Cloudflare is shedding greater than 1,100 staff to arrange for the “agentic AI period”. The cybersecurity firm advised employees concerning the workforce discount on Thursday, after posting first-quarter income of $639.8 million.
Cloudflare co-founders Matthew Prince and Michelle Zatlyn mentioned in an inside memo, seen by Enterprise Insider, that the corporate’s use of AI had elevated “greater than 600%” within the final three months alone. They framed the layoffs as an train to arrange for the agentic AI period, and never a cost-cutting measure.
What did the Cloudflare memo say?
“The way in which we work at Cloudflare has essentially modified,” the corporate executives mentioned of their memo. “We do not simply construct and promote AI instruments and platforms. We’re our personal most demanding buyer”.
Noting that departments like engineering, HR, finance, and advertising and marketing now run “hundreds of AI agent periods every day,” the corporate mentioned it needed to be “intentional in how we architect our firm for the agentic AI period”.
Cloudflare insisted that the layoffs, which would cut back headcount by 20%, weren’t a “cost-cutting train” — “they’re about Cloudflare defining how a world-class, high-growth firm operates and creates worth within the agentic AI period,” the Silicon Valley big mentioned.
Will there be extra layoffs at Cloudflare?
Matthew Prince and Michelle Zatlyn claimed that there could be no extra layoffs on the firm within the foreseeable future. They mentioned that the thought behind the large workforce discount was to make sure that there are not any “ smaller, repeated cuts or dragging a reorganization out over a number of quarters”.
Learn the complete memo beneath:
Crew:
We’re writing to let instantly that we have made the choice to scale back Cloudflare’s workforce by greater than 1,100 staff globally.
The way in which we work at Cloudflare has essentially modified. We do not simply construct and promote AI instruments and platforms. We’re our personal most demanding buyer. Cloudflare’s utilization of AI has elevated by greater than 600% within the final three months alone. Staff throughout the corporate from engineering to HR to finance to advertising and marketing run hundreds of AI agent periods every day to get their work accomplished. Meaning we’ve got to be intentional in how we architect our firm for the agentic AI period with the intention to supercharge the worth we ship to our prospects and to honor our mission to assist construct a greater Web for everybody, in every single place.
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At this time is a tough day. This resolution sadly means saying goodbye to teammates who’ve contributed meaningfully to our mission and to constructing Cloudflare into one of many world’s most profitable corporations. We wish to be clear that this resolution isn’t a mirrored image of the person work or expertise of these leaving us. As an alternative, we’re reimagining each inside course of, workforce, and function throughout the corporate. At this time’s actions will not be a cost-cutting train or an evaluation of people’ efficiency; they’re about Cloudflare defining how a world-class, high-growth firm operates and creates worth within the agentic AI period.
It is a second we have to personal as founders and leaders of the corporate. Matthew has personally despatched out each provide letter we have prolonged. It’s a apply he has all the time regarded ahead to as a result of it represented our development and the unbelievable expertise becoming a member of our mission. It did not really feel proper for this message to come back from anybody aside from the 2 of us. Fairly than trickling out notices via managers, we might be sending emails to each worker.
(Additionally learn: Matthew Prince net worth: All on Cloudflare CEO’s fortune amid global outage)
Inside the subsequent hour, each member of our world workforce will obtain an e-mail from each of us clarifying how this modification impacts them. For these departing as we speak, we’ll ship this replace to each their private and Cloudflare addresses to make sure they obtain the knowledge instantly.
It is essential to us that we deal with departing workforce members proper and in a method that exceeds what we have seen from different corporations. We imagine performing with empathy is not about avoiding laborious choices however relatively about the way you deal with folks when these choices are made. If we’re asking our workforce to be world-class, we’ve got a reciprocal obligation to be world-class in how we deal with them. We’re pairing the directness of those measures with severance packages that lead the business.
The packages for departing staff will embrace the equal of their full base pay via the tip of 2026. Healthcare protection is totally different throughout the globe, and in case you’re in america, we’ll proceed to supply help via the tip of the yr. We’re additionally vesting fairness for departing workforce members via August fifteenth, in order that they obtain inventory past their departure date. And, if departing workforce members have not hit their one-year cliffs, we’re going to waive these and vest their pro-rated fairness via August as effectively.
We have requested the workforce to do that solely as soon as, as laborious as that could be as we speak. We do not wish to do it once more for the foreseeable future. By taking decisive motion now, we offer speedy readability to these departing and shield the steadiness of the workforce that is still. We’re making these adjustments now as a result of making smaller, repeated cuts or dragging a reorganization out over a number of quarters creates extended emotional uncertainty for workers and stalls our means to construct. It is the proper factor to do; it is the sincere factor to do; and it displays the values of the corporate we’re persevering with to construct.
Cloudflare began as a digitally native firm constructed within the cloud. That allowed us to catch as much as and go corporations that had a head begin of years or many years however had been slowed down by outdated methods and processes. As we have now turn out to be the chief, we can not relaxation on the workflows and organizational constructions that labored yesterday. We’re assured that our reshaped group might be even quicker and extra modern as we proceed constructing the long run.
To these departing us: you have helped construct the sturdy basis Cloudflare stands on as we speak. We’ve the utmost respect in your work and gratitude for the affect you will have made. We’re assured you’ll land at different nice locations and construct many future nice corporations, bringing with you a novel set of expertise realized whereas constructing Cloudflare.
Transparency is a core precept at Cloudflare, and it was essential that you simply hear this from us first. We might be heading to our earnings convention name at 2 PM PT, once we’ll share extra. We additionally plan to handle as we speak’s bulletins dwell with the workforce at our all-hands assembly.
It isn’t a simple day, nevertheless it’s the proper resolution. Our mission to assist construct a greater Web is extra essential now than ever, and there is loads of work left to be accomplished.