Just months after flying thousands of employees to California for a high-profile corporate retreat, Block has cut around 40 per cent of its global workforce in a sweeping redundancy round that has hit Afterpay’s Australian operations particularly hard.

In October, chief executive Jack Dorsey hosted about 8000 staff at a three-day event featuring live performances and open-bar celebrations following a strong financial year. The company reported profit before tax of more than A$14 billion, up 17 per cent, and outlined ambitious plans for expansion. The gathering reportedly accounted for the bulk of A$104 million in expenses disclosed soon after.

Last week, Dorsey announced the cuts in a public statement, pointing to growing use of artificial intelligence tools and a shift towards smaller, flatter teams. Shortly afterwards, staff were informed internally of the scale of the changes.

Employees in Australia said close to half of the 1300 local Afterpay workforce were affected, with significant reductions across legal, product, engineering, design and marketing. Sales teams appear largely intact. Block declined to confirm exact figures.

The company acquired Afterpay in 2022 for A$43 billion during a period of rapid expansion that saw its global headcount climb from about 4000 to more than 12,500 in three years. Critics argue the latest reductions reflect over-hiring during the pandemic rather than purely AI-driven efficiencies, a practice some industry figures have labelled “AI-washing”.

Block has offered affected staff 20 weeks’ pay plus one additional week per year of service, vested equity through May, six months of healthcare, A$7,700 in cash and retention of company laptops. Remaining Australian employees have been promised a 5.68 per cent pay rise and roughly A$46,000 in cash and shares over two years.

Investors responded positively, with Block’s shares rising nearly 17 per cent to A$98 by the end of the week.