Cloudflare laid off more than 1,100 employees globally as the company restructures for what it calls the "agentic AI era."

Co-founders Matthew Prince and Michelle Zatlyn announced the cuts in an internal email, saying AI usage among employees has surged 600% in the past three months alone.

"We don't just build and sell AI tools and platforms. We are our own most demanding customer," the founders wrote. "Employees across the company from engineering to HR to finance to marketing run thousands of AI agent sessions each day to get their work done."

The layoffs represent a significant workforce reduction for the content delivery network and cybersecurity company. Prince and Zatlyn emphasized the cuts were not performance-based but part of reimagining "every internal process, team, and role across the company."

Generous severance packages

Cloudflare offered departing employees full base pay through the end of 2026, plus healthcare coverage through December for US workers. The company also accelerated equity vesting through August 15th and waived one-year cliff requirements for newer hires.

"We believe acting with empathy isn't about avoiding hard decisions but rather about how you treat people when those decisions are made," the founders said.

The announcement came hours before Cloudflare's earnings call, where executives planned to discuss the restructuring further. The company framed the move as necessary to maintain its competitive edge against legacy competitors.

"Cloudflare started as a digitally native company built in the cloud," Prince and Zatlyn wrote. "As we've now become the leader, we cannot rest on the workflows and organizational structures that worked yesterday."

The founders said they aimed to complete the restructuring in one round rather than conducting multiple smaller layoffs over several quarters. They described the decision as providing "immediate clarity" to departing employees while protecting stability for remaining staff.

Cloudflare plans to address the changes in an all-hands meeting following the earnings call.