Cloudflare Cuts 1,100 Jobs Citing AI Productivity Gains as Revenue Hits Record $639.8M

Cloudflare announced on May 8, 2026, that it is laying off approximately 20% of its workforce—1,100 employees—in the first mass layoff in its 16-year history. The cuts affect all teams and geographies except salespeople with revenue quotas, as detailed by CFO Thomas Seifert. The layoffs were disclosed alongside Q1 2026 earnings showing record quarterly revenue of $639.8 million (up 34% year-over-year) but a net loss of $62.0 million, wider than the $53.2 million loss a year earlier. Co-founder and CEO Matthew Prince insisted the cuts were not cost-saving but driven by AI adoption, citing internal productivity gains of 2x to 100x since November 2025. Cloudflare's AI usage has surged over 600% in three months; 100% of code deployed via its Workers platform is now reviewed by autonomous AI agents. Prince stated the company will continue hiring and expects headcount in 2027 to exceed any 2026 level. The layoffs follow a pattern seen at Meta, Microsoft, and Amazon, where AI is cited as both a revenue driver and a reason for workforce reduction. Cloudflare ended Q1 with about 5,500 employees before the cuts.