Cloudflare has announced a sweeping global workforce reduction, cutting more than 1,100 jobs as the San Francisco-based technology company accelerates its transformation for the artificial intelligence era. The internet security and cloud networking provider disclosed the layoffs on Thursday, alongside reporting first-quarter revenue of $639.8 million, a substantial 34 percent increase compared to the same period last year.
Internal Memo Highlights AI-Driven Changes
In an internal memo obtained by Business Insider, co-founders Matthew Prince and Michelle Zatlyn informed employees that artificial intelligence has fundamentally altered the company's operations. 'The way we work at Cloudflare has fundamentally changed,' they wrote, noting that internal use of AI had surged by over 600 percent in just three months. Employees across engineering, HR, finance, and marketing are increasingly relying on automated systems, with the company running 'thousands of AI agent sessions each day.' The memo stressed the need to intentionally architect the company for the 'agentic AI era.'
Not a Cost-Cutting Exercise
Cloudflare insisted that the job cuts are not a cost-cutting measure and are unrelated to employee performance. Instead, executives described the move as part of a dramatic overhaul to 'reimagine every internal process, team, and role across the company.' The company employed 5,156 full-time workers at the end of 2025, meaning nearly one in five staff members will lose their jobs. It remains unclear how many positions in the Bay Area will be affected.
Severance and Restructuring Costs
In an unusual step, employees will learn their fate via email within an hour, rather than through their managers. Executives described the cuts as a one-off purge intended to avoid 'smaller, repeated cuts' that could prolong uncertainty. Those leaving the company are being offered generous severance packages, including full base pay through the end of 2026, continued US healthcare coverage through year-end, and equity vesting through August 15, even for some staff who had not yet reached normal vesting milestones. Cloudflare expects restructuring costs between $140 million and $150 million, primarily related to severance and benefits, with the bulk incurred in the second quarter. The company aims to complete the restructuring by the end of the third quarter as it transforms into a leaner, AI-first powerhouse.
Broader Tech Industry Trend
Cloudflare's layoffs follow similar moves by other tech firms. Earlier this week, Coinbase co-founder Brian Armstrong announced a 14 percent workforce reduction, affecting about 700 employees, citing AI and the need to change company culture. Oracle also began cutting staff in April, with insiders describing a 'significant reduction in force.' Workers were informed via early morning emails and quickly lost system access. Oracle has not commented on the scale of the layoffs, though one employee estimated up to 10,000 roles could be affected.
