Overview
- Shares fell Friday after Cloudflare said Thursday it will eliminate about 1,100 roles worldwide as it rebuilds operations around an agentic AI‑first model.
- The company beat first‑quarter expectations with $639.8 million in revenue, up 34% year over year, and adjusted EPS of $0.25, but guided Q2 revenue to $664–$665 million, slightly below forecasts, and reaffirmed its full‑year outlook.
- Leaders said internal AI use rose more than 600% in three months, with employees running thousands of AI agent sessions daily across functions, and they framed the layoffs as a redesign of teams rather than a cost‑cutting move.
- Cloudflare expects $140 million to $150 million in restructuring charges, largely in the second quarter, and departing staff will receive base pay through the end of 2026, U.S. healthcare through year‑end, and equity vesting through August 15.
- Cuts span most teams and regions with quota‑carrying sales roles spared, and executives said they intend this to be a single reset and will keep hiring where AI‑enhanced work requires new skills.