Cybersecurity firm Cloudflare has announced it is laying off more than 1,100 members of staff globally as it restructures the business around artificial intelligence. The announcement came on Thursday, just hours after the company reported first-quarter earnings that exceeded analyst expectations. Despite the strong figures, shares fell sharply in after-hours trading, dropping more than 14%.
In a memo sent directly to all staff by the company's founders, Cloudflare said its internal use of AI had risen by more than 600% in the space of just three months. Thousands of AI agent sessions are now run daily by employees across departments including engineering, HR, finance and marketing.
The founders said the redundancies were not the result of poor individual performance or a cost-cutting drive, but rather a deliberate effort to reshape the company for what they called the "agentic AI era." They argued that continuing with existing structures would slow the business down.
Cloudflare said it wanted to handle the process in a single round of cuts rather than spreading redundancies across several quarters, which it said would cause unnecessary uncertainty for staff.
The company pledged what it described as industry-leading severance packages for those leaving. Departing employees in the United States will receive their full base pay through to the end of 2026, healthcare coverage through the end of the year, and equity vesting through 15 August. Staff who have not yet reached their one-year equity cliff will have that requirement waived.
The memo was signed personally by both founders, who said they felt it was important that the news came directly from them rather than through line managers. Cloudflare joins a growing number of technology companies that have cited AI-driven efficiency gains as a reason for reducing their workforces.
(With inputs from agencies)
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