By the numbers: Block’s gross payment volume (GPV) totaled $60.076 billion in Q3 2023, up 10% year over year (YoY), per its shareholder letter.

• Square accounted for 92% of GPV and grew 11% YoY.
• Cash App’s volume remained relatively flat between this year and last.

Gross profits for the quarter grew 21% YoY, hitting $1.90 billion. This is a deceleration from a 38% jump last year.

Some Q3 earnings highlights:

• Verticalization. Square deepened its verticalization efforts, adding more restaurant, healthcare, and beauty and wellness tools, among others. Square also launched Square for Franchises in Q3. These vertical solutions are paying off: Gross profit from the vertical POS solutions increased 29% YoY.
• Banking. Gross profit from banking products—primarily Square Loans, Instant Transfer, and Square Debit Card—increased 20% YoY. Square is still testing the Square Credit Card. Banking opportunities are a top priority for the company, CEO Jack Dorsey wrote in the letter. Block also wants to make banking on Cash App the primary banking relationship for its US customers.
• Artificial intelligence (AI). Square launched 10 generative AI features for sellers in October. Using AI is one of the company’s top priorities, per Dorsey. It will use AI for sales, customer service, and marketing efforts.

It’s not all good news: In Dorsey’s words, “The growth of the company has meaningfully outpaced the growth of the business.”

• Dorsey warned Block employees that job cuts are on the way, per an internal letter viewed by Insider.
• Block is implementing a cap of 12,000 employees—it currently has more than 13,000 people on its payroll.
• Block will also reduce spend across corporate overhead areas by centralizing operations and will improve its cost structure through partnerships and using its scale.
• Centralizing operations may also create more cooperation between Square and Cash App, which has reportedly been a struggle, per the Information. And it can help bring together Afterpay and Cash App, another of Block’s goals.

Block isn't the only payment provider worried about costs. PayPal also hinted at layoffs in its Q3 earnings.

The takeaway: With Dorsey back at the helm of Square, effective in October, we can expect major cost-cutting efforts and new strategic priorities. Block is diversifying to become less reliant on Cash App for growth, which should reinforce its strength in the long term.

This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a three-times-weekly recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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