Cloudflare cuts 1,100 jobs as AI makes roles obsolete despite record $639.8M revenue growth

Cloudflare says AI made 1,100 jobs obsolete, even as revenue hit a record high | TechCrunch

Cloudflare on Thursday joined a growing list of tech companies -- including Meta, Microsoft, and Google -- that have reported increased revenue alongside and massive layoffs, attributing both trends to their use of AI. Cloudflare, which provides internet security and performance services to millions of websites worldwide, announced it was cutting its workforce by approximately 20%, which equates to 1,100 people, it said as part of its first quarter 2026 earnings report on Thursday. "We've never done something like this in Cloudflare's history," co-founder and CEO Matthew Prince said Thursday on the quarterly conference call, marking the first mass layoff in the company's 16-year history. The company is cutting people from all teams and geographies except for salespeople who carry revenue quotas, CFO Thomas Seifert detailed on the call. The news of the workforce cuts came as the company reported quarterly revenues of $639.8 million, a 34% year-over-year increase and the highest single quarter in the company's history. However, this was coupled with a loss of $62.0 million compared with losing $53.2 million in the year-ago quarter. That widening loss, even as revenue surged, highlights a familiar paradox in Cloudflare's story: the company is growing fast but has yet to turn a consistent profit. But the loss was a smaller percentage of revenue, and the quarter was coupled with a lot of other positive indicators. For instance, Cloudflare reported that it had over $2.5 billion in "remaining performance obligations," a year-over-year growth of 34%. RPO is the favorite metric these days to indicate revenue under contract but not yet delivered. Hence, Prince insisted, the 20% cuts were not to reduce expenses but were strictly because of its use of AI. "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," Prince and Cloudflare co-founder and COO, Michelle Zatlyn, wrote in a related blog post about the layoffs. Prince acknowledged on the call that even though Cloudflare has been selling AI-powered products, it was at first cautious about adopting AI itself. "Internally, the tipping point was last November. At that point, across our teams, we began to see massive productivity gains, team members that were two, 10, even 100 times more productive than they had been before. It was like going from a manual to an electric screwdriver," he described. "Cloudflare's usage of AI has increased by more than 600% in the last three months alone," he added. Prince highlighted the internal use of AI coding, saying that virtually the entire R&D team is now using the company's own Workers platform -- a tool that lets developers build and run software directly on Cloudflare's global network -- including its vibe coding feature. He also noted that 100% of the code produced this way and deployed for use in Cloudflare's products is "now reviewed by autonomous AI agents." But it's not just developers who are using AI internally, he said. "Employees across the company from engineering to HR to finance to marketing run thousands of AI agent sessions each day to get their work done." As a result, these highly productive, AI-powered employees require fewer support staff, he argued. "A lot of the support people that provide support behind them, those roles aren't going to be the roles that, you know, drive companies going forward," Prince said. Interestingly, Prince says that Cloudflare "will continue to hire people, and we'll continue to invest in them because the people that are embracing these tools are just so much more productive than we'd ever seen before. I would guess that in 2027 we'll have more employees than we did at any point in 2026." Cloudflare said it ended its first quarter before layoffs with a headcount of about 5,500. The pattern Prince described -- deploying AI gains as justification for workforce reductions even during a period of strong revenue growth -- is fast becoming a familiar script across the tech industry. Whether it reflects true structural transformation or acts as convenient cover for cost discipline is a question that investors and employees will be wrestling with for some time to come. When asked by an analyst on the call why the company needed to cut so deeply after such a good quarter, Prince said, "Just because you're fit doesn't mean you can't get fitter."

