Cloudflare Cuts 20% of Workforce Citing AI Productivity Gains as Quarterly Revenue Hits Record $639M

Cloudflare has announced its first-ever mass layoff, cutting approximately 1,100 employees — 20% of its workforce — as it reported record quarterly revenue of $639.8 million, a 34% year-over-year increase. Co-founder and CEO Matthew Prince and co-founder and president Michelle Zatlyn framed the cuts not as cost reduction but as a structural response to AI-driven productivity gains.

Prince said internal AI adoption surged over 600% in three months, with the entire R&D team now using AI coding tools and all deployed code reviewed by autonomous AI agents. Employees across HR, finance, and marketing run thousands of AI agent sessions daily, he added, reducing the need for support roles.

Prince said he expects Cloudflare to employ more people in 2027 than at any point in 2026, anticipating continued hiring of AI-proficient staff.

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