Cloudflare cuts 1,100 jobs as AI transforms workforce

Cloudflare has announced it will cut more than 1,100 employees, representing approximately 20 percent of its global workforce, as part of a major reorganization to prepare for what the company calls the "agentic AI era." The layoffs were announced on May 7 by CEO Matthew Prince and President/COO Michelle Zatlyn in a memo sent directly to all employees, just hours after Cloudflare reported first-quarter revenue growth of 34 percent year-on-year, reaching nearly $640 million. The company cited that internal AI usage has surged by more than 600 percent in the past three months, with employees across engineering, HR, finance, and marketing running thousands of AI agent sessions daily. Cloudflare's leadership stated the cuts are not about cost-cutting or individual performance but about redefining how the company operates and creates value in the AI era. Despite the strong quarterly results and future guidance projecting 30 percent growth, Cloudflare shares fell more than 14 percent in after-hours trading following the announcement. Departing employees will receive severance packages including full base pay through the end of 2026, continued healthcare coverage through December for US-based staff, and vested equity through August 15, with one-year cliff requirements waived. Prince emphasized on the earnings call that the company expects to have more employees in 2027 than in 2026, though in dramatically different roles. Cloudflare has also announced plans to hire 1,111 interns by the end of 2026, describing them as essential to ramping up creative and widespread AI application with a fresh approach. Cloudflare joins a growing list of technology companies, including Coinbase, Meta, Oracle, Amazon, Block, Atlassian, and Snap, that have announced significant workforce reductions attributed to AI-driven workplace changes. Company leaders who were previously hesitant to link layoffs directly to AI have begun openly embracing the shift, with Meta's Mark Zuckerberg noting that projects previously requiring larger teams now need only a single talented person. Cloudflare, which claims to support approximately 20 percent of the web, had experienced turbulent quarters last year with two major outages affecting platforms globally, including Zoom, LinkedIn, Shopify, and Coinbase.