Cloudflare to fire 1,100 staff whose jobs just aren't AI enough

Cloudflare has revealed it will farewell 1,100 staff, due to its current and future use of AI. In a blog post that oozes Orwellian "doublespeak," CEO Matthew Prince and President/COO Michelle Zatlyn used the headline "Building for the future" to share the email they sent to all employees. That mail opens: "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 post explains, "Cloudflare's usage of AI has increased by more than 600% in the last three months alone. Employees across the company from engineering to HR to finance to marketing run thousands of AI agent sessions each day to get their work done." All that AI means "we have to be intentional in how we architect our company for the agentic AI era in order to supercharge the value we deliver to our customers and to honor our mission to help build a better Internet for everyone, everywhere." Sackings are therefore needed, and are "about defining how a world-class, high-growth company operates and creates value in the agentic AI era." To rub salt into the wounds of sacked staff, the email went out not long before Cloudflare announced quarterly results that included 34 percent year-over-year revenue growth and guidance for 30 percent future growth. Prince opened the company's earnings call by stating "We had a very strong start to 2026." Analysts on the earnings call asked Prince to explain the layoffs and whether they will make Cloudflare stronger. "We have seen that there are roles at Cloudflare that are not the roles we need for the future," Prince responded. "Just because you are fit does not mean you cannot get fitter. Over the last six months especially, the productivity gains from the people directly talking to customers and directly creating code have been incredible, and a lot of the support roles behind them are not going to be the roles that drive companies going forward." The CEO said Cloudflare has "always lived a little bit in the future" and said the company is an early beneficiary of AI. And he said the company will keep hiring. "The people embracing these tools are so much more productive than we have ever seen before," he said. "I would guess that in 2027 we will have more employees than we did at any point in 2026, but the roles are changing dramatically, and you have to do something dramatic to make that shift." "This is not about downsizing or saving costs," Prince said. "This is about having the right people in the right roles to build the future." As is often the case these days, the email to staff warned them of a brief doomsday countdown. "Within the next hour, every member of our global team will receive an email from both of us clarifying how this change affects them," the message states. "For those departing today, we will send this update to both their personal and Cloudflare addresses to ensure they receive the information immediately." The Register imagines that went down well for workers in time zones where employees might avoid their work email outside 9-5, but sneak an early-morning-or-late-night-glance at their personal inboxes. Prince and Zatlyn told employees they hope "to do this only once" and then contradict themselves by saying they "don't want to do it again for the foreseeable future." "By taking decisive action now, we provide immediate clarity to those departing and protect the stability of the team that remains," they wrote, before adding their view that one deep cut because "dragging a reorganization out over multiple quarters creates prolonged emotional uncertainty for employees and stalls our ability to build." Firing 1,100 people is therefore "the right thing to do; it's the honest thing to do; and it reflects the values of the company we are continuing to build." ®

Cloudflare stock sinks 18% after earnings as company cuts 1,100 employees due to AI changes

A logo of Cloudflare sits outside the company's house on the opening day of the 55th annual meeting of the World Economic Forum in Davos, Switzerland, Jan. 20, 2025. Cloudflare reported first-quarter earnings Thursday that beat analysts' expectations, but shares fell 18% in extended trading as the company announced a 20% reduction in its workforce. Here's how the cloud company did versus LSEG estimates: In a blog post, the company announced that it is cutting over 1,100 employees, writing that agentic artificial intelligence has "fundamentally changed" the company's work. "This wasn't an easy decision, but it's the right decision," CEO Matthew Prince said on the earnings call, adding that there are roles at the company "that just aren't the roles that we need for the future." The company highlighted that its use of AI has increased over 600% in the last three months as it embraces "an agentic AI-first operating model."

Cloudflare cuts 1,100 jobs in agentic AI pivot despite beating Q1 2026 earnings as stock falls 24%

