- The company said the layoffs are not connected to employee performance
- Cloudflare said it expects to complete the restructuring by the end of the third quarter.
- The cuts will impact roughly one-fifth of its 5,156 full-time employee
Cloudflare's internal memo has revealed how rapidly artificial intelligence has been reshaping work inside the company as the San Francisco cloud networking firm announced that it is cutting more than 1,100 jobs worldwide.
In the memo obtained by Business Insider, co-founders Matthew Prince and Michelle Zatlyn told employees, “The way we work at Cloudflare has fundamentally changed.” It states that artificial intelligence usage inside the company has increased by more than 600 per cent in just three months.
“We don't just build and sell AI tools and platforms. We are our own most demanding customer,” they added and noted that teams across engineering, HR, finance and marketing now run “thousands of AI agent sessions each day.”
“That means we have to be intentional in how we architect our company for the agentic AI era,” it further mentioned.
The cuts will impact roughly one-fifth of its 5,156 full-time employees.
The company said the layoffs are not connected to employee performance or conventional cost-cutting but are instead part of an effort to overhaul “every internal process, team, and role across the company” as it adapts to AI-driven workflows.
New York Post report mentioned that employees will be notified directly by email within an hour rather than through managers. The company also described the move as a one-time restructuring aimed at avoiding repeated rounds of layoffs.
Cloudflare reported first-quarter revenue of $639.8 million, up 34 per cent from a year earlier, according to the San Francisco Chronicle, alongside the restructuring announcement.
The company said departing employees will receive full base pay through the end of 2026, continued US health coverage until year-end and equity vesting through August 15, including some workers who had not yet reached standard vesting milestones.
It expects restructuring costs of $140 million to $150 million, mainly linked to severance and benefits, with most expenses expected in the second quarter as the changes roll out across operations.
Cloudflare said it expects to complete the restructuring by the end of the third quarter.
