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.

"We've asked the team to do this only once, as hard as that may be today," the memo continued. " By taking decisive action now, Cloudflare aims to provide immediate clarity to those departing and protect the stability of the team that remains. Executives said making smaller, repeated cuts or dragging a reorganization out over multiple quarters creates prolonged emotional uncertainty for employees and stalls the ability to build.

The company started as a digitally native company built in the cloud, which allowed it to pass competitors slowed by outdated systems. Cloudflare plans to hold an earnings conference call at 2 PM PT. The company will address the announcements at an all-hands meeting.

Executives said they will share more on the call and plan to speak live with the team at the all-hands. To those departing, the memo expressed gratitude. "You've helped build the strong foundation Cloudflare stands on today," it said.

Business Insider reported that the cuts make Cloudflare the latest tech company to cite AI-driven efficiency gains and organizational changes as reasons for reducing head count. The memo emphasized that transparency is a core principle at Cloudflare. Executives stated it was important that staff hear the news from them first.

The company expressed confidence that its reshaped organization will be even faster and more innovative as it continues building the future.