Tech giant Cloudflare is planning to cut more than 1,100 employees worldwide, representing about a fifth of its workforce, despite reporting a significant surge in revenue.
Job Cuts Amid Revenue Growth
The web infrastructure provider announced the layoffs on the same day it reported first-quarter revenue of $639.8 million, a 34 percent increase year-on-year, according to a company press release. Co-founders Matthew Prince and Michelle Zatlyn confirmed the job losses in an email to employees, shared on the company's blog under the title 'Building for the future.'
Cloudflare reported having 5,156 full-time employees at the end of 2025 in its annual filing with the Securities and Exchange Commission. The cuts therefore affect roughly one in five employees.
AI Driving Fundamental Change
In the email, the co-founders noted that the company's internal use of artificial intelligence had surged by more than 600 percent over the past three months. 'The way we work at Cloudflare has fundamentally changed,' the email read. It stated that employees in human resources, marketing, finance, and engineering all run 'thousands' of AI agent sessions per day. 'That means we have to be intentional in how we architect our company for the agentic AI era,' the email added.
Prince wrote in the earnings release: 'AI is driving a fundamental re-platforming of the Internet and a paradigm shift in how software is created and consumed; it's shaping up to be the biggest tailwind we've ever seen in Cloudflare's history.'
Severance and Costs
Those departing the company will receive a package equivalent to their full base pay through the end of 2026. In the United States, employees will continue to receive healthcare support through the end of the year. The email stated: 'We've asked the team to do this only once, as hard as that may be today. We don't want to do it again for the foreseeable future.'
Cloudflare estimates it will incur charges between $140 million and $150 million in connection with the workforce reduction. Of that, $105 million to $110 million relates to notice periods, severance payments, and employee benefits, while the remaining $35 million to $40 million is related to the vesting of share-based awards.
Company Background
Cloudflare was founded in 2009 by Prince, Zatlyn, and Lee Holloway. According to its website, the firm serves data from 335 cities in over 125 countries worldwide. The company's co-founders publicly confirmed the move on the company blog, stating: 'It's not an easy day, but it's the right decision.'
