Cloudflare, a US-based internet infrastructure and cybersecurity company, is reducing 20% of its workforce, affecting over 1100 employees globally. The company revealed in a blog post that the agentic artificial intelligence (AI) has “fundamentally changed” how it operates, enabling smaller teams to handle tasks that previously required significantly larger workforces.

CEO Matthew Prince, during the earnings call, said, “This wasn’t an easy decision, but it’s the right decision.” According to him, some existing jobs may no longer fit the kind of work Cloudflare expects to prioritise going forward. He further highlighted that the use of AI in the company has grown by 600% in the last three months, and described the transition as an “agentic AI-first operating model.”

The company further highlighted that lay-offs were driven by organisational restructuring and processes, and not because of employee underperformance or temporary budget constraints.

At the end of 2025, the company had 5,156 full-time employees, so the cuts would affect roughly one-fifth of its workforce. In addition, it expects to spend between $140 million and $150 million in severance pay in the second quarter.

In the first quarter, Cloudflare exceeded Wall Street expectations, posting revenue of $639.8 million against forecasts of $621.9 million. Its adjusted profit also came in higher than expected at 25 cents per share. Therefore, despite making profits, the company has decided to reduce its workforce as AI changes its operations.
 

The tech layoffs continue in the month of May, as Cognizant is also reported to reduce over 15000 jobs as part of its restructuring operation. Meta has also confirmed layoffs that could impact nearly 8000 employees in the US.