May 2026 — When Cloudflare announced its Q1 2026 earnings on Thursday, the numbers were good. Revenue hit $639.8 million — up 34% year-over-year and well above the $621.9 million analysts expected. Adjusted earnings came in at 25 cents per share, beating estimates by two cents.
Then came the other announcement: 1,100 people were losing their jobs. Around 20% of the company’s entire workforce, gone.
- Cloudflare (NYSE: NET) is headquartered in San Francisco and provides internet security and performance services to millions of websites worldwide.
“The Way We Work Has Fundamentally Changed”
Cloudflare CEO Matthew Prince and co-founder Michelle Zatlyn sent the news directly to all staff rather than letting managers trickle it out. Within an hour of the announcement, every employee worldwide had received an email confirming whether they were affected.
In the internal letter, later shared publicly on the company blog, the founders wrote: “We are writing to let you know directly that we’ve made the decision to reduce Cloudflare’s workforce by more than 1,100 employees globally. The way we work at Cloudflare has fundamentally changed.”
The reason they gave was AI — specifically the rise of what they called the “agentic AI era.” According to the founders, Cloudflare’s own internal use of AI has grown by more than 600% in just the last three months. Engineers, HR, finance, marketing — they’re all running AI agents daily.
On the earnings call, Prince was more blunt about what that means for headcount: “A lot of the support people that provide support behind them — those roles aren’t going to be the roles that drive companies going forward.”
He also made clear this wasn’t a performance issue or a cost-cutting response to a bad quarter. “Today’s actions are not a cost-cutting exercise or an assessment of individuals’ performance,” the founders wrote. “They are about Cloudflare defining how a world-class, high-growth company operates and creates value in the agentic AI era.”
When an analyst pushed back — asking why the company needed cuts after such a strong quarter — Prince’s answer was unusually terse: “Just because you’re fit doesn’t mean you can’t get fitter.”
The Tipping Point Was Last November
Prince has been selling AI products for years. But he admitted on the call that Cloudflare itself was slow to adopt AI internally.
That changed around November 2025. “At that point, across our teams, we began to see massive productivity gains — team members that were two, 10, even 100 times more productive than they had been before. It was like going from a manual to an electric screwdriver,” he said.
Now, 100% of the code produced via Cloudflare’s internal vibe coding tool and deployed to production is reviewed by autonomous AI agents. No human review.
This is the first mass layoff in Cloudflare’s 16-year history. “We’ve never done something like this in Cloudflare’s history,” Prince acknowledged.
The Severance Package
The founders were insistent that the execution — whatever one thinks of the decision itself — should be done differently than most tech layoffs. Affected employees will receive their full base pay through the end of 2026. US employees keep healthcare coverage through December. Equity continues to vest through August 15, and one-year vesting cliffs are being waived for departing staff.
That amounts to roughly eight months of full pay for most affected workers — a level of severance that, by American standards, is exceptionally rare.
By comparison, when Snap laid off 1,000 people last month, it offered four months of severance — itself considered generous in Silicon Valley.
“We’ve asked the team to do this only once,” the founders wrote. “We don’t want to do it again for the foreseeable future.”
Employee Reactions: A Pattern With History
The May 2026 cuts are Cloudflare’s largest ever, but they aren’t the company’s first time generating public anger over how it handles departures.
In January 2024, a Cloudflare account executive named Brittany Pietsch recorded her own termination call and posted it to TikTok. The video spread fast. On the call, HR told her: “You are not being singled out on this. Your peers are also being collectively assessed on performance. This is a collective calibration for Cloudflare.”
Pietsch asked directly why she was being let go. The HR representative responded: “Errr, I won’t be able to go into specifics for numbers.”
The video drew a sharp reaction from CISOs and executives across the industry. One CISO commented publicly: “Lying and saying it was based on performance, not having direct managers in the meetings, stonewalling valid questions — this is the most unethical method of laying off an employee I’ve ever seen.”
Another sales staffer shared her experience on LinkedIn at the time: “‘We’re very careful with hiring in order to avoid layoffs’ was literally what I was told in my final interview with Cloudflare when I was offered my role, about eight months ago. Unfortunately, I discovered this was in fact not accurate.”
She added: “No warning, no PIP, still on a ramp quota, positive performance reviews, booking deals, on track with pipeline, and looking forward to closing some big wins this fiscal year. Yet, I was still let go via a cold, impersonal, surprise 15-minute meeting.”
The 2024 controversy eventually prompted CEO Prince to address it on X, where he admitted Cloudflare fell short: “Managers should always be involved. HR should be involved, but it shouldn’t be outsourced to them. No employee should ever actually be surprised they weren’t performing. We definitely weren’t anywhere close to perfect in this case.”
Hacker News Noticed the Irony
When the May 2026 announcement hit, observers online were quick to spot something uncomfortable. In September 2025, Cloudflare ran an internship program called “Help build the future” — hiring 1,111 interns under that slogan. Eight months later, 1,100 people were out the door under a blog post titled “Building for the Future.”
One Hacker News commenter captured the reaction: “Exhibit A — September 2025 — ‘Help build the future’ — Cloudflare hires 1111 interns. Exhibit B — May 2026 — ‘Building for the future’ — Cloudflare lays off 1100 people.”
What Comes Next
Prince said Cloudflare will keep hiring — just differently. “I would guess that in 2027 we’ll have more employees than we did at any point in 2026,” he told analysts. The company is not cutting salespeople who carry revenue quotas. The roles disappearing are support, operational, and back-office functions that AI is now covering.
The company expects restructuring charges of $140 million to $150 million in Q2. Full-year revenue guidance came in at $2.805 billion to $2.813 billion, just above analyst estimates of $2.8 billion.
Despite strong earnings, Cloudflare shares dropped roughly 19–24% in after-hours trading Thursday — investors, apparently, uncomfortable with the cost of going from fit to fitter.
Cloudflare (NYSE: NET) is headquartered in San Francisco and provides internet security and performance services to millions of websites worldwide.