Cloudflare has cut 20% of its workforce, eliminating about 1,100 jobs. The company's stock dropped 19% in a single day and nearly 24% for the week following the announcement.
CEO says few engineers affected
CEO Matthew Prince stated that very few engineers or customer-facing sales people are impacted by the layoffs. The company expects to take a charge of $140 million to $150 million from the job cuts. Cloudflare reported Q1 2026 revenue of $639.8 million, up 34% year over year, with adjusted EPS of $0.25, beating estimates.
Cloudflare increased its usage of AI by more than 600% in the last three months alone. The company believes it has to be intentional in how it architects the company for the agentic AI era, and noted that the decision is not a reflection of individual work.
For Q2 2026, Cloudflare guided revenue around $644.5 million, below analyst estimates. The reason for investor disappointment is unclear, but the guidance may have contributed to the stock sell-off.
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