Cloudflare is cutting more than 1,100 jobs, or about 20% of its staff, as the internet infrastructure and cybersecurity company reshapes itself around artificial intelligence. The move comes as more companies adopt an AI-first strategy for internal workflows, and Cloudflare says the layoffs are part of a broader overhaul rather than a response to short-term cost pressure or weak employee performance.
The company is effectively saying its future organization will be built for AI agents that can handle complex work on their own – and that means fewer people doing some of the jobs humans used to own. It is a stark example of how AI is moving from demo territory into headcount strategy.
What Cloudflare said about the layoffs
Cloudflare had 5,156 employees at the end of 2024, so the cuts are large even by the standards of tech’s current efficiency obsession. The company expects related expenses of between $140 million and $150 million in the quarter, while also warning that second-quarter revenue will come in around $665 million, just shy of Wall Street’s $665.3 million estimate.
That forecast was enough to punish the stock. Shares fell about 19% in after-hours trading even though first-quarter numbers beat expectations, with revenue of $639.8 million versus the expected $621.9 million and adjusted earnings of 25 cents per share versus 23 cents forecast. The stock was still up more than 30% since the start of the year, which is a neat summary of the modern market: strong results, a softer guide, and investors hit the panic button anyway.
AI inside Cloudflare has already changed the workflow
In messages to employees, chief executive Matthew Prince and co-founder Michelle Zatlyn said internal use of Cloudflare’s own AI tools has risen more than sixfold over the past three months. That surge, they argued, has already altered how teams operate and how the business is organized. The subtext is hard to miss: once the tools become good enough, companies stop treating automation as a side project and start treating it as the operating model.
Cloudflare is not the first company to move this way, and it will not be the last. Block, the payments company founded by Jack Dorsey, said in February that it would cut more than 4,000 jobs – nearly half its workforce – as it integrated AI across internal operations. Around the same time, Goldman Sachs estimated that AI was already causing net losses of 5,000 to 10,000 jobs a month in the most exposed parts of the US economy. Those numbers are contested, but the direction is not.
Why Cloudflare’s AI layoffs stand out in tech
Cloudflare’s decision is especially telling because it comes from a company that sits deep in the internet plumbing, where reliability and security usually reward caution over theatrics. If a business like this is publicly recasting its workforce around AI agents, then the pressure is spreading beyond experimental chatbot pilots and into core corporate functions. The winners are the companies that can squeeze more output from fewer layers; the losers are the teams doing routine, repeatable work that software can now imitate, or at least approximate well enough for management.
The next question is how far the restructuring goes. Cloudflare has signaled that AI is changing how it works now, not someday, and investors have made clear they will reward growth only if it comes with discipline. The uncomfortable part for everyone else is that this may be the template: build for AI first, then see which jobs survive the redesign.