Cloudflare has announced plans to cut around 1,100 jobs, nearly 20% of its workforce even as the company reported its strongest quarterly revenue growth to date, highlighting how rapidly artificial intelligence is reshaping workforce structures across the tech industry.
The internet infrastructure and cybersecurity company posted record first-quarter 2026 revenue of $639.8 million, marking a 34% year-on-year increase. However, alongside the earnings announcement, Cloudflare revealed a major restructuring plan centred around what CEO Matthew Prince described as an “agentic AI-first” operating model.
According to the company, internal use of AI tools has surged by more than 600% in the last three months, with teams across engineering, HR, finance, marketing, and other departments increasingly relying on AI-powered systems and autonomous agents. Prince said the company had witnessed dramatic productivity gains, with some employees becoming “two, 10, even 100 times more productive” with AI assistance.
Cloudflare clarified that the layoffs were not linked to employee performance or short-term cost-cutting pressures, but rather reflected a broader redesign of how the company intends to operate in an AI-driven era. The company expects restructuring charges between $140 million and $150 million related to the workforce reduction.
The move makes Cloudflare one of the latest major technology firms to directly connect layoffs with AI-led productivity gains. Industry observers say the development reflects a growing shift across Silicon Valley, where companies are increasingly using AI not just as a support tool, but as a way to fundamentally reduce the amount of human labour required for certain functions.
Despite the strong revenue numbers, the announcement triggered market concerns, with Cloudflare’s shares falling sharply after the company issued a slightly softer-than-expected revenue forecast for the next quarter.