Cloudflare beat Wall Street's revenue and earnings estimates on Wednesday, announced it would cut 1,100 employees because artificial intelligence agents now do their work, and watched its stock fall 24 per cent on Thursday. The sequence is becoming the template for the technology industry in 2026: record revenue, record layoffs, record doubt about what comes next. First-quarter revenue was 639.8 million dollars, up 34 per cent year over year, beating the consensus estimate of 622 million. Adjusted earnings per share were 25 cents against expectations of 23 cents. Free cash flow was 84.1 million dollars. The company added a record number of customers paying more than five million dollars per year and saw a 73 per cent year-over-year increase in deals worth more than a million. By every traditional metric, the quarter was strong. Then the company said it was eliminating one in five jobs. CEO Matthew Prince and co-founder Michelle Zatlyn announced in a blog post that Cloudflare is transitioning to what they called an "agentic AI-first operating model." The company said its internal use of AI had increased more than 600 per cent in three months. Staff across engineering, human resources, finance, and marketing are running thousands of AI agent sessions per day. The framing was not that AI would assist employees. It was that AI has made certain categories of employee unnecessary. Prince was specific about which roles are disappearing. "A lot of the support roles" behind customer-facing and engineering staff "are not going to be the roles that drive companies going forward," he said. The language distinguished between people who build the product, people who sell the product, and people who support the people who build and sell the product. The third group is being replaced. GitHub froze new Copilot sign-ups last month because agentic AI workflows were generating costs that exceeded what users paid, a signal that the economics of AI tools are not yet stable. Cloudflare's bet is that the instability is temporary and that the productivity gains from running thousands of AI agent sessions per day will more than offset the cost of eliminating 1,100 human roles and paying 140 to 150 million dollars in restructuring charges. The financial results that accompanied the layoff announcement were not the results of a company in distress. Cloudflare now has 4,416 customers paying more than 100,000 dollars per year. It estimates that approximately 80 per cent of leading AI companies use its products. Its Workers developer platform, which runs code at the edge of Cloudflare's network across data centres in 330 cities, is positioned as infrastructure for the AI agent economy the company says is replacing the roles it just eliminated. Full-year revenue guidance was 2.805 to 2.813 billion dollars, narrowly beating the consensus estimate of 2.8 billion. Full-year adjusted earnings guidance was 1.19 to 1.20 dollars per share, ahead of the 1.14 expected. Prince called AI "the biggest tailwind we've ever seen in Cloudflare's history" and said the re-platforming of the internet around AI agents represents the company's largest growth opportunity. The stock market disagreed, or at least disagreed with the timing. Shares fell 24 per cent on Thursday, erasing billions in market capitalisation. The sell-off reflected not the earnings, which were strong, but the uncertainty about whether a company that just fired 20 per cent of its workforce can execute a business model transition while maintaining the growth trajectory investors had priced in. The 1,100 affected employees will receive base pay through the end of 2026, continued healthcare coverage through year end in the United States, and equity vesting extended to 15 August 2026. The restructuring is expected to be substantially complete by the end of the third quarter. Prince said, "Today is a hard day." The company's headcount will fall from approximately 5,156 to around 4,000. The restructuring charges of 140 to 150 million dollars break down to 105 to 110 million in cash severance and benefits and 35 to 40 million in non-cash equity-related expenses. The savings are projected at a pace that Cloudflare expects to reinvest into the AI infrastructure and hiring it says will drive the next phase of growth. Cloudflare framed the cuts as structural rather than cyclical. This is not a company reducing headcount because revenue is declining. Revenue grew 34 per cent. This is a company reducing headcount because it believes the work those employees performed is now performed by software. The distinction matters because it implies the jobs are not coming back. Meta and Microsoft between them cut 23,000 jobs while simultaneously increasing AI spending by tens of billions of dollars. Oracle eliminated up to 30,000 positions to fund AI data centres. Atlassian cut 1,600 in the name of AI adaptation. The tech sector has recorded more than 73,000 job cuts across 95 companies in the first four months of 2026, with projections that the full-year total will exceed the 124,000 eliminated in all of 2025. Cloudflare's announcement is notable because it was the most explicit in attributing the layoffs to AI replacing human work rather than AI requiring capital reallocation. Meta's Zuckerberg said the layoffs were about freeing capital for AI infrastructure. Cloudflare's Prince said the layoffs were about AI doing the work. The difference is between "we need your salary to buy GPUs" and "we no longer need you because the GPUs are doing your job." The human cost of the AI layoff wave is accumulating at a pace that the industry's growth metrics do not capture. Google is turning Chrome into an agentic AI workplace tool, embedding AI capabilities directly into the browser that millions of knowledge workers use daily. ServiceNow projects 30 billion dollars in revenue by 2030, with a third of that coming from AI. The companies building the AI tools and the companies deploying them are both growing. The people whose work the tools replicate are not. Cloudflare's position is coherent but uncomfortable. The company reported its strongest quarter, told investors the AI opportunity is transformational, cut a fifth of its workforce to pursue it, and then saw a quarter of its market value disappear because investors were not sure the transformation would work. The 600 per cent increase in AI usage over three months is either evidence that the transition is already delivering results or evidence that the company is moving faster than it can manage. Prince's statement that certain support roles "are not going to be the roles that drive companies going forward" is a prediction about the entire industry, not just Cloudflare. If he is right, the 1,100 people losing their jobs at Cloudflare are early casualties of a restructuring that will reach every technology company and eventually every company that employs people to do work that AI agents can approximate. If he is wrong, Cloudflare just fired 20 per cent of its workforce during its best quarter, and the 24 per cent stock drop is the market's way of saying so. The earnings beat. The layoffs are real. The stock is down. The AI agents are running. The question Cloudflare cannot yet answer, and that no company in its position has answered, is whether a 600 per cent increase in AI usage produces a proportional increase in the value of the work, or whether it produces a proportional increase in the confidence that the work is being done without anyone checking whether it is being done well.

