Cloudflare previously announced plans to hire more than 1,000 interns to ‘scale up’ the use of AI.
Cloudflare is cutting 20pc of its workforce after the use of AI at the company grew by 600pc in the last three months. The company said it is cutting more than 1,100 jobs, and expects restructuring costs to reach $150m.
Cloudflare shares fell more than 16pc in after-hours trading despite the company announcing a stronger-than-expected quarter, with first-quarter revenue growing 34pc year-on-year to nearly $640m. It expects second quarter revenue to reach between $664m to $665m.
“We have to be deliberate in how we design our company in the era of agency AI”, an email sent to employees read.
“Today’s actions aren’t a cost-cutting exercise or a human performance review – they’re about Cloudflare explaining how a world-class, high-growth company operates and creates value in the agency AI era.”
In its earnings release yesterday (May 7), Cloudflare founder and CEO Matthew Prince said “AI is driving a fundamental internet renaissance and a paradigm shift in how software is created and used – shaping the biggest storm we’ve ever seen in Cloudflare’s history.”
Cloudflare has offices in many European countries, including the UK. SiliconRepublic.com has contacted the company for details on country-specific layoffs.
The IT service provider is the latest to join the growing list of high-performance technology companies that are substituting human workers for AI. In recent months alone, Coinbase has cut 14pc of its workforce; Meta, about 8,000 jobs; Block, 4,000 jobs; Oracle, about 10,000; Amazon, 30,000; Atlassian, 10pc of its employees; and Snap, about 16pc – a trend largely driven by technology change in the workplace.
Company leaders, who had been wary of linking layoffs to AI, have recently begun to embrace the shift in work culture, with Coinbase’s Brian Armstrong noting that AI is “changing the way we work” and Meta’s Mark Zuckerberg noting that projects that previously required large teams, now require “one very skilled person”.
The founder of Block, head and chairman Jack Dorsey, on the other hand, said, earlier this year, that “many companies” will reach the same conclusions with small groups and make similar structural changes “during the next year”.
Cloudflare, however, is also hiring a young, AI-savvy workforce, with its plan to hire 1,111 interns by the end of 2026. The students are expected to “strengthen the creation and spread of the use of AI in a new way”, the company wrote in a blog from September.
The company – which says it powers about 20 percent of the web – had a tumultuous last quarter last year with two outages affecting websites around the world. Sites and platforms such as Zoom, LinkedIn, Shopify, Canva, Substack, Coinbase, as well as X and OpenAI, were reportedly affected by the outage.
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