San Francisco, May 8, 2026, 04:02 (PDT)
Cloudflare plans to slash over 1,100 positions—roughly 20% of its staff—as it shifts focus to agentic artificial intelligence. The San Francisco-based cybersecurity firm is looking at charges between $140 million and $150 million, with most of that likely to hit in the second quarter.
Cloudflare shares tumbled roughly 19% in after-hours trading Thursday. The drop followed first-quarter results that topped expectations, but the company’s second-quarter revenue outlook landed just a touch shy of Wall Street’s forecast.
Timing here isn’t incidental. Cloudflare trimmed jobs not after a slump, but right as it reported a 34% jump in revenue to $639.8 million, with adjusted earnings at 25 cents per share—topping forecasts, according to Reuters. Now, investors face the question: can AI-driven efficiency boost margins, or will it cost Cloudflare on delivery?
Cloudflare’s internal AI usage has exploded—more than 600% in just three months, according to Chief Executive Matthew Prince and co-founder Michelle Zatlyn. Employees are now running thousands of daily AI agent sessions, spanning teams from engineering to HR, finance, and marketing. These agentic AI tools go beyond simple prompt responses, handling tasks with a degree of autonomy.
In the earnings release, Prince described AI as fueling a “fundamental re-platforming” of the internet, calling it the “biggest tailwind” Cloudflare has experienced. The company noted the shift is making agents “core parts” of its workforce rather than just supplementary tools. Cloudflare
Cloudflare insisted the job cuts weren’t about underperformance or short-term financial strain. In a message to employees, Prince and Zatlyn described the shakeup as part of a broader rethink of “every internal process, team, and role,” emphasizing, “this is not a cost-cutting exercise.” The Cloudflare Blog
Cloudflare says outgoing staff will keep their base salaries until the end of 2026. U.S. employees are set to maintain healthcare coverage through the rest of the year. Equity will vest up to August 15, and some workers under the one-year mark get prorated shares.
On the earnings call, Chief Financial Officer Thomas Seifert said the cuts would touch multiple departments and regions, but most quota-carrying sales roles are staying intact. Despite the restructuring costs, Seifert maintained the company’s 2026 free cash flow forecast.
Cloudflare is looking for second-quarter revenue in the $664 million to $665 million range, with adjusted earnings expected to land at 27 cents per share. For the full year, the company’s forecast puts revenue between $2.805 billion and $2.813 billion, and it sees adjusted earnings at $1.19 to $1.20 a share.
Investors didn’t spare infrastructure stocks with lofty valuations in the rout. Shares of Fastly, which focuses on edge computing and security, slid 40%—despite beating earnings estimates—after its growth in network services and compute came up short of expectations.
The labor picture has broadened. Back in February, Block announced plans to eliminate over 4,000 positions as it ramped up its AI transition, Reuters reported. Goldman Sachs economists, meanwhile, put AI-related net job reductions at 5,000 to 10,000 each month across the U.S. sectors most vulnerable in 2025.
Still, there are risks baked in. Cloudflare cautioned its projected costs rely on assumptions that could shift significantly. The company’s risk disclosures highlight hurdles including hanging onto customers, keeping sales teams productive, retaining key staff, and successfully deploying AI tools.
