issued Friday, May 8, 2026 · 07:38 AM
[BENGALURU] Cloudflare announced Thursday (May 7) that it will lay off about 20 percent of its employees as part of its transition to an “agent AI-first operating model,” as the internet services company reorganizes around artificial intelligence.
Despite reporting better-than-expected quarterly results, Cloudflare stock fell 14% in after-hours trading.
The company is cutting more than 1,100 jobs, the latest AI-related layoffs in the high-tech sector, as companies rush to automate tasks and rebuild products around technology.
CEO Matthew Prince and co-founder Michelle Zatlin said in a joint statement that the job cuts reflect a shift to an AI-driven operating model and are not a cost-cutting measure. Cloudflare says its AI usage has increased by more than 600 percent in three months.
“From engineering to human resources to finance to marketing, employees across your company run thousands of AI agent sessions every day to get their jobs done. That means you need to be intentional about how you build your company for the age of agent AI,” the statement said.
Cloudflare, which had 5,156 full-time employees at the end of last year, expects to incur costs of between $140 million and $150 million related to headcount reductions in the second quarter.
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The company expects second-quarter revenue to be between $664 million and $665 million, according to data compiled by LSEG, with the median number below the forecast of $665.3 million. Adjusted earnings are expected to be 27 US cents per share, in line with expectations.
In the first quarter, the company reported revenue of US$639.8 million, beating expectations of US$621.9 million. Adjusted earnings were $25 per share, compared to expectations of $23 per share. Reuters
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