Cloudflare to cut 20% of staff as AI reshapes operations

Cloudflare said it would cut more than 1,100 jobs globally, a reduction of about 20% of its workforce, as the San Francisco infrastructure company reorganized around an “agentic AI-first” operating model. Co-founders Matthew Prince and Michelle Zatlyn said internal AI usage had surged by more than 600% in the previous three months, with employees in engineering, HR, finance and marketing running thousands of AI agent sessions each day.

The company said the layoffs were not a cost-cutting exercise and not a judgment on individual performance. Even so, the move pointed to a sharper reality across technology: AI is no longer just a product pitch for customers, but a tool companies are using to redraw their own org charts, decide which tasks machines can absorb and decide where human labor is still most valuable. Cloudflare did not identify specific job titles being eliminated, but it said departing workers would receive full base pay through the end of 2026, U.S. healthcare coverage through the end of that year and equity vesting through August 15, 2026. The company also waived one-year cliffs for some employees.

The cuts landed after a strong first quarter. Cloudflare reported revenue of $639.8 million, up 34% from a year earlier, while its GAAP net loss narrowed to $22.9 million, or 7 cents per share. Free cash flow reached $84.1 million, and the company said it held $4.164 billion in cash, cash equivalents and available-for-sale securities as of March 31. Its customer base remained broad, with more than 4,400 large customers and 42% of the Fortune 500 paying for its services.

That makes the restructuring more than an internal staffing story. Cloudflare sits behind a large share of internet traffic and sells security and performance services to enterprise customers, so changes inside the company are a signal about broader tech hiring, not just one balance sheet. As of December 31, 2025, Cloudflare had 5,156 full-time employees, including 2,452 outside the United States, which means the planned reduction reached deep into a global operation.

Investors focused on the near-term numbers as much as the AI narrative. Cloudflare said second-quarter revenue would fall between $664 million and $665 million, below some Wall Street expectations, and the stock dropped sharply after the announcement. The message from management was clear: Cloudflare wants to move faster, spend differently and build around automation now, not after the market forces the issue.