Amid a rapid shift toward artificial intelligence, Cloudflare has announced plans to reduce about 20% of its workforce while restructuring its operations around AI tools. The move comes as the company also forecast second-quarter revenue slightly below Wall Street expectations.
The San Francisco-based firm said it will cut more than 1,100 jobs globally. Cloudflare had 5,156 full-time employees at the end of 2025 and expects to incur charges between $140 million and $150 million related to the layoffs in the second quarter.
For the upcoming quarter, the company projects revenue between $664 million and $665 million, slightly below analysts’ estimate of $665.3 million, according to LSEG data. Adjusted earnings are expected at $0.27 per share, in line with market expectations.
Despite reporting stronger-than-expected first-quarter results, Cloudflare’s shares dropped around 19% in extended trading. The company posted revenue of $639.8 million in the first quarter, surpassing the $621.9 million estimate, while adjusted profit stood at $0.25 per share, above expectations of $0.23. Its stock has risen 30.3% so far this year.
Cloudflare CEO Matthew Prince and co-founder Michelle Zatlyn told employees the company is reshaping every team and function to align with what they described as an “agentic AI” era.
The company clarified that the layoffs are part of a redesign of internal processes and roles, not due to employee performance or short-term cost pressures. It also noted that its internal use of AI has increased more than 6 times over the past 3 months, driving major operational changes.
The announcement reflects broader concerns about AI-driven automation and its impact on jobs. In a similar move, Block said in February it would cut more than 4,000 jobs, nearly half its workforce, to integrate AI into its operations.
Earlier this year, economists at Goldman Sachs estimated that AI contributed to 5,000 to 10,000 monthly net job losses in 2025 across the most affected industries in the U.S.
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