Cloudflare cuts 20% of staff amid AI pivot

Cloudflare said on May 7 that it cut more than 1,100 employees globally as the internet infrastructure company reorganized around what it called an “agentic AI-first operating model.” The cuts amount to more than one-fifth of the workforce, according to the company’s blog post and earnings materials. The announcement came the same day Cloudflare reported first-quarter revenue of $639.8 million, up 34% from a year earlier. Chief Executive Matthew Prince said AI was “the biggest tailwind” in the company’s history. ### When did Cloudflare make the cuts public? May 7 was the date Cloudflare disclosed the layoffs in a blog post signed by Prince and co-founder Michelle Zatlyn. The post said the company had “made the decision to reduce Cloudflare’s workforce by more than 1,100 employees globally” and described the move as a companywide redesign rather than a performance-based action. (blog.cloudflare.com) CNBC reported the reduction equated to about 20% of Cloudflare’s workforce, citing the company’s announcement and earnings call. The same report said shares fell 24% on May 8 after the earnings release and layoff disclosure. ### What did Cloudflare say changed inside the company? Cloudflare said its own use of AI had accelerated rapidly before the cuts. (blog.cloudflare.com) In the internal memo published on its blog, the company said AI usage had increased by more than 600% in the prior three months and that employees across engineering, HR, finance and marketing were running “thousands of AI agent sessions each day.” (cnbc.com) Matthew Prince told investors on May 7 that AI was changing both how software is created and how Cloudflare itself operates. In the earnings release, he said the company was being “intentional” about how it architects the business because AI and agents are now “core parts of our workforce.” ### Was this presented as a cost-cutting move? (blog.cloudflare.com) Cloudflare said in its blog post that the layoffs were “not a cost-cutting exercise” and “not a reflection of the individual work or talent” of departing employees. Prince and Zatlyn wrote that the company was “reimagining every internal process, team, and role across the company.” On the earnings call, Prince said some roles were no longer the roles Cloudflare needed “for the future,” according to CNBC’s account of the call. (cloudflare.com) That framing linked the cuts directly to the company’s adoption of AI tools and internal automation. ### What AI products had Cloudflare already been rolling out? April 13 and April 14 were key dates in Cloudflare’s AI product push. (blog.cloudflare.com) On April 13, the company said it was expanding its Agent Cloud to support “millions of autonomous, long-running agents.” On April 14, it announced Cloudflare Mesh, which it described as a private networking product built for the rise of AI agents, and a partnership with Wiz on AI application security. (cnbc.com) April 20 marked the close of Cloudflare’s “Agents Week 2026,” when the company said it had launched products across compute, security, platform tools and the “emerging agentic web.” Cloudflare’s blog said the releases were designed to support the full stack needed to build and run AI agents. ### How did the layoffs land against Cloudflare’s financial results? (cloudflare.com) Cloudflare reported first-quarter revenue of $639.8 million, GAAP net loss of $22.9 million and non-GAAP net income of $94.0 million for the quarter ended March 31. The company said cash, cash equivalents and available-for-sale securities totaled about $4.16 billion at quarter-end. (blog.cloudflare.com) The company forecast second-quarter revenue of $664 million to $665 million, according to CNBC’s summary of the earnings release. MarketBeat said Cloudflare’s next earnings report is estimated for July 30, 2026. (cnbc.com) (cloudflare.com)