Cloudflare Lays Off 1,100 Employees Amid AI Adoption

Cloudflare, an internet infrastructure and cybersecurity company, has announced the termination of employment for around 20% of its global workforce.

This decision comes as part of an operational restructuring due to the adoption of artificial intelligence (AI). The layoffs will impact more than 1,100 employees. According to the company’s report, Cloudflare had 5,156 permanent employees as of the end of 2025.

Cloudflare stated that these changes are being made as the company reorganises its internal ways of working amid the rapidly increasing use of AI.

Cloudflare CEO Matthew Prince and co-founder Michelle Zatlyn said the company is reimagining every team and work function to operate in the era of “AI agents”.

Cloudflare revealed that internal AI usage has increased more than sixfold in the last three months. This is said to be driving major changes in team operations.

The San Francisco-based company estimates that restructuring and layoff costs will reach $140 million to $150 million in the second quarter of 2026.

On the other hand, Cloudflare forecasts second-quarter revenue in the range of $664 million to $665 million, slightly below analysts’ expectations of $665.3 million.

Cloudflare’s shares fell around 19% in after-hours trading, despite the company reporting first-quarter performance that exceeded market forecasts.

In the first quarter of 2026, Cloudflare recorded revenue of $639.8 million.

Meanwhile, Goldman Sachs economists estimate that AI has caused the loss of around 5,000 to 10,000 jobs per month throughout 2025 across various industries.