Cloudflare cuts 1,100+ staff in agentic AI restructuring

Cloudflare has announced a workforce reduction of more than 1,100 employees globally. The decision, communicated directly by co-founders Matthew Prince and Michelle Zatlyn in an email to all staff, is framed not as cost-cutting or a reflection of individual performance, but as a structural reimagining of the company for an "agentic AI era."

According to the message, Cloudflare's own internal usage of AI has surged by over 600% in the past three months alone. Employees across departments such as engineering, HR, finance, and marketing now run thousands of AI agent sessions daily to accomplish their work. This operational shift has fundamentally changed how the company functions, leading leadership to conclude that existing workflows and organizational structures must be redesigned.

No trickle-down notification

Rather than routing individual termination notices through managers, all employees are receiving personalized emails from the founders clarifying the impact on their roles. Departing staff will get the update at both their personal and Cloudflare email addresses to ensure immediate receipt. Prince noted that he personally sends every offer letter extending a position at the company, and it felt inappropriate for this news to come from anyone other than the two founders.

Departure terms aim to "lead the industry"

Cloudflare says it is pairing the bluntness of the announcement with severance packages designed to exceed typical industry standards. Departing employees will receive:

  • The equivalent of their full base pay through the end of 2026.
  • Continued healthcare coverage through the end of the year for US-based employees (noting that international coverage varies).
  • Equity vesting extended through August 15th, ensuring departing team members receive stock beyond their last working day.
  • Waiver of uncompleted one-year cliffs, with pro-rated equity also vesting through August for those who haven't reached that milestone.

One decisive action, not repeated cuts

The founders state they made the full reduction in a single action to avoid the prolonged emotional uncertainty and operational stall associated with smaller, repeated layoffs or multi-quarter reorganizations. While acknowledging the difficulty of the day, they expressed confidence that the reshaped organization will be faster and more innovative moving forward.

The announcement precedes a scheduled earnings conference call, where the company plans to share more details, and a live all-hands meeting to address the changes with the remaining team.