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Cloudflare lays off 20 per cent of staff in AI overhaul
The cybersecurity giant is the latest tech firm to gut its headcount in the name of artificial intelligence and the markets are not convinced
SAN FRANCISCO: Cloudflare has announced it will cut roughly 20 per cent of its global workforce, more than 1,100 jobs, as it tears up its operating model and rebuilds it around artificial intelligence. The internet infrastructure and cybersecurity company, which employed 5,156 full-time staff at the end of 2025, said it expects to book charges of between $140 million and $150 million in the second quarter to cover the cost of the cull.
The announcement came bundled with a second-quarter revenue forecast of $664 million to $665 million, a whisker below Wall Street’s consensus estimate of $665.3 million, with adjusted earnings projected at 27 cents per share, in line with expectations. Investors were unimpressed: shares fell roughly 19 per cent in extended trading, even as the company posted a stronger than expected first quarter with revenue of $639.8 million against an estimate of $621.9 million, and adjusted profit of 25 cents per share, above the 23 cents the market had pencilled in.
Chief executive Matthew Prince and co-founder Michelle Zatlyn told employees in an internal message that the company was reimagining every team and every function to operate in what they called an “agentic AI-first” era. The layoffs, they insisted, were not a response to poor performance or short-term cost pressures, but a deliberate redesign of internal processes and roles. The company added that its own internal use of AI had surged more than sixfold in just three months, a figure that, depending on one’s outlook, is either a vindication of the strategy or a blunt explanation for why so many desks are being cleared.
Cloudflare is far from alone. Payments firm Block said in February it would eliminate more than 4,000 jobs, nearly half its headcount, as part of a similar AI-driven overhaul. Goldman Sachs economists have estimated that AI was responsible for between 5,000 and 10,000 net job losses per month in 2025 across the most exposed American industries.
Despite the bloodletting, Cloudflare’s shares have still risen 30.3 per cent so far this year, a reminder that markets have, until now, rewarded the AI pivot handsomely. Whether gutting your workforce counts as a strategy or a confession remains, for the moment, an open question. The 1,100 people packing their bags already know the answer.