Cloudflare cuts headcount by 20pc for leaner, AI-powered workforce

Cloudflare previously announced plans to hire more than 1,000 interns to 'ramp up' AI use. Cloudflare is cutting 20pc of its workforce after AI usage at the company grew 600pc in the last three months. The company said that it is cutting more than 1,100 employees, and expects restructuring costs to range up to $150m. Shares at Cloudflare fell by more than 16pc in after-hours trading despite the company announcing a stronger than expected quarter, with first quarter revenue growing 34pc year-on-year to nearly $640m. It expects second quarter revenue to hit between $664m to $665m. "We have to be intentional in how we architect our company for the agentic AI era", an email sent to employees read. "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." In its earnings release yesterday (7 May), Cloudflare co-founder and CEO Matthew Prince said that "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." Cloudflare has offices in a number of European countries, including the UK. SiliconRepublic.com has reached out to the company for details on country-specific layoffs. The IT service provider is the latest to join a growing list of well-performing tech companies laying off human workers in preference for AI. In recent months alone, Coinbase has cut 14pc of its workforce; Meta, about 8,000 jobs; Block, 4,000 jobs; Oracle, about 10,000; Amazon, 30,000; Atlassian, 10pc of its workforce; and Snap, about 16pc - with the trend largely attributed to changing technology at the workplace. Company leaders, who were previously apprehensive of linking layoffs to AI, have recently begun embracing the shift in work culture, with Coinbase's Brian Armstrong noting AI is "changing how we work" and Meta's Mark Zuckerberg commenting that projects that previously required larger teams, now only need "a single very talented person". Block's co-founder, head and chair Jack Dorsey, meanwhile, said, earlier this year, that a "majority of companies" will reach similar conclusions around smaller teams and make similar structural changes "within the next year". Cloudflare, however, is also tapping a younger, more AI-literate workforce, with its plan to hire 1,111 interns by the end of 2026. The interns are expected to "ramp up the creative and widespread application of AI with a fresh approach", the company wrote in a blog from September. The company - which claims to support around 20pc of the web - had a turbulent final quarter last year with two major outages affecting websites across the globe. Sites and platforms such as Zoom, LinkedIn, Shopify, Canva, Substack, Coinbase, as well as X and OpenAI, were reportedly affected in the disruptions. Don't miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic's digest of need-to-know sci-tech news.

Cloudflare beats on earnings, but 20% AI-driven layoffs and weak guidance send shares down

Cloudflare beats on earnings, but 20% AI-driven layoffs and weak guidance send shares down Shares in Cloudflare Inc. plunged more than 16% in late trading today after the content delivery network and security company beat fiscal 2026 first-quarter estimates but issued second-quarter revenue guidance that fell short of expectations. It also announced plans to cut about 20% of its workforce in a restructuring tied to what it called an "agentic AI-first operating model." For the quarter that ended on March 31, Cloudflare reported adjusted earnings per share of 25 cents, up from 16 cents in the same quarter of last year, on revenue of $639.8 million, up 34% year-over-year. Both figures came in ahead of the 23 cents per share and revenue of $622 million expected by analysts. Cloudflare reported a net loss of $22.9 million or seven cents a share, narrower than the $38.5 million loss it reported in the same quarter last year. Losses from operations came in at $62 million, or 9.7% of revenue, while adjusted income from operations was $73.1 million. Free cash flow rose to $84.1 million, up from $52.9 million a year earlier. Current remaining performance obligations grew 34% year-over-year, the company said, signaling continued demand from enterprise customers. The headline numbers were not what spooked investors. Cloudflare forecast second-quarter revenue of $664 million to $665 million, with the midpoint of $664.5 million below analyst expectations of about $666 million. The miss was modest in dollar terms but ran counter to expectations that the company would lift guidance after a first-quarter beat. Full-year revenue guidance of $2.81 billion to $2.81 billion came in slightly above analyst expectations of about $2.79 billion. Alongside the results, Cloudflare said it plans to reduce its workforce by approximately 1,100 people, equating to about 20% of its 5,156 full-time staff it had at the end of 2025. The company expects to incur charges of $140 million to $150 million in connection with the plan, including $105 million to $110 million in cash costs for severance, notice period and benefits and $35 million to $40 million in non-cash share-based award expense. Most of the charges are expected to hit in the second quarter, with the plan substantially complete by the end of the third quarter. Cloudflare framed the cuts as a re-architecture of the company around artificial intelligence rather than a cost-cutting move. "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," co-founder and Chief Executive Matthew Prince said in the company's earnings release. The company said internal AI usage has grown more than 600% in three months, with employees across engineering, finance, marketing and human resources running thousands of agent sessions per day. The pitch did little to reassure investors, who appeared to have seen the combination of light second-quarter guidance and a 20% workforce reduction as a sign of slowing near-term growth rather than a productivity dividend.

