Cloudflare is to cut more than 1,100 jobs globally as the internet infrastructure company restructures its operations around artificial intelligence, becoming the latest technology firm to cite AI-driven changes as a reason for workforce reductions.
The San Francisco-based company said the cuts, representing around 20 per cent of its workforce, are part of a shift towards what executives described as an “agentic AI-first operating model”.
In a joint statement to staff, chief executive Matthew Prince and co-founder Michelle Zatlyn said Cloudflare’s internal use of AI tools had increased by more than 600 per cent in the past three months. “Employees across the company, from engineering to HR to finance to marketing, run thousands of AI agent sessions each day to get their work done,” the statement said. “That means we have to be intentional in how we architect our company for the agentic AI era.”
The company insisted the move was not primarily aimed at reducing costs, but rather at reshaping the business for an AI-driven future.
Cloudflare reported stronger-than-expected first-quarter results, posting revenue of $639.8 million, up 34 per cent year-on-year. Adjusted earnings also exceeded analysts’ forecasts.
However, investors reacted negatively after the company issued a softer-than-expected revenue forecast for the current quarter and warned that AI infrastructure spending was weighing on margins. Shares fell sharply in extended trading following the announcement.
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Prince said AI represented “a fundamental re-platforming of the Internet and a paradigm shift in how software is created and consumed”.
Cloudflare expects to incur restructuring charges of between $140 million and $150 million as a result of the layoffs, with most of the costs expected during the second quarter.
The company said departing employees would receive severance packages including base pay through the end of 2026, alongside healthcare support for US-based staff and accelerated equity vesting.
The cuts come amid a broader wave of AI-linked redundancies across the technology sector, as companies increasingly automate workflows and reorganise around generative AI systems.
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