The internet infrastructure and cybersecurity firm aims to eliminate over 1,100 jobs globally. With 5,156 full-time employees at the conclusion of 2025, it anticipates incurring charges between $140 million and $150 million related to the layoffs in the second quarter.
For the second quarter, Cloudflare expects revenue between $664 million and $665 million, just shy of analysts’ forecast of $665.3 million, according to data compiled by LSEG. Adjusted earnings are expected to be 27 cents per share, matching market expectations.
Despite stronger-than-expected results for the first quarter, shares of the San Francisco-based enterprise fell by about 19% in extended trading.
‘AGENTIC AI-FIRST OPERATING MODEL’
Cloudflare CEO Matthew Prince and co-founder Michelle Zatlyn conveyed to employees that the firm is reimagining every team and function to align with what they term an agentic AI era.
The company stated that the job reductions are indicative of a redesign of internal processes and roles, rather than a reaction to employee performance or immediate cost constraints.
Furthermore, Cloudflare noted that its internal use of AI has surged more than sixfold in the last three months, necessitating significant changes in team operations.
In the first quarter, Cloudflare reported revenue of $639.8 million, surpassing analysts’ expectations of $621.9 million. Adjusted profit was recorded at 25 cents per share, exceeding the anticipated 23 cents per share.
So far this year, shares of Cloudflare have increased by 30.3%.
IMPACT OF AI-DRIVEN AUTOMATION
This announcement arrives amid growing concerns from investors and economists that AI-driven automation may disrupt industries and hasten job losses in sectors particularly vulnerable to technological advances.
In a related development, payments company Block stated in February that it would be cutting over 4,000 jobs, nearly half of its workforce, as part of a strategy to implement AI throughout its operations.
Earlier this year, economists from Goldman Sachs indicated that AI could lead to monthly net job losses of 5,000 to 10,000 in 2025 within the most impacted industries in the U.S.
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(Edited by : Juviraj Anchil)
