Editing News-Cloudflare-AI-Layoffs-May-2026 (section)

== Details ==

Cloudflare CEO '''Matthew Prince''' and co-founder '''Michelle Zatlyn''' stated the layoffs were explicitly '''not a cost-cutting exercise''' but a strategic shift, noting that internal AI usage at the company has risen over '''600% in three months'''. Employees across engineering, HR, finance, and marketing now "run thousands of AI agent sessions each day to get their work done," according to the company's statement.<ref name="reuters">[https://www.reuters.com/business/world-at-work/cloudflare-cut-over-1100-jobs-2026-05-07/ Reuters: Cloudflare cuts workforce by 20% in AI-first restructuring]</ref>

The restructuring carries an estimated '''$140 million to $150 million''' in charges, primarily in Q2 2026. Despite strong Q1 2026 results (revenue of $639.8 million, beating estimates of $621.9 million), the company issued Q2 revenue guidance of $664-665 million, slightly below analyst consensus of $665.3 million. Cloudflare shares fell 14% in extended trading following the announcement.<ref name="bi">[https://www.businessinsider.com/cloudflare-announces-1100-layoffs-amid-ai-focus-shift-2026-5 Business Insider: Cloudflare Announces 1,100 Layoffs Amid AI Focus Shift]</ref>