Cloudflare Cuts 20% of Workforce as AI Reshapes Operations
Cloudflare is eliminating more than 1,100 jobs worldwide-roughly 20% of its workforce-as the company restructures around artificial intelligence tools. The San Francisco-based internet infrastructure and cybersecurity company announced the cuts Thursday despite posting stronger-than-expected first-quarter earnings, sending its stock down nearly 19% in after-hours trading.
The company had 5,156 full-time employees at the end of 2025 and expects severance charges between $140 million and $150 million in the second quarter. CEO Matthew Prince and co-founder Michelle Zatlyn told employees the cuts reflect a redesign of internal processes, not performance issues or financial pressure.
AI Adoption Accelerates Operational Overhaul
Cloudflare's internal use of AI has grown more than sixfold in three months, triggering major changes across teams. The company said it is "reimagining every team and function" to operate in what leadership calls an "agentic AI-first operating model."
The restructuring reflects a broader pattern across Silicon Valley. Companies are moving beyond AI experiments to fundamentally rebuilding how they work, replacing traditional staffing models with automated workflows.
Strong Results Didn't Calm Investor Concerns
Cloudflare reported first-quarter revenue of $639.8 million, beating the analyst estimate of $621.9 million. Adjusted profit reached 25 cents per share versus an expected 23 cents. The company projected second-quarter revenue of $664 million to $665 million, narrowly missing the Wall Street consensus of $665.3 million.
Despite the solid earnings, investors focused on slowing growth forecasts and the long-term effects of AI-driven workforce reductions. Cloudflare shares remain up 30.3% year-to-date even after Thursday's drop.
AI Job Cuts Spread Across Industries
Cloudflare is not alone. Payments firm Block cut more than 4,000 jobs-nearly half its workforce-in February as part of an AI integration overhaul. Goldman Sachs economists estimated AI was responsible for 5,000 to 10,000 monthly net job losses across exposed U.S. industries in 2025.
As companies move from piloting AI tools to rebuilding operations around them, the workforce reductions are accelerating. For operations professionals, this shift signals how aggressively corporations plan to use AI to redesign roles and streamline labor across functions.
Operations managers facing similar transformations may benefit from understanding how AI reshapes workflows. An AI learning path designed for operations managers covers the skills needed to lead through this transition.
Your membership also unlocks:
