Cloudflare, a company that specializes in internet security and infrastructure, plans to lay off about 20% of its workforce. This means over 1,100 jobs will be cut globally. The decision comes as Cloudflare adapts to the growing use of artificial intelligence (AI) tools. At the end of 2025, the company had over 5,156 employees and expects to incur costs of $140 million to $150 million from these layoffs in the second quarter.
For the second quarter, Cloudflare projects revenue between $664 million and $665 million, just below analysts’ expectations of $665.3 million. However, their expected adjusted earnings of 27 cents per share align with what experts had predicted. Interestingly, shares of the San Francisco-based company dropped around 19% in after-hours trading, even though they reported strong first-quarter results.
In a message to employees, Cloudflare CEO Matthew Prince and co-founder Michelle Zatlyn expressed that the company is entering what they call an “agentic AI era.” They mentioned that the job cuts aren’t due to poor performance but are part of a redesign of internal processes to streamline operations.
In fact, Cloudflare’s use of AI has surged over six times in the last three months, prompting significant changes. The first quarter saw revenue hit $639.8 million, surpassing predictions, while adjusted earnings of 25 cents per share exceeded expectations as well.
Interestingly, Cloudflare’s stock has increased by 30.3% this year, which shows a complex relationship between AI developments and market confidence.
The rise of AI has raised concerns among investors and economists about potential job losses across various sectors. For instance, in February, payments firm Block announced it would eliminate over 4,000 jobs, nearly half of its workforce, as it integrated AI into its operations. Goldman Sachs has also pointed out that AI could lead to 5,000 to 10,000 job losses per month in vulnerable U.S. industries by 2025.
This shift highlights a broader trend. Many companies are re-evaluating their workforce in light of the advances in AI. As AI technologies become more prevalent, we may see other firms taking similar steps, further reshaping the job landscape.
In summary, Cloudflare’s recent decisions reflect significant changes in how businesses are adapting to technological advancements. The growing reliance on AI not only influences internal company structures but also raises questions about the future of work across various industries.
For further insights on the impact of AI in employment, you can refer to Goldman Sachs’ analysis.
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Cloudflare, artificial intelligence, expectations
