Cloudflare is cutting more than 1,100 jobs, about 20% of its total workforce, despite posting record quarterly revenue of $639.8 million in Q1 2026. The cybersecurity and cloud company said the layoffs are tied to a huge increase in internal AI adoption, with employee use of AI tools rising over 600% in just three months. CEO Matthew Prince said AI agents are now handling work across multiple departments, making several roles unnecessary.
Cloudflare executives described the restructuring as a shift toward what they called an ‘agentic AI-first operating model’, where AI systems increasingly function like autonomous digital workers capable of handling operational, administrative, and analytical tasks with minimal human supervision. According to Matthew Prince, employees across engineering, finance, HR, customer operations, and marketing are now running thousands of AI-agent sessions every day. He said some workers had become ‘two, 10, even 100 times more productive’ through AI-assisted workflows, reducing the need for large support and coordination teams behind them.
Cloudflare had around 5,156 employees at the end of 2025, meaning about one in every five workers is being affected. Most reductions are believed to be concentrated in back-office and operational roles, while engineering and customer-facing sales teams are expected to continue hiring aggressively.
The company expects the restructuring to cost between $140 million and $150 million, mostly in severance payouts, healthcare benefits, and employee compensation. Cloudflare stated that affected US employees would continue receiving base salary through the end of 2026 along with extended healthcare support. The restructuring process is expected to be largely completed by the end of the third quarter of 2026.
The latest job cuts becomes even more critical as Cloudflare reported a very strong Q1 2026 performance. The company posted record revenue of $639.8 million, up about 34% year-over-year, while also delivering non-GAAP earnings of $0.25 per share and operating income of $73.1 million, showing solid profitability momentum. Free cash flow stood at about $84.1 million, with strong liquidity of over $4 billion in cash reserves, indicating the layoffs are not financial distress-driven. The company also guided Q2 2026 revenue at around $665 million.
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Ashutosh is a Senior Writer at The Tech Portal, largely reporting on new tech, and intersection of technology and business. Ashutosh’s career spans across nearly a decade of technology writing across multiple platforms and languages.
