Cloudflare stock falls 18% after Q1 earnings beat; company cuts over 1,100 employees citing AI changes

Cloudflare reported first-quarter earnings per share of 25 cents versus 23 cents expected, and revenue of $640 million versus $622 million expected. The company announced a workforce reduction of over 1,100 employees (a 20% reduction), stating that agentic artificial intelligence (AI systems that autonomously make decisions and execute tasks) has "fundamentally changed" its work.

The company's use of AI increased over 600% in the last three months as it adopts an "agentic AI-first operating model." First-quarter revenue increased 34% year-over-year. CEO Matthew Prince said on the earnings call that there are roles at the company "that just aren't the roles that we need for the future."

For Q2 2026, Cloudflare forecasted revenue between $664 million and $665 million and earnings per share of 27 cents (in line with Wall Street expectations). For full-year 2026, the company forecasted revenue between $2.805 billion and $2.813 billion and earnings per share between $1.19 and $1.20, both narrowly beating estimates.