Cloudflare attributes 1,100 layoffs to AI amid record revenue growth

Cloudflare announced a workforce reduction of roughly 1,100 employees, representing 20% of its staff, citing the impact of AI on internal productivity rather than cost-cutting measures. This marks the first large-scale layoff in the company’s 16-year history. Despite these cuts, the company reported record first-quarter revenues of $639.8 million, a 34% increase compared to the previous year, alongside a $62 million loss. Cloudflare co-founder and CEO Matthew Prince explained that AI adoption across all departments—from engineering to HR and finance—has drastically increased productivity, making some support roles redundant. The company noted a 600% increase in AI usage over the last three months and emphasized that all AI-generated code undergoes autonomous agent review. Prince stated that the layoffs are part of redefining operational efficiency in the AI era, not a response to financial pressure, and that hiring will continue, potentially exceeding 2026 headcount by 2027. The move reflects a broader tech industry trend where AI implementation is cited as justification for workforce reductions even amid strong revenue growth, raising questions about the balance between automation and human employment.