Cloudflare cuts headcount by 20pc for leaner, AI-powered workforce

Cloudflare previously announced plans to hire more than 1,000 interns to ‘ramp up’ AI use.

Cloudflare is cutting 20pc of its workforce after AI usage at the company grew 600pc in the last three months. The company said that it is cutting more than 1,100 employees, and expects restructuring costs to range up to $150m.

Shares at Cloudflare fell by more than 16pc in after-hours trading despite the company announcing a stronger than expected quarter, with first-quarter revenue growing 34pc year-on-year to nearly $640m. It expects second-quarter revenue to hit between $664m and $665m.

“We have to be intentional in how we architect our company for the agentic AI era”, an email sent to employees read.

“Today’s actions are not a cost-cutting exercise or an assessment of individuals’ performance – they are about Cloudflare defining how a world-class, high-growth company operates and creates value in the agentic AI era.”

In its earnings release yesterday (7 May), Cloudflare co-founder and CEO Matthew Prince said: “AI is driving a fundamental re-platforming of the internet and a paradigm shift in how software is created and consumed – it’s shaping up to be the biggest tailwind we’ve ever seen in Cloudflare’s history.”

Cloudflare has offices in a number of European countries, including the UK. When queried on country-specific layoffs, the company redirected SiliconRepublic.com to the official announcement on its website.

The IT service provider is the latest to join a growing list of well-performing tech companies laying off human workers in preference for AI. In recent times, Coinbase has cut 14pc of its workforce; Meta, about 8,000 jobs; Block, 4,000 jobs; Oracle, about 10,000; Amazon, 30,000; Atlassian, 10pc of its workforce; and Snap, about 16pc – with the trend largely attributed to changing technology at the workplace.

Company leaders, who were previously apprehensive of linking layoffs to AI, have recently begun embracing the shift in work culture, with Coinbase’s Brian Armstrong noting AI is “changing how we work” and Meta’s Mark Zuckerberg commenting that projects that previously required larger teams now only need “a single, very talented person”.

Block’s co-founder, head and chair Jack Dorsey, meanwhile, said earlier this year that a “majority of companies” will reach similar conclusions around smaller teams and make similar structural changes “within the next year”.

Cloudflare, however, is also tapping a younger, more AI-literate workforce, with plans to take on 1,111 interns by the end of 2026. The interns are expected to “ramp up the creative and widespread application of AI with a fresh approach”, the company wrote in a blog last September.

The company – which claims to interface with around 20pc of the web – had a turbulent final quarter last year with two major outages affecting websites across the globe. Sites and platforms such as Zoom, LinkedIn, Shopify, Canva, Substack and Coinbase, as well as X and OpenAI, were reportedly affected in the disruptions.

Don’t miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic’s digest of need-to-know sci-tech news.

Updated, 8 May, 10.41am: The article has been updated with a response from Cloudflare.