Cybersecurity giant Cloudflare has laid off more than 1,100 employees globally. The latest job cuts mark nearly 20% of its workforce, as the company restructures around the growing adoption of artificial intelligence tools and AI agents.
The firings were internally disclosed on Thursday, following Cloudflare’s first-quarter earnings, which totaled $639.8 million. According to a memo from Cloudflare’s founders, Matthew Prince and Michelle Zatlyn, the objective of this strategy is to prepare the firm for the ‘agentic AI era.’
The executives said Cloudflare’s internal use of AI tools had increased by more than 600% in the last three months alone. Teams across engineering, HR, finance, and marketing were now running “thousands of AI agent sessions each day”, they noted.
“The way we work at Cloudflare has fundamentally changed,” the memo said. “We don’t just build and sell AI tools and platforms. We are our own most demanding customer.”
The company added that it was redesigning internal processes, team structures, and job roles to align with AI-driven workflows.
Cloudflare stressed that the layoffs were not linked to employee performance or financial distress. The company described the move as a strategic overhaul aimed at reshaping operations for an AI-first future.
“Today’s actions are not a cost-cutting exercise,” the memo said. “They are about Cloudflare defining how a world-class, high-growth company operates and creates value in the agentic AI era.”
The leadership also said the company wanted to avoid ‘smaller, repeated cuts’ over several quarters, arguing that a single large restructuring would provide clarity and stability for remaining employees.
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Cloudflare said affected employees would receive severance packages that include full base pay through the end of 2026. US employees will continue to receive healthcare support through the end of this year, while equity vesting has been extended through August 15.
The company also said employees who had not yet completed their one-year vesting cliff would still receive prorated stock benefits.
Prince and Zatlyn called the decision ‘hard but necessary’, adding that Cloudflare’s future growth depended on adapting quickly to AI-led workplace transformation.