Cloudflare to cut 20% workforce as AI use surges, says teams are being rebuilt for ‘agentic AI era’
CEO Matthew Prince and co-founder Michelle Zatlyn said the company’s use of AI tools has increased more than sixfold over the past three months.Cloudflare to cut 20% workforce as AI use surges; teams are being rebuilt(AP)Cloudflare on Thursday said it will cut about 20% of its global workforce, or more than 1,100 employees, as the company restructures operations to increase the use of artificial intelligence tools across the business.The company said the layoffs are tied to what it described as an “agentic AI-first operating model,” and not to employee performance or short-term cost-cutting efforts. The announcement was made in a message to employees from co-founders and chief executives Matthew Prince and Michelle Zatlyn, according to Reuters.Cloudflare had 5,156 full-time employees at the end of 2025, according to company filings. The company expects to incur restructuring charges of about $140 million to $150 million, with most of the costs expected in the second quarter of 2026.‘The way we work has fundamentally changed’In a blog post published by the company, Prince and Zatlyn said Cloudflare’s internal use of AI tools had increased by more than sixfold over the past three months. “The way we work at Cloudflare has fundamentally changed,” the executives wrote, adding that teams across the company were already using “thousands of AI agent sessions each day.”The executives said the company was “reimagining every team and function” for what they called the “agentic AI era,” in which AI systems are increasingly integrated into software development, operations, finance, support and internal workflows. The company added that the layoffs reflected a redesign of processes and roles rather than concerns around productivity or near-term financial pressure.Cloudflare said the restructuring was aimed at adapting the organisation to faster AI-assisted execution and product development. The company said AI adoption inside the business had accelerated rapidly in recent months, prompting significant operational changes across departments, according to The Wall Street Journal.The layoffs come even as Cloudflare reported quarterly results that beat Wall Street estimates. For the first quarter, revenue rose 34% year-on-year to $639.8 million, while adjusted earnings came in at 25 cents per share.Despite the earnings beat, Cloudflare shares fell in extended trading after the company issued second-quarter revenue guidance slightly below market expectations. The company forecast second-quarter revenue between $664 million and $665 million.Prince described AI as “a fundamental re-platforming of the Internet” and said the technology shift represented one of the largest opportunities in the company’s history in their blog post.Cloudflare joins a growing number of technology companies linking workforce reductions to AI adoption and automation, as businesses increasingly restructure teams around AI-driven operations and software tools.Get Latest real-time updatesStay updated with the latest Trending,
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