Cloudflare announced its first-ever mass layoff, cutting approximately 1,100 employees (20% of its workforce), even as it reported record quarterly revenue of $639.8 million — a 34% year-over-year increase. CEO Matthew Prince attributed the cuts entirely to AI-driven productivity gains, not cost-cutting, saying internal AI usage surged 600% in three months and that employees are now 2x to 100x more productive. The entire R&D team uses Cloudflare's own Workers platform including its vibe coding feature, with 100% of AI-generated code reviewed by autonomous AI agents. Prince argued that highly productive AI-empowered employees require fewer support staff, and predicted Cloudflare will have more total employees by 2027 than at any point in 2026. The move mirrors a growing pattern at Meta, Microsoft, and Google of pairing strong revenue growth with AI-justified layoffs.
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