Cloudflare fired around 1,100 employees worldwide on Thursday from its headquarters in San Francisco, telling staff that the layoffs, which affect roughly 20% of its global workforce, are part of a plan to rebuild the company for what executives called the 'agentic AI era' rather than a short‑term financial squeeze.

Cloudflare Fireshave become a familiar phrase in the wider tech industry over the past two years, as major firms slash jobs while simultaneously ploughing money into artificial intelligence. Cloudflare, a cybersecurity and internet infrastructure provider, had 5,156 full-time staff at the end of 2025 and has been pitching itself as a key player in the AI-powered future of the web. The company now says AI has transformed how its own teams operate so quickly that its old structure no longer makes sense.

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The cuts are brutal in scale. More than one in five employees will go, with Cloudflare estimating it will incur between $140 million and $150 million in related charges in its second quarter. Yet the firm is not in obvious distress.

Cloudflare forecast second‑quarter revenue of between $664 million and $665 million, only just below Wall Street's $665.3 million consensus. Adjusted earnings are expected to hit 27 cents per share, in line with analyst estimates. For the first quarter, it reported revenue of $639.8 million, beating expectations of $621.9 million, and adjusted profit of 25 cents per share, ahead of the predicted 23 cents.

Investors initially flinched. Shares fell almost 19% in extended trading after the announcement, even though the stock remains up more than 30% this year. Markets plainly heard the same message staff did, this is not a tweak, it is a reset.

JUST IN: Cloudflare lays off 1,100+ employees through email as it restructures for the “agentic AI era.”

In an internal letter later shared publicly, chief executive Matthew Prince and co‑founder Michelle Zatlyn told employees, 'We've made the decision to reduce Cloudflare's workforce by more than 1,100 employees globally.' They framed the move squarely as a response to the way artificial intelligence has already rewired the company's day‑to‑day work.

'The way we work at Cloudflare has fundamentally changed,' the note said. '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.'

According to the founders, staff across engineering, human resources, finance and marketing now run 'thousands of AI agent sessions each day' as part of routine workflows. That rise in internal automation, they argued, means Cloudflare needs fewer people and a different mix of skills if it is to stay competitive.

Source: International Business Times UK