Cloudflare Just Cut 20% of Its Workforce. The Reason Why Is a Warning for the 'Agentic AI' Era

Agentic AI is soon to win Employee of the Month. After reporting positive first-quarter earnings, Cloudflare announced that it will be cutting 20% of its workforce, citing artificial intelligence as one of the key reasons. The cloud network and cybersecurity company sent out an email to its employees on Thursday to announce the new headcount reduction. The company's Chief Executive Matthew Prince detailed to employees that demand for AI has skyrocketed. According to the email, Cloudflare's usage of AI has increased by more than 600% in the last three months alone. "We want to be clear that this decision is not a reflection of the individual work or talent of those leaving us. Instead, we are reimagining every internal process, team, and role across the company," said the company email. "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." New Beginnings During its recent earnings call, Cloudflare confirmed its first-quarter revenue had increased 34% year-over-year. After announcing the new job cuts, Cloudflare's stock dropped over 16% on the market. The company is looking to continue to grow with revenue for the second quarter forecast to fall between $664 million and $665 million.

Cloudflare Says It Plans to Cut 20% of Staff as AI Reshapes Work. The Stock Is Plunging.

Get personalized, AI-powered answers built on 27+ years of trusted expertise. Cloudflare's stock could be set to lose one-quarter of its value in a single session after the web security company announced a big round of layoffs, citing AI. Shares of Cloudflare (NET) were down over 24% in recent trading, a day after the firm said it plans to cut 1,100 jobs, or about 20% of its workforce, citing AI-driven changes in how it operates. The news overshadowed first-quarter results that topped analysts' expectations. Cloudflare reported adjusted earnings of 25 cents per share on revenue that jumped 34% year-over-year to $639.8 million in the first quarter. Both figures were above the analyst consensus compiled by Visible Alpha. The company also lifted its full-year revenue and profit forecasts, though its second-quarter forecast of $664 million to $665 million in revenue and adjusted EPS of 27 cents was just in line with estimates. Cloudflare said the layoffs are "not a cost-cutting exercise," in a release. Its internal use of AI has grown more than 600% in the last three months, and the company looks to be "intentional in how we architect our company for the agentic AI era," it said. Still, William Blair analysts said the move could raise worries that Cloudflare "may be experiencing top-line deceleration, hence the decision to take steps to drive margin improvement." However, the analysts suggested they see the restructuring making Cloudflare more efficient. With Friday's tumble, Cloudflare shares were dragged back into negative territory for the year. They closed at a record high near $257 ahead of last night's earnings.

A Silicon Valley CEO just sent the most savage staff memo ever, and the fallout is enormous

