Artificial Intelligence Cloudflare Lays Off 1,100 Employees in AI-Driven Restructuring The company topped revenue and earnings forecasts for the first quarter of 2026, but its shares plunged more than 20%. By Eduard Kovacs | May 11, 2026 (7:25 AM ET) Flipboard Reddit Whatsapp Whatsapp Email Web performance and security company Cloudflare announced last week that it’s laying off more than 1,100 employees worldwide as part of an AI-driven restructuring plan. In an email to workers, CEO Matthew Prince and COO Michelle Zatlyn said the company’s AI usage has skyrocketed — by over 600% in the past three months alone — with AI agents being heavily used by employees in HR, marketing, finance, and engineering. “That means we have to be intentional in how we architect our company for the agentic AI era in order to supercharge the value we deliver to our customers and to honor our mission to help build a better Internet for everyone, everywhere,” the Cloudflare co-founders said . They also noted, “Today’s actions are not a cost-cutting exercise or an assessment of individuals’ performance; they are about Cloudflare defining how a world-class, high-growth company operates and creates value in the agentic AI era.” Departing employees will receive severance equivalent to their full base salary through the end of 2026. The company noted that US workers will continue to receive healthcare coverage through December 31. In addition, Cloudflare said it will accelerate equity vesting for affected staff through August 15, allowing them to continue accumulating shares after their departure. For employees who have not yet reached their one-year vesting cliff, the company will waive that requirement and provide pro-rated equity vesting through August. Advertisement. Scroll to continue reading. “By taking decisive action now, we provide immediate clarity to those departing and protect the stability of the team that remains,” said Prince and Zatlyn. “We are making these changes now because making smaller, repeated cuts or dragging a reorganization out over multiple quarters creates prolonged emotional uncertainty for employees and stalls our ability to build.” Cloudflare topped revenue and earnings forecasts for the first quarter of 2026, yet its shares plunged more than 20% following the same-day announcement of workforce layoffs and softer near-term guidance. According to data from Layoffs.fyi , cybersecurity companies that announced layoffs this year include Kaseya, Axonius, CyberArk, At-Bay, Pentera, and Arctic Wolf. Related : People on the Move Related : Nick Andersen Appointed Acting Director of CISA Related : Cybersecurity M&A Roundup: 33 Deals Announced in April 2026 Written By Eduard Kovacs Eduard Kovacs (@EduardKovacs) is senior managing editor at SecurityWeek. He worked as a high school IT teacher before starting a career in journalism in 2011. Eduard holds a bachelor’s degree in industrial informatics and a master’s degree in computer techniques applied in electrical engineering. 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