Cloudflare to cut about 20% workforce as AI adoption reshapes operations

Cloudflare, the San Francisco-based internet infrastructure and cybersecurity company, will cut about 20% of its workforce—over 1,100 jobs—amid a restructuring to prioritize artificial intelligence adoption. The company, which had 5,156 employees at the end of 2025, expects second-quarter revenue of $664 million to $665 million, just below Wall Street’s estimate of $665.3 million, with adjusted earnings projected at 27 cents per share. CEO Matthew Prince and co-founder Michelle Zatlyn stated in an internal message that the company is reimagining every team to operate in an 'agentic AI era.' The job cuts reflect a redesign of internal processes, not performance issues or short-term cost pressures. Cloudflare reported its own AI usage has surged more than sixfold in the past three months, prompting major operational shifts. Despite stronger-than-expected first-quarter results—revenue of $639.8 million (beating estimates of $621.9 million) and adjusted profit of 25 cents per share (above expectations of 23 cents)—Cloudflare’s shares dropped roughly 19% in extended trading. The company also forecasted restructuring charges between $140 million and $150 million for the second quarter. The move aligns with broader concerns about AI-driven automation disrupting industries, following similar workforce reductions at firms like Block, which cut over 4,000 jobs in February. Goldman Sachs economists earlier this year attributed 5,000 to 10,000 monthly net job losses in 2025 to AI exposure in vulnerable U.S. sectors. Cloudflare’s decision underscores the rapid integration of AI into corporate operations, even as the company maintains its financial momentum. The restructuring is framed as a strategic pivot rather than a response to financial distress, with shares still up 30.3% year-to-date.