Cloudflare employees were hit with shocking news this week after the tech giant confirmed it would cut more than 1,100 jobs worldwide. The move came alongside a dramatic internal memo from the company's founders, who said artificial intelligence is rapidly reshaping how work is done inside the business. As the layoffs spread across departments, the memo quickly sparked conversation across Silicon Valley about the future of work in the AI era. ALSO READ: The JPMorgan harassment suit against Lorna Hajdini that went viral has one massive problem -- it may be fake Cloudflare has announced one of the biggest tech layoffs of the year, with the San Francisco-based company eliminating roughly one-fifth of its workforce as it pivots toward an AI-driven future. According to the San Francisco Chronicle, the internet security and cloud networking company revealed the cuts Thursday while also reporting first-quarter revenue of $639.8 million -- a 34% jump compared to the previous year. The layoffs affect more than 1,100 employees globally. At the end of 2025, Cloudflare employed 5,156 full-time workers, as per a report by the New York Post. ALSO READ: The ex-JPMorgan banker at the center of harassment suit against Lorna Hajdini just quietly left his new job too In an internal memo obtained by Business Insider, co-founders Matthew Prince and Michelle Zatlyn told staff the company had fundamentally changed because of its growing dependence on artificial intelligence. "The way we work at Cloudflare has fundamentally changed," the founders wrote. They explained that the company was not only creating AI tools for customers but heavily using the technology internally across multiple departments, including engineering, finance, HR and marketing. "We don't just build and sell AI tools and platforms. We are our own most demanding customer," the memo stated, as per a report by the New York Post. The founders also revealed that workers inside the company are now conducting "thousands of AI agent sessions each day," with internal AI usage reportedly jumping more than 600% in only three months. "That means we have to be intentional in how we architect our company for the agentic AI era," they added. Cloudflare insisted the layoffs were not about poor employee performance or simple cost-cutting. Instead, leadership described the move as a sweeping redesign of the company itself. The company said it is attempting to "reimagine every internal process, team, and role across the company" as artificial intelligence becomes central to operations. Executives also stressed that the layoffs would happen all at once instead of through repeated rounds of cuts. "We've asked the team to do this only once," the founders wrote, explaining that they wanted to avoid prolonged uncertainty among employees, as per a report by the New York Post. Staff members were reportedly informed directly through email notifications instead of through conversations with managers. ALSO READ: 'Never forget, I own you': Explicit remarks and racist slurs -- JPMorgan Exec Lorna Hajdini faces fresh allegations in refiled harassment lawsuit Despite the scale of the cuts, Cloudflare said departing employees would receive unusually strong severance packages. Affected workers are expected to continue receiving full base pay through the end of 2026. The company will also continue US healthcare coverage through the end of the year. Some employees will additionally receive equity vesting through Aug. 15, including workers who had not yet reached standard vesting milestones. Cloudflare expects the restructuring to cost between $140 million and $150 million, largely tied to severance payments, benefits and related expenses. Most of those costs are expected to appear during the second quarter. The company said the restructuring process should be largely complete by the end of the third quarter as it pushes toward becoming a faster and more aggressive AI-first company. For many across Silicon Valley, the memo reflected a growing reality inside the tech industry that how companies are rapidly restructuring around artificial intelligence, even during periods of strong financial growth. ALSO READ: Quote of the Day by Abraham Lincoln: 'When you have got an elephant by the hind leg...' -- Inspiring quotes by the 16th president of the United States who played a major role in the abolition of slavery How many employees is Cloudflare laying off? The company is cutting more than 1,100 jobs globally, about 20% of its workforce. Did Cloudflare say the layoffs were performance-related? No. The company said the restructuring was tied to its AI-focused transformation, not employee performance.

Cloudflare Stock Dives On Q1 Earnings, Company Says AI Is 'Biggest Tailwind' In History - Cloudflare (NYS

Cloudflare stock is feeling bearish pressure. Why is NET stock falling? Cloudflare Tops Q1 Estimates Q1 Revenue: $639.76 million, versus estimates of $621.87 million Q1 Adjusted EPS: 25 cents, versus estimates of 23 cents Total revenue was up 34% on a year-over-year basis. Net cash flow from operations was $158.30 million, and free cash flow came in at $84.10 million in the quarter. Cloudflare ended the period with approximately $4.16 billion in cash, cash equivalents and available-for-sale securities. "We had a very strong start to 2026. 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," said Matthew Prince, co-founder and CEO of Cloudflare. NET Shares Tumble After Q2 Guidance Cloudflare expects second-quarter revenue of $664 million to $665 million versus estimates of $665.34 million. The company anticipates second-quarter adjusted earnings of 27 cents per share, which matches Wall Street estimates of 27 cents per share. Cloudflare raised its full-year 2026 revenue guidance from a range of $2.785 billion to $2.795 billion to a new range of $2.805 billion to $2.813 billion, versus estimates of approximately $2.80 billion. The company raised its full-year earnings outlook from a range of $1.11 to $1.12 per share to a new range of $1.19 to $1.20 per share, versus estimates of $1.14 per share. NET Price Action: Cloudflare shares were down 13.46% in after-hours, trading at $222.20 at the time of publication on Thursday, according to Benzinga Pro. Cloudflare investors appear to be responding negatively to the company's second-quarter guidance. Image: Shutterstock.com Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Cloudflare shares plunge 18% after earnings report as AI-driven layoffs rattle investors

