Overview
- Cloudflare said it will eliminate about 1,100 roles, roughly 20% of its staff, as it reorganizes the company around AI agents that employees now use across departments.
- Shares fell about 23% after the reorganization was announced alongside the latest earnings, signaling concern about the payoff from the strategy.
- The company expects $140 million to $150 million in one-time charges, including $105 million to $110 million in cash payouts and $35 million to $40 million from accelerated equity awards, with most costs recorded in Q2 2026 and the new model targeted for Q3.
- Executives said internal AI use jumped more than 600% in three months, with workers running thousands of AI agent sessions each day in engineering, HR, finance, and marketing, and they framed the overhaul as a redesign of how teams work.
- Departing employees will receive full base pay through the end of 2026, continued U.S. health coverage through December 31, and accelerated equity vesting through August 15.