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Block, Inc. (NYSE:XYZ) CEO Jack Dorsey said Thursday that advancements in artificial intelligence models and efforts to streamline operations drove the company’s choice to lay off nearly half its workforce.

During the company’s fourth-quarter earnings call, Dorsey was probed about the timing and rationale behind the neary 40% workforce reduction.

“We have been working very hard to functionalize the company. That’s a big part of what gives us more confidence in making this move,” he responded.

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Dorsey said that Block effectively houses two separate companies—likely referring to Square and Cash App—with independent corporate structures, but with a lot of “duplication.”

“As we functionalized, it allowed us to act more like one company and recognize where there are common capabilities and common foundation, and we’re still doing a lot of that work, but I have the confidence that we’re in a place that we can move much faster there,” the top executive said.

Dorsey further pointed out that AI models became “an order of magnitude” more capable and intelligent. This breakthrough, he said, has opened up new possibilities for applying AI to most of the organization, enabling accelerated product delivery.

Trending: This AI Helps Fortune 1000 Brands Avoid Costly Ad Mistakes — See Why Investors Are Paying Attention

The justification comes after Block reduced its headcount by nearly half, from over 10,000 people to just under 6,000.

Dorsey described the decision as one of the “hardest” in the company’s history. The affected employees would receive 20+ weeks of salary, vested equity, six months of health coverage and $5,000 transition cash.

In other news, Block reported earnings of 65 cents per share for the fourth quarter, in line with the Street estimate, while revenue missed expectations.

Photo Courtesy: Frederic Legrand – COMEO on Shutterstock.com

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This article Jack Dorsey Says AI Models’ Progress, Push Toward Functionalization Spurred Block’s Mega Job Cuts – Stock Surges 23% After-Hours originally appeared on Benzinga.com

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