Cloudflare is joining the growing list of tech companies announcing layoffs, with the cybersecurity and internet infrastructure firm saying it will cut around 20% of its global workforce as it reshapes operations around artificial intelligence.
The San Francisco-based company said on Thursday that more than 1,100 employees worldwide will be affected. Cloudflare had 5,156 full-time employees at the end of 2025. The company expects to take charges between $140 million and $150 million related to the layoffs during the second quarter.
At the same time, Cloudflare projected second-quarter revenue between $664 million and $665 million, slightly below Wall Street expectations of $665.3 million. Adjusted earnings are expected to come in at 27 cents per share, matching analyst estimates.
Despite posting stronger-than-expected first-quarter results, the company’s shares dropped nearly 19% in extended trading. Cloudflare reported first-quarter revenue of $639.8 million, beating analyst expectations of $621.9 million. Adjusted profit came in at 25 cents per share, above the expected 23 cents. Even with the stock drop, Cloudflare shares are still up more than 30% this year.
The company said the layoffs are tied to a broader restructuring effort as AI rapidly changes workplace operations. Cloudflare executives stressed that the cuts were not based on employee performance or short-term financial pressure.
READ: Here are all the tech layoffs that took place so far in 2026 (February 6, 2026)
Cloudflare CEO Matthew Prince and co-founder Michelle Zatlyn told employees the company is rebuilding itself for what they called an “agentic AI era.”
In a post on X, Prince wrote: “An update regarding the future at @Cloudflare. I’ve shared my full message to the team and details on the support we’re providing those departing here:” Responding to that post, Mikael Pawlo commented, “Tough times… you might want to consider an opt-in simple web page with linkedin-profile-links to the laid off staff. Cloudflare is as good as it gets, and I am sure such action would make it easier for future employers to discover your stellar ex-employees.” To which, Prince replied back, “That’s the plan.”
In the internal message shared with staff, the founders said, “We are writing to let you know directly that we’ve made the decision to reduce Cloudflare’s workforce by more than 1,100 employees globally.”
The letter explained how deeply AI tools are now embedded inside the company’s daily operations.
“The way we work at Cloudflare has fundamentally changed. We don’t just build and sell AI tools and platforms. We are our own most demanding customer. Cloudflare’s usage of AI has increased by more than 600% in the last three months alone,” the message stated.
The founders said employees across engineering, HR, finance, and marketing are now running “thousands of AI agent sessions each day” as part of their workflow. Because of that, the company said it needed to redesign its structure to stay competitive in what it described as the “agentic AI era.”
The executives also tried to reassure employees losing their jobs, saying the decision was “not a reflection of the individual work or talent” of affected workers.
“Today’s actions are not a cost-cutting exercise or an assessment of individuals’ performance; they are about Cloudflare defining how a world-class, high-growth company operates and creates value in the agentic AI era,” the founders wrote.
Cloudflare said all employees would receive direct emails explaining whether they were impacted, instead of learning the news gradually through managers. The company also said departing workers would receive what it called industry-leading severance support.
READ: Cognizant eyes up to 15,000 layoffs, India set to bear the brunt (May 6, 2026)
According to the letter, affected employees will continue receiving full base pay through the end of 2026. In the United States, healthcare coverage will continue through the end of the year. The company also said it would extend equity vesting through August 15 and waive one-year vesting cliffs for some workers.
“We’ve asked the team to do this only once,” the founders wrote. “We don’t want to do it again for the foreseeable future.”
The letter framed the layoffs as a long-term strategic reset rather than a short-term response to economic pressure.
“Cloudflare started as a digitally native company built in the cloud,” the message stated. “As we’ve now become the leader, we cannot rest on the workflows and organizational structures that worked yesterday.”
The founders closed the message by acknowledging the emotional impact of the decision while defending it as necessary for the company’s future.
“It’s not an easy day, but it’s the right decision,” they wrote. “Our mission to help build a better Internet is more important now than ever, and there’s a lot of work left to be done.”