Key Takeaway:
- The layoffs impact 1,100+ global employees, despite the company framing it as a strategic shift rather than a cost-cutting measure.
- Severance is notably generous, offering full base pay through the end of 2026 and healthcare through the year’s end.
- Internal AI usage at Cloudflare spiked over 600% in just three months, with agents now performing thousands of daily tasks.
Cloudflare CEO Matthew Prince announced Thursday that the company is laying off more than 1,100 employees worldwide as the cybersecurity and cloud services provider restructures operations around artificial intelligence-driven workflows.
The company said the move reflects a broader shift toward what executives called the “agentic AI era,” as Cloudflare rapidly expands its internal use of artificial intelligence tools across departments, including engineering, finance, marketing, and human resources.
In a message sent to employees and signed by Prince and co-founder Michelle Zatlyn, the company said AI usage inside Cloudflare increased more than 600% during the past three months. Executives said employees now run “thousands of AI agent sessions each day” to complete tasks and support operations.
“This decision unfortunately means saying goodbye to teammates who have contributed meaningfully to our mission,” the executives wrote. “Today’s actions are not a cost-cutting exercise or an assessment of individuals’ performance.”
Cloudflare layoffs affect employees globally, though the company did not immediately specify how many positions were cut in individual regions or departments.
Cloudflare Cuts More Than 1,100 Jobs Globally
The layoffs mark one of the company’s largest workforce reductions since its founding. Cloudflare said employees would receive notification emails directly from Matthew Prince and Zatlyn instead of through managers.
The company said departing employees will receive severance packages that include full base pay through the end of 2026. U.S.-based employees will continue receiving healthcare coverage through the end of the year.
Cloudflare also said it will continue vesting employee equity through Aug. 15 and waive one-year vesting cliffs for eligible workers so they can retain prorated stock compensation.
Prince said the company intends to make the reductions in a single round rather than conduct multiple smaller layoffs over time.
“We don’t want to do it again for the foreseeable future,” the executives wrote.
CEO Matthew Prince Says AI Drives Workforce Changes
Cloudflare leadership said the company is redesigning teams, workflows, and internal systems to adapt to increasing reliance on AI tools.
According to the memo, the company views itself as both a builder and a heavy user of AI technologies. Executives said the restructuring aims to create a faster and more efficient organization capable of supporting future growth.
CEO Matthew Prince said Cloudflare’s transition mirrors earlier shifts in the technology industry, where companies built around digital infrastructure overtook firms slowed by older systems.
“As we’ve now become the leader, we cannot rest on the workflows and organizational structures that worked yesterday,” the memo said.
The company plans to discuss the layoffs and its broader strategy during its earnings conference call and an internal all-hands meeting.
Cloudflare Offers Extended Pay and Equity Support
Cloudflare emphasized that the layoffs were handled with transparency and employee support in mind, describing the severance terms as exceeding industry standards.
The company said affected employees would receive updates through both personal and company email accounts to ensure immediate access to information regarding benefits and compensation.
Prince and Zatlyn acknowledged the emotional impact of the cuts while defending the decision as necessary for long-term stability and innovation.
“It’s not an easy day, but it’s the right decision,” the executives wrote.
Cloudflare, founded in 2009, provides cybersecurity, networking, and cloud infrastructure services to businesses worldwide. The company has increasingly invested in AI-related products and services as competition intensifies across the technology sector.