Cloudflare's stock dropped 18% after reporting strong Q1 2026 earnings, as the company announced plans to cut over 1,100 jobs, about 20% of its workforce. This strategic pivot to an "agentic AI-first operating model" overshadowed the earnings beat, raising investor concerns about execution risks despite an optimistic long-term AI outlook. Shares of Cloudflare, Inc. tumbled sharply, dropping about 18% in after-hours trading on May 7, 2026, after the cloud infrastructure and cybersecurity company reported quarterly earnings and unveiled a sweeping workforce reduction linked to its strategic shift toward artificial intelligence (AI), reported CNBC. Cloudflare reported strong first-quarter 2026 results that exceeded analyst expectations. The company posted revenue of $640 million, well above the $622 million consensus estimate, and generated 25 cents in earnings per share (EPS) versus an expected 23 cents. The performance represented 34% year-over-year revenue growth, underscoring robust demand for Cloudflare's cloud networking and security services. Despite this, the company also reported a net loss of $22.93 million, or 7 cents per share, though this was an improvement from a $38.45 million loss in the year-ago quarter. Cloudflare's announcement that it will cut over 1,100 jobs globally, roughly 20 % of its workforce, emerged as one of the reasons for the stock's sell-off, eclipsing the earnings beat. The company said the workforce reduction is part of a pivot to an "agentic AI-first operating model," a reimagining of how work gets done using AI tools that have become increasingly embedded in internal processes. CEO Matthew Prince emphasized in commentary that the decision, though difficult, was necessary to align the organization with the evolving technological landscape. He highlighted that Cloudflare's use of AI had increased by more than 600% in the past three months, with thousands of AI agent workflows now part of everyday operations. While management framed the cuts as a strategic reorganization rather than a traditional cost-cutting measure, investors clearly saw the implications as negative, especially in light of Cloudflare's cautious second-quarter revenue guidance of $664 million to $665 million, which was slightly below broad market expectations. Cloudflare's extended session stock plunge, roughly 18%, was among the most pronounced moves in the technology sector on May 7. The decline reflected concern not just over the workforce reduction but also investor unease about the balance between investing in future growth areas like AI and short-term execution risks tied to such a rapid structural shift. The layoffs come amid a broader industry trend in 2026, where major technology firms, including Meta, Amazon, Coinbase, and others, have announced workforce reductions, many citing AI and automation as contributing factors reshaping organizational priorities. Across the sector, over 93,000 jobs have been cut so far this year, illustrating the profound impact of AI integration on corporate staffing decisions. Despite the market's initial negative reaction, Cloudflare maintained an optimistic long-term outlook. For the full year 2026, management reaffirmed guidance for revenue of $2.805 billion to $2.813 billion and earnings per share of $1.19 to $1.20, both marginally above expectations. The company believes that embracing AI more deeply within its operations will enable it to deliver greater customer value and innovation.

Cloudflare employee gets laid off and reacts with surprising honesty: 'Built something meaningful, helped protect people...'

As the AI boom reshapes the tech industry, Cloudflare laid off over 1,100 employees, citing a strategic shift towards the "agentic AI era." Despite strong financial results, the company is restructuring teams and workflows to integrate AI, leading to significant operational changes and employee uncertainty about future roles and routines. The AI boom is creating excitement across the tech industry, but behind the headlines about innovation and automation is a growing wave of uncertainty for employees. Companies are rapidly restructuring teams, redefining roles, and preparing for what many executives describe as the next phase of work shaped by artificial intelligence. Amid these changes, one layoff post from a cybersecurity employee has struck an emotional chord online, not because of anger or outrage, but because of the quiet and deeply human detail at the centre of it: concern for his puppies losing their daily routine. Cloudflare employee Cayetano Antolino recently shared on LinkedIn that he had been impacted by the company's latest round of layoffs. In his post, Antolino reflected warmly on his experience at the company and said the hardest part about leaving was saying goodbye to the people he worked with. He described his teammates as intelligent, supportive, and deeply driven, adding that he was proud of what they had built together during his time there. According to him, the work felt meaningful because it involved helping protect people at scale while also allowing the team to grow professionally along the way. Rather than expressing bitterness, his post carried a surprisingly calm and reflective tone. He shared that the part upsetting him most about the transition was not the loss of the role itself, but the possibility that his next job may not be remote. That change, he explained, would affect his puppies, who had become used to midday walks, random couch breaks, and quietly appearing in the background during meetings. He added that he planned to take some time to reset, spend more time walking his dogs, and think about what comes next in his career journey this year. The post quickly gained attention online because it captured a softer side of layoffs that is often overlooked. Beyond salaries, titles, and projects, remote jobs also quietly shape everyday routines, relationships, and personal lives in ways many people only realise after losing them. He worked as a full-time Physical Security Specialist, Protective Intelligence and GSOC Lead at Cloudflare, in San Francisco Bay Area. The layoffs come as Cloudflare cuts more than 1,100 jobs while preparing for what company leadership has described as the "agentic AI era." Employees were informed about the workforce reduction shortly after the company reported strong first-quarter financial results. According to company leadership, the layoffs are not tied to employee performance or short-term financial pressure. In a message to staff, CEO Matthew Prince and co-founder Michelle Zatlyn explained that the company is redesigning teams and workflows around increasing AI integration. The company also stated that its internal use of AI tools has increased more than sixfold over the past three months, leading to major operational changes across departments. Financially, the company remains in a strong position. In the first quarter, Cloudflare reported revenue of $639.8 million, surpassing analysts' estimates of $621.9 million. Adjusted earnings also exceeded expectations, coming in at 25 cents per share compared to projected figures of 23 cents per share. The company's shares have risen more than 30 per cent so far this year. That contrast, strong financial performance alongside large-scale layoffs, has become increasingly common across the tech industry as companies race to restructure around artificial intelligence. For many employees, the fear is no longer just about company losses or downturns, but about how quickly roles themselves may change in the AI transition.

