San Francisco, May 8, 2026, 04:02 (PDT)
Cloudflare will cut more than 1,100 jobs, about 20% of its workforce, as the San Francisco internet infrastructure and cybersecurity company reorganizes around agentic artificial intelligence. The company expects $140 million to $150 million in related charges, mostly in the second quarter.
The stock reaction was sharp. Cloudflare shares fell about 19% in extended trading on Thursday after the company paired stronger-than-expected first-quarter results with a second-quarter revenue forecast that was only slightly below Wall Street estimates.
That is why the timing matters. The cuts did not follow a weak quarter; they came as Cloudflare said revenue rose 34% to $639.8 million and adjusted earnings reached 25 cents a share, ahead of analysts’ estimates cited by Reuters. Investors are now weighing whether AI-led efficiency can lift margins without denting execution.
Chief Executive Matthew Prince and co-founder Michelle Zatlyn told employees Cloudflare’s internal use of AI had risen more than 600% in three months, with staff running thousands of AI agent sessions a day across engineering, HR, finance and marketing. Agentic AI refers to systems that can carry out tasks with some autonomy, rather than just answer a prompt.
Prince said in the earnings release that AI was driving a “fundamental re-platforming” of the internet and called it the “biggest tailwind” Cloudflare had seen. The company said the shift meant agents were becoming “core parts” of its workforce, not side tools. Cloudflare
Cloudflare said the layoffs were not tied to individual performance or near-term cost pressure. In the staff note, Prince and Zatlyn wrote that the company was “reimagining every internal process, team, and role” and that the move was “not a cost-cutting exercise.” The Cloudflare Blog
Departing employees will receive base pay through the end of 2026, Cloudflare said. U.S. workers will get healthcare support through year-end, and the company said it would vest equity through Aug. 15, including prorated equity for some employees who had not reached one-year cliffs.
Chief Financial Officer Thomas Seifert said on the earnings call that the reductions would run across functions and geographies, though quota-carrying sales capacity was largely spared. He said the company still expected its 2026 free cash flow outlook to hold despite the restructuring charges.
For the second quarter, Cloudflare forecast revenue of $664 million to $665 million and adjusted earnings of 27 cents a share. For the full year, it projected revenue of $2.805 billion to $2.813 billion and adjusted earnings of $1.19 to $1.20 a share.
The selloff also hit while investors were punishing richly valued infrastructure names. Fastly, a smaller edge-computing and security peer, fell 40% after an earnings beat as growth in network services and compute sales missed market hopes.
There is a wider labor signal, too. Reuters noted that Block said in February it would cut more than 4,000 jobs as part of an AI overhaul, while Goldman Sachs economists estimated AI had been linked to 5,000 to 10,000 monthly net job losses in the most exposed U.S. industries in 2025.
But the plan carries risk. Cloudflare said its cost estimates depend on assumptions and may differ materially, and its own risk disclosures point to challenges around customer retention, sales productivity, personnel retention and the ability to incorporate AI tools effectively.
