Cloudflare is laying off over 1,100 employees worldwide, roughly a fifth of its workforce, despite reporting a 34% year-over-year revenue increase to $639.8 million in Q1 2026. The cuts come as the company pivots toward an "agentic AI era," with internal AI usage skyrocketing by 600% in the past three months.
In a company blog post titled Building for the future, co-founders Matthew Prince and Michelle Zatlyn explained that AI is fundamentally changing how Cloudflare operates. Employees in HR, marketing, finance, and engineering now run "thousands" of AI agent sessions daily, necessitating a restructuring to focus on AI-driven growth.
The layoffs primarily affect roles in HR, marketing, finance, and engineering. Affected employees will receive a severance package including full base pay through end of 2026, plus healthcare support in the U.S. through year-end. The company expects to incur $140–$150 million in charges related to the workforce reduction.
Despite the job cuts, Cloudflare’s revenue surge underscores the dual impact of AI: driving business growth while displacing traditional roles. Prince noted that AI is "the biggest tailwind we’ve ever seen in Cloudflare’s history," reshaping the internet and software creation.
This move reflects a broader trend in the tech industry where companies are restructuring for AI efficiency, often at the cost of human jobs. Cloudflare’s leadership emphasized they aim to make this a one-time reduction, avoiding further cuts in the foreseeable future.
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