Jack Dorsey returns to lead Block, announcing layoffs, stock buyback, and recognizing over $200 million in Bitcoin profits

Twitter founder Jack Dorsey's payment platform Block, formerly known as Square, released its fourth quarter financial report for 2023, showing a 22% year-over-year increase in gross profit to $2.03 billion, surpassing analysts' expectations. The report also indicates strong revenue growth for Square and Cash App. Following the announcement, SQ stock rose 13% in after-hours trading on Thursday.

Saying Goodbye to Layoff Days, Focus on Growth in the Future

Last October, after CEO Alyssa Henry, who had been with Block for nine years, left for another opportunity, founder Jack Dorsey returned and carried out a significant round of layoffs. In this shareholder report, Dorsey stated that he had previously done a lot to reduce costs and is now shifting the focus to growth.

Block announced at the end of last year that it would maintain a limit of 12,000 employees. Dorsey mentioned that this restriction forces the company to prioritize more impactful work. Block plans to achieve this by combining performance management, team consolidation, and function to reduce duplication and define priorities. Block hopes to maintain this limit until the business growth significantly exceeds the company's growth.

Dorsey also aims for Square to once again become a leader in the engineering and design field. He specifically invited the company's first Cash App designer and team lead, Robert Andersen, to rejoin the team.

Block Recognizes $207 Million Bitcoin Income

According to its annual report, Block holds Bitcoin for the following purposes:

• Bitcoin investment: the company holds Bitcoin for long-term investment purposes
• Operational purposes: used to facilitate customers in selling and buying Bitcoin on Cash App
• Held for customers

FASB adopted fair value accounting standards at the end of last September, allowing companies holding cryptocurrency to show the market value of cryptocurrency assets in their financial statements. Block has implemented this accounting standard ahead of time.

FASB's adoption of fair value accounting standards benefits companies holding cryptocurrency such as MicroStrategy

Block holds 8,038 Bitcoins for investment purposes, and as of December 31, 2023, the company had accumulated purchases of approximately $220 million worth of Bitcoin at an average unit cost of around $27,370. Using its new accounting standards, the company recognized a $207 million income. This is also the reason for Block's outstanding performance this time.

Impressive Financial Report, Stock Repurchase, 13% After-Hours Surge in SQ Stock Price

In October 2023, the board authorized a maximum of $10 billion in stock repurchases. As of the year ended December 31, 2023, Block had repurchased 25,000 shares of Class A common stock for a total amount of $156.8 million, with $843.2 million still available for authorized repurchases.

Following the release of the impressive financial report, Block surged 13% in after-hours trading.