are designed to provide. The move signals that Block is prioritizing near-term profitability over growth investment, a shift that investors will scrutinize closely when the Q4 results are released on February 26.

Capital Allocation: Buybacks and Profit Leverage

The company is deploying a dual lever to boost shareholder returns: aggressive cost control and expanded capital returns. Management is simultaneously pushing for a 10% workforce cut and expanding its share repurchase authorization by $5 billion. This adds to $1.1 billion in remaining authorization, creating a massive $6.1 billion buyback program. The move is a direct signal that cash flow from the planned profitability ramp will be returned to shareholders, not reinvested.

The financial targets are designed to drive this flow. Block projects adjusted earnings per share to grow in the low 30% range annually through 2028, aiming for $5.50. This leverages the expected growth in gross profit, which is forecast to climb in the mid-teens each year. The new non-GAAP cash flow metric, which accounts for lending capital needs, is expected to reach more than $4.0 billion by 2028, or 25% of gross profit. This sets a clear cash generation target that funds both the buybacks and the operating income expansion.

The bottom line is a focus on compounding returns. By capping top-line growth while aggressively expanding margins, Block aims to deliver a high-velocity profit stream. The $5 billion buyback is a commitment to return that excess cash, with the EPS growth target providing a clear path for per-share value creation. The strategy hinges on hitting the 30% annual adjusted operating income growth target, as any shortfall would pressure both the cash flow and the buyback capacity.

Catalysts and Liquidity Risks

The primary near-term catalyst is the Q4 earnings report, set for release after the market closes on February 26. Analysts expect revenue of $6.25 billion and adjusted earnings of $403 million. This report will be the first major test of the company's new financial targets and the initial impact of its operational overhaul, including the potential workforce reduction.

The key operational risk is execution. The planned 10% workforce cut must be implemented without disrupting the core growth engines like Cash App and Square. Any misstep could damage customer trust and slow the mid-teens annual gross profit growth that underpins the entire financial plan. The company's history of retooling since 2024 shows the complexity of integrating its ecosystems, and the layoffs add pressure to get this right.

The critical metric to watch is the new non-GAAP cash flow. The company aims for this measure to reach 25% of gross profit by 2028, or more than $4.0 billion. For 2026, the target is 20% of gross profit. This flow metric is the real engine for funding the expanded $5 billion buyback and the promised 30% annual adjusted operating income growth. Any deviation from this cash generation path will directly challenge the viability of the shareholder return strategy.