Cloudflare just posted the best quarter in its 16-year history. It also just laid off one in five employees. Those two sentences sitting next to each other tells you everything about where the tech labor market is headed.
CEO Matthew Prince announced during the company’s Q1 2026 earnings call that Cloudflare is eliminating approximately 1,100 positions, reducing headcount from roughly 5,500 to around 4,400. The cuts represent the first major layoffs the company has ever conducted, and Prince was unusually blunt about the reason: AI made those jobs unnecessary.
Record revenue, record cuts
Cloudflare reported Q1 2026 revenue of $639.8 million, a 34% increase year-over-year. The company still posted a net loss of $62 million, but that top-line growth is the kind of number most SaaS companies would frame and hang on the wall.
Which makes the layoffs harder to categorize as a typical belt-tightening exercise. Prince explicitly stated these are not traditional cost-cutting measures. Instead, the company says its internal use of “agentic AI” has rendered entire categories of work redundant.
