Jack Dorsey’s Block soars 25pc as it lifts guidance, cuts jobs

afr.com:

Block shares surged 25 per cent on the ASX on Friday after Jack Dorsey’s payments company said it would cut global staff by 1500 to keep a lid on costs and announced a surprise $1 billion share buyback.

The market also responded favourably to a lift in its full-year 2023 and 2024 earnings guidance and a commitment to hit a combined growth rate and profit margin of more than 40 per cent in 2026.

Block chief Jack Dorsey is being more disciplined on costs. Bloomberg

With its share price halving over the past 12 months, Block has been pressured by investors to reduce operating costs and lift transparency on guidance, which it produced in a third quarter earnings update on Friday.

The job cuts were flagged by The Australian Financial Review last month. Block said on Friday it would limit its overall staff levels at 12,000 and instate an “absolute cap” until its performance improved. This is 1500 people less than its current headcount of 13,500.

Block shares, which hit a low of $60.56 late last month, jumped by $16.27 or 25 per cent to $81.12 in late afternoon trading on Friday, their highest level since September. But they are still 10 per cent down on levels six months ago.

“Block increased its full year 2023 outlook and its significant growth in adjusted operating income expected in full year 2024 is causing the stock to move meaningfully higher,” said RBC Capital Markets analyst Daniel Perlin.

Block chief executive Jack Dorsey announced in February it aimed to be a “rule of 40” company, by targeting a combined growth rate and profit margin exceeding 40 per cent. The company had not put a timeline on this until Friday, when it said it would hit the target by 2026.

It will reinstate both quarterly and annual gross profit and