Cloudflare said Thursday it will cut about 20% of its global workforce, or more than 1,100 employees, as the company restructures operations to increase the use of artificial intelligence tools across the enterprise.
The company said the layoffs were related to what it described as an “AI agent operating model” and not employee performance or short-term cost-cutting efforts. According to Reuters, employees made the announcement in a memo from co-founders and CEOs Matthew Prince and Michelle Zatlyn.
Cloudflare had 5,156 full-time employees at the end of 2025, according to company filings. The company expects to incur restructuring costs of approximately $140 million to $150 million, with the majority of costs expected in the second quarter of 2026.
“The way we work has fundamentally changed”
In a blog post published by the company, Prince and Zatlyn said internal use of Cloudflare’s AI tools has increased more than sixfold in the past three months. “The way we work at Cloudflare has fundamentally changed,” the executives wrote, adding that teams across the company already use “thousands of AI agent sessions every day.”
Executives said the company is “reshaping every team and function” for what they called the “agent AI era,” in which AI systems are increasingly integrated into software development, operations, finance, support and internal workflows. The company added that the layoffs reflected a redesign of processes and roles rather than productivity concerns or short-term financial pressures.
Cloudflare said the restructuring was aimed at aligning the organization to faster execution and AI-powered product development. The company said the adoption of artificial intelligence within the business has accelerated rapidly in recent months, leading to significant operational changes across departments, according to The Wall Street Journal.
The layoffs come even as Cloudflare reported quarterly results that beat Wall Street estimates. For the first quarter, revenue rose 34% year-over-year to $639.8 million, with adjusted earnings of 25 cents per share.
Despite the earnings beat, Cloudflare shares fell in extended trading after the company issued second-quarter revenue guidance slightly below market expectations. The company forecasts second-quarter revenue of between $664 million and $665 million.
Prince described AI as a “fundamental re-platforming of the Internet” and said the technological shift represents one of the biggest opportunities in the company’s history in their blog post.
Cloudflare joins a growing number of technology companies that are combining workforce reductions with AI adoption and automation as businesses increasingly restructure teams around AI-driven operations and software tools.
