Cloudflare stock fell sharply after the company announced plans to cut about 20% of its workforce and issued a second-quarter revenue forecast slightly below Wall Street expectations.
The San Francisco-based internet infrastructure and cybersecurity company said the restructuring follows a rapid increase in its use of artificial intelligence tools. Cloudflare also reported stronger-than-expected first-quarter results, but investors focused on the job cuts, restructuring charges, and near-term sales outlook.
Cloudflare said it would cut more than 1,100 jobs globally as it reshapes operations around artificial intelligence. The company had 5,156 full-time employees at the end of 2025.
The workforce reduction represents about 20% of Cloudflare’s staff. The company expects to record restructuring charges of $140 million to $150 million in the second quarter linked to the job cuts.
Cloudflare said the cuts reflect a redesign of internal processes and roles. The company also said the move was not tied to employee performance or short-term cost pressure.
Chief Executive Officer Matthew Prince and co-founder Michelle Zatlyn told employees that Cloudflare was reimagining every team and function for an ‘agentic AI era.’ Prince also said, “With AI and agents now core parts of our workforce, the way we work at Cloudflare has fundamentally changed.”
Cloudflare expects second-quarter revenue of $664 million to $665 million. Analysts expected $665.3 million, according to LSEG-compiled data. Additionally, the company projected adjusted earnings of 27 cents per share for the second quarter. That figure matched Wall Street expectations.
Cloudflare shares dropped roughly 19% in extended trading after the announcement. The stock later fell 23% on Friday as investors reacted to the sales forecast and AI-linked restructuring plan.
The move came despite Cloudflare’s strong year-to-date performance before the selloff. Shares had risen 30.3% so far this year before the sharp decline.
Cloudflare reported first-quarter revenue of $639.8 million. That figure beat analysts’ estimate of $621.9 million.
Moreover, the company posted adjusted profit of 25 cents per share. Analysts had expected adjusted earnings of 23 cents per share.
The results showed continued demand for Cloudflare’s internet infrastructure and cybersecurity services. However, the earnings beat did not offset investor concern over the company’s second-quarter forecast and restructuring costs.
Cloudflare provides tools that help businesses secure websites, manage traffic, and support digital applications. Its update arrived as technology companies continue to explain how AI tools are changing staffing, spending, and operating plans.
Cloudflare said its own use of AI has increased more than sixfold over the past three months. The company said that growth has changed how teams work across the business.
The company is moving toward an ‘agentic AI-first operating model.’ The model places AI agents and automation tools at the center of many internal functions.
In addition, Cloudflare’s announcement came as investors and economists continue to track job losses linked to AI-driven automation. The concern is strongest in sectors where software tools can handle routine work.
Cloudflare is not the only company connecting workforce reductions to AI adoption. Coinbase said earlier this week that it would cut 14% of its workforce, or about 700 jobs, because of market conditions and AI adoption.
Block also said in February that it would cut more than 4,000 jobs, nearly half of its workforce. The company linked the move to a broader overhaul aimed at embedding AI across its operations.
Furthermore, Goldman Sachs economists said earlier this year that AI was responsible for 5,000 to 10,000 monthly net job losses in 2025 in the most exposed U.S. industries.
Cloudflare’s latest update places the company among major technology firms changing workforce plans as AI becomes part of daily operations. The next financial updates will show how the restructuring costs, AI adoption, and revenue growth develop after the job cuts.
Also Read: Cloudflare Partners with Giga to Accelerate School Connectivity Worldwide