Cloudflare announced that it will reduce nearly 20% of its global workforce, affecting more than 1,100 employees, as the company restructures operations to increase the use of artificial intelligence tools across its business functions.
The company linked the layoffs to what it described as an “agentic AI-first operating model” rather than employee performance or short-term cost-cutting measures. According to sources, co-founders and chief executives Matthew Prince and Michelle Zatlyn shared the announcement with employees through an internal message.
Cloudflare employed 5,156 full-time workers at the end of 2025, based on company filings. Additionally, the company expects to incur restructuring charges ranging between $140 million and $150 million, with most expenses expected during the second quarter of 2026.
In a company blog post, Prince and Zatlyn revealed that Cloudflare increased its internal use of AI tools by more than sixfold during the past three months. “The way we work at Cloudflare has fundamentally changed,” the executives wrote, adding that employees across departments already use “thousands of AI agent sessions each day.”
The leadership team stated that Cloudflare is now “reimagining every team and function” for what it called the “agentic AI era,” where AI systems increasingly handle software development, operations, finance, customer support, and internal workflows. Furthermore, the company clarified that the restructuring reflects a redesign of processes and operational roles rather than concerns related to productivity or immediate financial challenges.
Cloudflare also said the restructuring aims to help the organisation adapt to faster AI-assisted execution, automation, and accelerated product development cycles. According to The Wall Street Journal, the company rapidly expanded AI adoption internally in recent months, prompting major operational shifts across multiple departments.
The layoffs come despite strong financial performance from the company. For the first quarter, Cloudflare reported a 34% year-on-year increase in revenue, reaching $639.8 million. Meanwhile, adjusted earnings stood at 25 cents per share, exceeding Wall Street expectations. However, the company’s shares declined in extended trading after it issued second-quarter revenue guidance slightly below market forecasts. Cloudflare projected second-quarter revenue between $664 million and $665 million.
Prince described artificial intelligence as “a fundamental re-platforming of the Internet” and emphasized that the AI transition represents one of the biggest growth opportunities in the company’s history.
Cloudflare now joins a growing list of technology companies reshaping their workforce structures around artificial intelligence, automation, machine learning, and AI-powered software development. As enterprises increasingly integrate generative AI and intelligent automation into daily operations, many tech firms continue redesigning teams and workflows to align with the rapidly evolving AI economy.
Cloudflare’s workforce reduction signals the accelerating shift toward AI-driven business models across the global technology industry. While the company continues delivering strong financial growth, its restructuring highlights how artificial intelligence is transforming operational strategies, workforce planning, and the future of enterprise software development.
