When you block the sign-in of a user in your Microsoft 365 admin center, like this:

The Waldo license will be unassigned automatically in the admin portal, and that user will disappear from your Licenses list. Easy and clean ✨

Heads up: it may take up to 24 hours for this change to reflect in Waldo. If you're in a hurry, you can always force the refresh of the user list.