US-based Cloudflare, a connectivity cloud company, is set to reduce its workforce by more than 1,100 employees worldwide. This decision comes as the company restructures its operations to align with the increasing use of artificial intelligence (AI). Cloudflare reported a remarkable 600% surge in internal AI usage over the past three months, with various departments relying on AI agents for daily tasks.
The company emphasized that this move is part of a larger organizational revamp to adapt to the era of ‘agentic AI,’ rather than a typical cost-cutting measure or performance-based layoff program. Cloudflare assured that the restructuring process would be communicated directly to all employees, impacting their official and personal email addresses.
As part of the restructuring, departing employees will receive severance packages that include full base pay until the end of 2026, ongoing healthcare support in the US until year-end, and additional equity vesting benefits until August 15. Employees who have not completed their one-year vesting cliff will also receive prorated equity vesting.
Cloudflare plans to execute the restructuring in a single phase to minimize uncertainty and avoid multiple layoff rounds. The company aims to reshape its organizational structure to stay competitive in a rapidly evolving AI landscape that is reshaping business workflows and operating models in the tech sector. Cloudflare’s transformation strategy focuses on enhancing speed and innovation by investing in AI-driven products and services.
