Cloudflare lays off 20% of its workforce, the latest technology company to announce significant layoffs as it ramps up its use of artificial intelligence-powered tools.
The San Francisco web performance and cybersecurity company announced it will lay off 1,100 people.
“The way we work at Cloudflare has fundamentally changed,” CEO Matthew Prince and Chief Operating Officer Michelle Zatlin told employees in an email. “We don’t just build and sell AI tools and platforms; we ourselves are our most demanding customers.”
The company is the latest tech company to announce major layoffs this week as tech employees embrace the use of AI agents to perform tasks like code generation faster. Coinbase announced Tuesday that it will cut about 700 jobs, or 14% of its workforce. PayPal reportedly plans to cut 20% of its workforce.
Other companies such as Meta, Block, and Oracle have also announced layoffs this year. U.S. tech employers announced 85,411 layoffs from January to April, an increase of 33% from a year earlier, the outplacement and executive coaching firm Challenger, Gray & Christmas announced Thursday.
According to an email published on Cloudflare’s blog, AI usage has spiked more than 600% in the past three months. Companies must be “intentional” to prepare for the “age of agent AI,” the email said, as employees in various roles, including engineering, human resources, finance, and marketing, run “thousands of AI agent sessions every day to get their jobs done.”
Cloudflare executives added that the company hopes to avoid further large-scale layoffs.
“We are making these changes now because making repeated small cuts or dragging out the reorganization over multiple quarters would create long-term emotional uncertainty for our employees and slow our ability to build,” the email said.
The company estimates that severance and other restructuring costs will be between $140 million and $150 million in 2026.
Cloudflare hasn’t said how many of those will be done in its San Francisco office. According to the company’s website, the company has offices around the world, including Asia, Europe and the Middle East.
As of December, Cloudflare had 5,156 employees.
Cloudflare announced layoffs on the same day it announced its first quarter results. The company’s first quarter revenue was $639.8 million, up 34% year over year. Net loss was $22.9 million.
However, the company’s second-quarter outlook fell short of Wall Street expectations. Cloudflare forecast second-quarter revenue of $664 million to $665 million, lower than the $666 million expected by Wall Street.
Cloudflare stock fell about 18% in after-hours trading to $209 per share.
