Cloudflare is laying off over 1,100 workers — roughly 20% of its staff — because, as the company puts it, the way its employees work has fundamentally changed. The company says it needs to restructure for the "Agentic AI" era.
Over the past three months, internal AI usage at Cloudflare has surged more than 600%. Across engineering, HR, finance, and marketing, employees now collectively run thousands of AI agent sessions every day to get their jobs done. In a memo to staff, the two founders emphasized that this isn't a simple cost-cutting move or a purge of low performers. Instead, the company is redesigning every internal process and role.
The severance package is notably generous: departing employees will receive their full base salary for all of 2026. US employees will have health insurance covered through the end of the year, and everyone's equity vesting is extended to August 15 — with employees who joined less than a year ago getting their one-year cliff waived entirely. The founders promised this is a one-time action, not a series of small rounds that would create ongoing morale damage for the teams left behind.