Cloudflare announces mega layoffs as AI use explodes by 600%. 'Thousands of AI agent sessions...'

Cloudflare, the tech giant which deals with AI agents, has decided to fire 1,100 employees across its offices in the world. The founders admitted to their staff that the company has become one of its own biggest customers, and the use of AI has exploded by more than 600 per cent in just three months. An internal memo seen by Business Insider, sent by co-founders Matthew Prince and Michelle Zatlyn, reads, "The way we work at Cloudflare has fundamentally changed. We don’t just build and sell AI tools and platforms. We are our own most demanding customer." They admitted AI has taken over the scene at Cloudflare and that workers across engineering, HR, finance, and marketing are running "thousands of AI agent sessions each day." The memo shows that the company is shaping for the future, as it wrote, it has to be “intentional in how we architect our company for the agentic AI era.”

Cloudflare layoffs: Total number of employees at the company

On Thursday, the cloud networking firm reported $639.8 million in its first-quarter revenue, a 34 per cent increase from a year earlier. Cloudflare claims that the global layoffs are not a cost-cutting measure but part of an effort to “reimagine every internal process, team, and role across the company.” It has announced that it intends to become an AI-first company. At the end of 2025, the company had 5,156 full-time employees, which means the layoffs will affect nearly one-fifth of its global workforce. The Cloudflare founders insist that it is a one-time reset to avoid “smaller, repeated cuts”. “We’ve asked the team to do this only once.” The employees were reportedly notified directly through email about the restructuring and firings.

Also Read: Meta layoffs: 8,000 employees to lose jobs in May amid massive AI push

Severance package at Cloudflare

The affected employees are being offered generous severance packages. They will be given full base pay and health coverage for US employees through the end of 2026, and equity vesting through August 15. The restructuring, comprising mainly of severance and other benefits, is expected to cost Cloudflare $140 million to $150 million. It plans to complete the exercise by the end of the third quarter.