Cloudflare has announced that more than 1,100 employees will leave the company as part of a global restructuring exercise, with the decision communicated to staff on May 7, 2026, hours after the cybersecurity firm reported first-quarter earnings that beat Wall Street expectations.
The cloud network and security company said the layoffs are not about cutting costs or employee performance. Instead, leaders described the move as part of a broader reorganisation to prepare for what Cloudflare is calling the “agentic AI era.”
Internal use of AI has surged by over 600% in the past three months, with teams across engineering, HR, finance, and marketing running thousands of AI agent sessions daily, according to the company. Leaders said this shift has fundamentally changed how the company operates, requiring new structures and roles to move faster and deliver more value to customers.
Departing employees will receive what Cloudflare described as industry-leading support packages, including severance pay through the end of 2026, extended healthcare coverage, and vested equity benefits until mid-August.
Matthew Prince, CEO of Cloudflare, who has personally signed every offer letter in the company’s history, emphasised that the layoff message came directly from him and co-founder Michelle Zatlyn rather than through managers.
The earnings beat that preceded the announcement still triggered a sharp 14% drop in Cloudflare’s share price during after-hours trading on the same day. For Cloudflare, the restructuring signals a deliberate shift toward leaner, AI-driven operations even as it balances customer growth with internal transformation.
