Cloudflare Cuts 20% Workforce as AI Boosts Productivity

AI Summary

Cloudflare is cutting 20% of its workforce, or 1,100 jobs, citing AI-driven productivity gains. The company reported a record $639.8 million in quarterly revenue, a 34% year-over-year increase, despite the layoffs.

The Layoff Announcement

Cloudflare on Thursday announced it was cutting its workforce by approximately 20%, which equates to 1,100 people, as part of its first quarter 2026 earnings report. This marks the first mass layoff in the company’s 16-year history.

The Impact of AI on Productivity

Cloudflare’s usage of AI has increased by more than 600% in the last three months alone.
Virtually the entire R&D team is now using the company’s own Workers platform, including its vibe coding feature.
100% of the code produced this way and deployed for use in Cloudflare’s products is “now reviewed by autonomous AI agents.”

The Financial Performance

The company reported quarterly revenues of $639.8 million, a 34% year-over-year increase and the highest single quarter in the company’s history. However, this was coupled with a loss of $62.0 million compared with losing $53.2 million in the year-ago quarter.

The Future Outlook

Cloudflare co-founder and CEO Matthew Prince said, “Today’s actions are not a cost-cutting exercise or an assessment of individuals’ performance; they are about Cloudflare defining how a world-class, high-growth company operates and creates value in the agentic AI era.” He also noted that the company will continue to hire people and invest in them because those embracing AI tools are much more productive.