Cloudflare posted record revenue of $639.8 million in the first quarter, up 34% year over year. Then it cut 1,100 employees, roughly 20% of its workforce.
CEO Matthew Prince has a blunt explanation: AI made an entire category of workers obsolete. In a Wall Street Journal op-ed published this month, Prince wrote that the "vast majority" of those let go were what he calls "measurers", employees in middle management, finance, legal, internal auditing, and revenue recognition. He argued that AI systems can now measure organizational performance "with a level of objective detail and precision that was previously impossible even for the best employees."
The cuts hit middle management hardest, but Prince insists the company isn't shrinking. Cloudflare has a record number of open positions in what he described as "areas that drive growth." The firm is prioritizing "builders" (engineers) and "sellers" (sales reps), roles Prince believes are safer from automation. That claim runs counter to the prevailing narrative that software engineers are among the most vulnerable to AI, especially after Anthropic's Claude Code demonstrated strong coding capabilities. A recent Anthropic study found AI is already theoretically capable of completing the majority of tasks in finance, legal, and management roles, but also the majority of tasks performed by engineers and sales reps.
Prince and Cloudflare president Michelle Zatlyn co-authored a blog post that included the internal email sent to staff announcing the layoffs, which cited the company's agentic AI approach as the driving factor.
Cloudflare's move is part of a broader wave. Jack Dorsey's Block cut 40% of its workforce in February.
Meta cut 10% of workers this month, with CEO Mark Zuckerberg warning employees that in the AI age, "success isn't a given." A report from outplacement firm Challenger, Gray, & Christmas found 49,135 U.S. layoffs tied to AI this year alone, nearly matching all AI-related cuts in all of 2025. But not everyone is buying the AI explanation. Marc Andreessen, co-founder of Andreessen Horowitz, said on the 20VC podcast that "every large company is overstaffed" and that many are using AI as a convenient excuse.
"I think a lot of them are overstaffed by 75%," Andreessen said. "Now they all have the silver bullet excuse: Ah, it's AI."
Cloudflare pointed Fortune to Prince's op-ed and the blog post when asked for comment. The company said Prince personally sent offer letters to all new hires, emphasizing the restructuring was about shifting the nature of work, not reducing headcount.
Prince said Cloudflare expects to employ more people by the end of 2027 than at any point during 2026.
