Cybersecurity giant Cloudflare announced on Thursday that it will lay off more than 1,100 employees globally as part of a reorganization aimed at positioning the company for what executives describe as the agentic AI era. The tech company’s shares have dropped massively Friday in response to the announcement.
Business Insider reports that the workforce reduction was revealed in a memo sent to staff on Thursday, just hours after Cloudflare reported first-quarter earnings that exceeded Wall Street expectations. Despite the positive earnings report, the company’s shares dropped more more than 23.4 percent in morning trading on Friday.
In the internal memo, Cloudflare executives explained that the company’s use of AI has experienced dramatic growth, increasing by more than 600 percent in just the last three months. According to executives, employees across all departments including engineering, human resources, finance, and marketing now run thousands of AI agent sessions daily to complete their work.
The company’s leadership emphasized that the layoffs are not performance-related but rather represent a fundamental restructuring of how the organization operates. The memo stated that Cloudflare is reimagining every internal process, team, and role across the company to adapt to what they call the agentic AI era.
The memo emphasized that the decision to reduce headcount was not a cost-cutting measure or an assessment of individual performance. Instead, executives framed it as an effort to redefine how a world-class, high-growth company operates and creates value in an era increasingly shaped by AI capabilities.
Cloudflare executives noted that as a digitally native company built in the cloud, the organization was able to surpass competitors that had years or decades of head start but were hindered by outdated systems and processes. Now that Cloudflare has achieved leadership status in its sector, the company believes it cannot rely on organizational structures and workflows that were effective in the past.
The announcement makes Cloudflare the latest technology company to cite AI-driven efficiency gains and organizational changes as justification for workforce reductions. The trend reflects broader shifts in the technology industry as companies integrate artificial intelligence tools into their operations and reassess staffing needs accordingly.
Breitbart News reported this week that Coinbase is laying off 14 percent of its staff this week due to AI. The crypto platform promptly suffered a major outage.
AI’s impact on every aspect of the American economy is already apparent within the tech industry. The spread of AI to companies of all industries and its impact on American workers is one of the primary themes of the instant bestseller by Breitbart News Social Media Director Wynton Hall, Code Red: The Left, the Right, China, and the Race to Control AI.
Senator Marsha Blackburn (R-TN), who was named one of TIME’s 100 Most Influential People in AI, praised CODE RED as a “must-read.” She added: “Few understand our conservative fight against Big Tech as Hall does,” making him “uniquely qualified to examine how we can best utilize AI’s enormous potential, while ensuring it does not exploit kids, creators, and conservatives.” Award-winning investigative journalist and Public founder Michael Shellenberger calls CODE RED “illuminating,” ”alarming,” and describes the book as “an essential conversation-starter for those hoping to subvert Big Tech’s autocratic plans before it’s too late.”
Read more at Business Insider here.
Lucas Nolan is a reporter for Breitbart News covering issues of AI, free speech, and online censorship.