Cloudflare cuts 20% of staff as AI reshapes its operating model

Cloudflare is not treating its 20% workforce cut as a simple belt-tightening move. The company said it is reshaping teams around an “agentic AI-first operating model,” and that its own internal AI usage surged more than 600% over the past three months.

That matters well beyond Cloudflare. The company said the changes are about redesigning roles and processes, not employee performance. It also said staff across engineering, HR, finance and marketing were running thousands of AI-driven workflows each day, a sign that the pressure is moving past pilot projects and into core operations. In other words, AI is no longer just a tool for faster output. It is becoming the reason leaders redraw the org chart.

Cloudflare said on May 7 that it would eliminate more than 1,100 jobs globally. The company paired that announcement with a strong first quarter: revenue rose 34% year over year to $639.8 million, and it ended the quarter with 4,416 customers paying more than $100,000 annually. Those large customers made up 72% of revenue. Even with those numbers, the stock fell sharply after the layoff announcement and earnings update, underscoring how quickly investors are rewarding efficiency narratives when AI is part of the story.

For monday.com, the comparison is hard to miss. The company said first-quarter revenue rose 24% year over year to $351.3 million, launched its AI Work Platform with native agents, and said AI contributed 10% of net new ARR. It also said internal AI use improved developer output by 32% and reduced product time to market by 38%. That is the same playbook Cloudflare is now pushing further: use AI to move faster, then ask which teams, workflows and management layers still make sense.

The functions most exposed are the ones Cloudflare singled out in practice, the administrative and operational layers that sit between software and execution. For workers at monday.com, that raises a sharper question than whether AI features sell: which jobs get redefined when efficiency stops meaning “do more with the same headcount” and starts meaning “rebuild the team around automation”? Cloudflare’s package for laid-off employees, including full base pay through the end of 2026, U.S. healthcare through year-end and accelerated equity vesting through August 15, suggests leadership wanted to signal that the change was strategic, not punitive. The larger signal is clearer still: in enterprise software, AI is now reshaping not only products, but the culture of work inside the company itself.