Cloudflare dismisses 1,100 employees in AI reorg

Company insists it was “not a cost-cutting exercise”

Network provider Cloudflare has announced 1,100 layoffs in a reorganisation for “the agentic AI era” - but shares dropped after hours.

In a memo shared with staff and seen by Business Insider, the company said its use of AI had grown more than 600% in the last three months alone, with employees running “thousands” of AI agents.

They might now regret embracing the tech so wholeheartedly. The memo continues:

“Today is a hard day. This decision unfortunately means saying goodbye to teammates who have contributed meaningfully to our mission and to building Cloudflare into one of the world's most successful companies.”

The company notes that this is not a cost-cutting exercise, but about “defining how a world-class, high-growth company operates and creates value in the agentic AI era.”

Cloudflare’s announcement came on the same day it posted Q1 revenue of $639.8 million, up 33.5% on last year and beating analysts’ expectations – although it still made a net loss of $22.93 million.

The company’s stock plunged nearly 20% after hours, emphasising that the world has moved on from the time when tying workforce reductions to AI adoption would send share prices into the stratosphere.

The news follows similar announcements around the tech space. Companies including Meta, Block and Amazon are all reorganising (read: cutting staff), both thanks to new AI-based efficiencies and to free up budgets for more AI investment.