Cloudflare cuts 20% of workforce (1,100 jobs) to adopt AI-first operating model

Cloudflare announced layoffs of more than 1,100 employees (approximately 20% of its 5,156-person workforce) as it restructures around an agentic AI-first operating model, despite reporting Q1 2026 revenue of $639.8 million (+34% YoY), beating analyst expectations. Internal AI usage at Cloudflare increased over 600% in the last three months, with employees running thousands of AI agent sessions daily. Restructuring charges are estimated at $140-150 million. Shares dropped roughly 19% in extended trading. CEO Matthew Prince framed the cuts as a fundamental re-architecture around AI rather than a cost-cutting move.