Cloudflare cuts 1,100 jobs because of AI, despite record revenue

Cloudflare has announced its first major layoffs, an unprecedented step in the company's history. CEO Matthew Prince attributed the decision to the efficiency of AI tools, which let the company handle its workload with fewer people. In total, 1,100 positions were cut, mostly in support functions. The cuts come against a backdrop of record revenue.

A historic moment for the cloud giant

For Cloudflare this is a genuinely historic moment: until now, the company was regarded as a stable employer that did not carry out large-scale layoffs. In a letter to employees, Matthew Prince explained that AI has reached a level of maturity at which it handles routine support tasks better than people do. The technology has advanced enough to replace human labor in structured operations.

The heaviest blow fell on support functions: technical support, ticket processing, answers to frequently asked questions, and initial problem diagnostics. Management positions and functions duplicated across different departments were also cut. Prince stressed that this is not a cost-cutting measure but a strategic decision to refocus the company on innovation.

Revenue grows as headcount shrinks

It seems counterintuitive: a company announces record revenue and lays off 1,100 people at the same time. But it reflects a fundamental shift in labor economics driven by AI. Output per worker is growing exponentially thanks to AI tools, so companies need fewer employees to serve the same volume of operations and customers.

Matthew Prince confirmed that this is not a response to financial trouble but a deliberate strategy: Cloudflare is investing in modern AI platforms that make work easier for the remaining employees. The company plans to grow while speeding up innovation and optimizing operating costs.

Who will be affected

• Support and technical support (AI chatbots handle it more effectively)
• Low-complexity operational roles
• Duplicate management positions
• Functions fully suited to automation
• Some global operations centers

Earlier examples in the industry

Cloudflare is not the first tech company to announce layoffs amid record profits. In 2023-2024, Meta*, Amazon and other giants carried out layoffs, citing the need to boost efficiency and refocus on AI. Still, the scale of the cuts at Cloudflare stands out: this is not a cosmetic 10-15% of staff but a complete reconfiguration of the workforce based on a technological assessment of every position.

What sets Cloudflare apart is the CEO's transparency. He does not hide that this is a consequence of adopting AI and speaks about it openly in public appearances. This may set a new trend in the industry: an honest dialogue about how AI is changing the structure of organizations.

A clear signal for the industry

Cloudflare's story is a loud wake-up call for the entire tech industry. AI is no longer just a tool for boosting the productivity of existing teams; it is a means of reconfiguring organizational structure. Companies that learn to manage this process now, by retraining teams and refocusing on new areas, will gain a huge competitive advantage. Those that wait risk falling behind.

*Meta is designated an extremist organization and banned in Russia.