Cloudflare to Cut 20% Workforce as It Restructures Around AI-First Operations

Cloudflare is laying off about 20% of its global workforce as the company restructures its operations around artificial intelligence, marking one of the clearest examples yet of AI-driven organizational redesign in the tech sector.

The company said it will eliminate more than 1,100 jobs worldwide as part of a shift toward what executives described as an “agentic AI-first operating model.” Cloudflare employed 5,156 full-time workers at the end of 2025 and expects to incur restructuring charges of between $140 million and $150 million in the second quarter.

CEO Matthew Prince and co-founder Michelle Zatlyn told employees the company is rethinking how every team and function operates in an AI-centric era, where autonomous AI systems increasingly handle workflows traditionally managed by humans.

Cloudflare said the layoffs are tied to redesigning internal processes and roles rather than employee performance or short-term cost-cutting. The company added that its internal use of AI tools has increased more than sixfold over the past three months, accelerating changes in how work is executed across the organization.

The restructuring announcement came alongside a mixed financial outlook. While Cloudflare reported stronger-than-expected first-quarter results, with revenue rising to $639.8 million and adjusted profit reaching 25 cents per share, its second-quarter revenue forecast of $664 million to $665 million came in slightly below Wall Street expectations.

The move reflects a broader trend sweeping across the technology industry, where companies are increasingly using AI not only in products but also to reshape internal operations and workforce structures.

Concerns about the impact of AI-driven automation on employment have intensified in recent months. Several major firms have already linked restructuring efforts to AI adoption, including Block, which announced large-scale workforce reductions earlier this year as part of its own AI transformation strategy.

Economists and analysts have warned that AI could significantly alter white-collar employment patterns, particularly in roles vulnerable to automation. Cloudflare’s restructuring adds to growing evidence that AI is beginning to influence not just productivity, but the fundamental operating models of technology companies themselves.