Cloudflare's stock fell 18% in extended trading after the cybersecurity and cloud services provider reported first-quarter earnings and announced a 20% reduction in its workforce.
The layoffs, affecting 1,100 employees, were attributed to the company's strategic shift in response to the evolving role of agentic artificial intelligence in its operations.
The company's earnings results exceeded analyst expectations, but the restructuring move overshadowed the financial performance.
The workforce reduction is part of a broader effort to align the company's structure with the transformative impact of AI on its business model.
The move reflects a growing trend among tech firms to reorganize in response to AI advancements, which are reshaping workflows and operational needs.
Cloudflare's decision highlights the challenges and opportunities presented by AI in the enterprise sector.