Cloudflare says AI made 1,100 jobs obsolete, even as revenue hit a record high
Cloudflare has announced it will reduce its workforce by 20%, affecting about 1,100 employees worldwide. The internet security company attributes this major layoff to advancements in artificial intelligence, which have made many roles redundant. The announcement came alongside Cloudflare’s first quarter 2026 earnings report, which highlighted a record quarterly revenue of $639.8 million—a 34% increase compared to the prior year.
AI Boosts Productivity, Leading to Job Cuts
This round of layoffs is the first of its kind in Cloudflare’s 16-year history. CEO Matthew Prince explained that every team and region would be impacted, with the exception of sales staff who directly generate revenue. The decision followed a notable surge in internal adoption of AI tools, resulting in significant productivity improvements across departments.
Prince noted that since November, employees using AI within the company have become several times more efficient, reducing the need for supporting roles. Cloudflare’s AI usage has increased by 600% in just three months, with coding and non-technical teams alike leveraging AI agents for daily tasks. Code produced via Cloudflare's technology platform is now fully reviewed by autonomous AI agents.
Layoffs Not Tied to Cost-Cutting
The leadership emphasized that these workforce reductions are not aimed at cutting expenses, but are instead part of a long-term strategy to align operations with the possibilities offered by AI. Cloudflare’s remaining performance obligations—a key future revenue metric—also climbed to over $2.5 billion, up 34% year-over-year.
Although the company booked a $62 million loss for the quarter, its losses as a percentage of revenue have shrunk. Prince assured investors that Cloudflare expects to keep growing and anticipates larger headcounts in future years as the business evolves.
Industry-Wide Impact
Cloudflare’s move reflects a broader technology sector trend, where leading firms use AI advancements to both justify layoffs and boost growth. As more companies adopt similar measures, questions remain about whether these actions point to lasting changes or are primarily about cost control in a competitive market.
Read the original article by Julie Bort on TechCrunch for more details.
