Cloudflare Cuts 1,100 Jobs as It Reorganizes for Agentic AI Growth

Cloudflare announced layoffs of 1,100 staff on Thursday as it reorganizes for the agentic AI era. The memo was sent to staff on Thursday, hours after the company reported first-quarter earnings that exceeded Wall Street expectations. Cloudflare shares dropped more than 14% in after-hours trading following the earnings report.

Cloudflare decided to reduce its workforce by more than 1,100 employees globally. The company's usage of AI has increased by more than 600% in the last three months. Employees across Cloudflare from engineering to HR to finance to marketing run thousands of AI agent sessions each day.

"The way we work at Cloudflare has changed," the memo stated. "We don't just build and sell AI tools and platforms. " Executives said the layoffs are not a reflection of the individual work or talent of those leaving.

They added that the layoffs are not a cost-cutting exercise or an assessment of individuals' performance. Cloudflare executives will send emails directly to every employee clarifying how the change affects them. Rather than trickling out notices through managers, the company chose this direct approach.

Matthew has personally sent out every offer letter Cloudflare has extended, and executives said it did not feel right for this message to come from anyone other than the two of them. Departing employees will receive severance equal to their full base pay through the end of 2026. For US employees, Cloudflare will continue providing healthcare coverage through the end of the year.

Departing employees will have equity vested through August 15th. Executives described the packages as leading the industry and said they reflect a reciprocal obligation to treat people well when hard decisions are made.