Cloudflare (NET) Stock Drops as AI Restructuring Plan Cuts More Than 1,100 Jobs

Cloudflare said its own use of AI has increased more than sixfold over the past three months. The company said that growth has changed how teams work across the business. The company is moving toward an 'agentic AI-first operating model.' The model places AI agents and automation tools at the center of many internal functions. In addition, Cloudflare's announcement came as investors and economists continue to track job losses linked to AI-driven automation. The concern is strongest in sectors where software tools can handle routine work. Cloudflare is not the only company connecting workforce reductions to AI adoption. Coinbase said earlier this week that it would cut 14% of its workforce, or about 700 jobs, because of market conditions and . Block also said in February that it would cut more than 4,000 jobs, nearly half of its workforce. The company linked the move to a broader overhaul aimed at embedding AI across its operations. Furthermore, Goldman Sachs economists said earlier this year that AI was responsible for 5,000 to 10,000 monthly net job losses in 2025 in the most exposed U.S. industries. Cloudflare's latest update places the company among major technology firms changing workforce plans as AI becomes part of daily operations. The next financial updates will show how the restructuring costs, AI adoption, and revenue growth develop after the job cuts.

Bloodbath at Silicon Valley giant as CEO's savage memo to staff emerges

Cloudflare is axing more than 1,100 employees in a worldwide bloodbath as the San Francisco tech giant dramatically restructures. Founders told staff that the company's internal use of artificial intelligence has exploded more than 600% in just three months. The internet security and cloud networking firm revealed the massive cuts Thursday alongside first-quarter revenue of $639.8 million, a 34% increase from a year earlier, reported The San Francisco Chronicle. "The way we work at Cloudflare has fundamentally changed," co-founders Matthew Prince and Michelle Zatlyn told employees in a savage internal memo. "We don't just build and sell AI tools and platforms. We are our own most demanding customer," they wrote, adding that workers across engineering, HR, finance, and marketing now run "thousands of AI agent sessions each day." "That means we have to be intentional in how we architect our company for the agentic AI era," the memo, obtained by Business Insider, stated. Cloudflare insisted the layoffs were "not a cost-cutting exercise" or a reflection of employee performance, but rather part of a sweeping effort to "reimagine every internal process, team, and role across the company." The company, founded in 2009, had 5,156 full-time employees at the end of 2025, meaning the cuts amount to roughly one-fifth of its global workforce. It's unclear how many Bay Area employees would be affected. Cloudflare's founders said all employees would be notified directly by email within an hour, rather than through managers, calling the move a one-time, decisive reset designed to avoid "smaller, repeated cuts" that could drag out uncertainty. "We've asked the team to do this only once." Departing workers are being offered unusually generous severance packages, including full base pay through the end of 2026, continued US health care coverage through year's end, and equity vesting through Aug. 15 -- even for some employees who had not yet reached standard vesting cliffs. The company said it expects to take on $140 million to $150 million in restructuring-related charges, mostly tied to severance, benefits, and related costs, with most expenses landing in the second quarter. Cloudflare said the restructuring should be substantially complete by the end of the third quarter as it pushes to reshape itself into a faster, AI-first company.

Cloudflare Lays Off 1,100 Employees Amid Major AI Restructuring

Cloudflare has laid off over 1,100 employees globally as the cybersecurity company restructures operations around AI agents and automation, calling the move a strategic shift toward the emerging "agentic AI era" rather than a cost-cutting exercise. Cybersecurity giant Cloudflare has laid off more than 1,100 employees globally. The latest job cuts mark nearly 20% of its workforce, as the company restructures around the growing adoption of artificial intelligence tools and AI agents. The firings were internally disclosed on Thursday, following Cloudflare's first-quarter earnings, which totaled $639.8 million. According to a memo from Cloudflare's founders, Matthew Prince and Michelle Zatlyn, the objective of this strategy is to prepare the firm for the 'agentic AI era.'