News
Cloudflare says AI made 1,100 jobs obsolete, even as revenue hit a record high
Cloudflare on Thursday joined a growing list of tech companies — including Meta, Microsoft, and Amazon — that have reported increased revenue alongside massive layoffs, attributing both trends to their use of AI.
Cloudflare, which provides internet security and performance services to millions of websites worldwide, announced it was cutting its workforce by approximately 20%, which equates to 1,100 people, it said as part of its first quarter 2026 earnings report on Thursday.
“We’ve never done something like this in Cloudflare’s history,” co-founder and CEO Matthew Prince said Thursday on the quarterly conference call, marking the first mass layoff in the company’s 16-year history. The company is cutting people from all teams and geographies except for salespeople who carry revenue quotas, CFO Thomas Seifert detailed on the call.
The news of the workforce cuts came as the company reported quarterly revenues of $639.8 million, a 34% year-over-year increase and the highest single quarter in the company’s history. However, this was coupled with a loss of $62.0 million compared with losing $53.2 million in the year-ago quarter.
That widening loss, even as revenue surged, highlights a familiar paradox in Cloudflare’s story: the company is growing fast but has yet to turn a consistent profit. But the loss was a smaller percentage of revenue, and the quarter was coupled with a lot of other positive indicators. For instance, Cloudflare reported that it had over $2.5 billion in “remaining performance obligations,” a year-over-year growth of 34%. RPO is the favorite metric these days to indicate revenue under contract but not yet delivered.
Hence, Prince insisted, the 20% cuts were not to reduce expenses but were strictly because of its use of AI.
“Today’s actions are not a cost-cutting exercise or an assessment of individuals’ performance; they are about Cloudflare defining how a world-class, high-growth company operates and creates value in the agentic AI era,” Prince and Cloudflare co-founder and president, Michelle Zatlyn, wrote in a related blog post about the layoffs.
Prince acknowledged on the call that even though Cloudflare has been selling AI-powered products, it was at first cautious about adopting AI itself.
“Internally, the tipping point was last November. At that point, across our teams, we began to see massive productivity gains, team members who were two, 10, even 100 times more productive than they had been before. It was like going from a manual to an electric screwdriver,” he described.
“Cloudflare’s usage of AI has increased by more than 600% in the last three months alone,” he added.
Prince highlighted the internal use of AI coding, saying that virtually the entire R&D team is now using the company’s own Workers platform — a tool that lets developers build and run software directly on Cloudflare’s global network — including its vibe coding feature. He also noted that 100% of the code produced this way and deployed for use in Cloudflare’s products is “now reviewed by autonomous AI agents.”
But it’s not just developers who are using AI internally, he said. “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.”
As a result, these highly productive, AI-powered employees require fewer support staff, he argued.
“A lot of the support people that provide support behind them, those roles aren’t going to be the roles that, you know, drive companies going forward,” Prince said.
Interestingly, Prince says that Cloudflare “will continue to hire people, and we’ll continue to invest in them because the people that are embracing these tools are just so much more productive than we’ve ever seen before. I would guess that in 2027 we’ll have more employees than we did at any point in 2026.”
Cloudflare said it ended its first quarter before layoffs with a headcount of about 5,500.
The pattern Prince described — deploying AI gains as justification for workforce reductions even during a period of strong revenue growth — is fast becoming a familiar script across the tech industry. Whether it reflects true structural transformation or acts as a convenient cover for cost discipline is a question that investors and employees will be wrestling with for some time to come.
When asked by an analyst on the call why the company needed to cut so deeply after such a good quarter, Prince said, “Just because you’re fit doesn’t mean you can’t get fitter.”
Artificial intelligence (AI) could help developing countries achieve in a decade what might otherwise take a century, according to the World Bank’s report.
The lender said governments must act swiftly to address gaps in electricity, connectivity, skills and institutional quality that could leave them behind.
The World Bank disclosed this in its latest World Development Report 2026, titled ‘The Promise of Artificial Intelligence’.
The report surveyed enterprises’ AI adoption in developing economies, sampling 777 firms in Nigeria.
The World Bank, in its report, urged developing economies to adopt an optimistic mindset, noting that AI could help governments reach billions of underserved people with medical, legal, educational, and agricultural services more quickly.
“AI could help extend otherwise costly medical, legal, educational, and agricultural services to the underserved billions—doing in a decade what might otherwise take a century,” the report stated.
It noted that jobs in high-income countries are more than three times as likely to be at risk of automation by generative AI as those in low- and middle-income countries, where 4.5 per cent of existing jobs are at risk, compared with 14.2 per cent in high-income countries.
At the same time, 16.2 per cent of jobs in developing economies could see their productivity meaningfully boosted by AI, close to the 18.7 per cent expected in high-income countries.
The greatest promise for developing countries lies not in replacing workers, but in amplifying what they can do, the report said.
“AI has thrown developing economies a lifeline, and they should seize it,” Indermit Gill, Senior Vice President and Chief Economist of the World Bank Group, added in the report.
He explained that developing economies do not need large models or big data centres to reap the benefits of AI adoption.
By adapting small, low-cost AI tools to local conditions, they can bring better medical care, education, judicial services and agricultural extension within reach of millions, the World Bank chief stated.
The report is the first comprehensive assessment of AI’s implications for developing countries, revealing how businesses and governments there have begun to use AI.
It revealed that AI is already helping people, businesses, and governments solve problems, analyse information, improve forecasts and deliver services on a larger scale.
These capabilities are especially valuable in countries where trained professionals, reliable records and public capacity are often limited.
According to the World Bank, AI tools can make it easier for doctors to diagnose patients, farmers to make better crop decisions, and businesses to become more productive.
Governments, too, could use AI to improve tax collection, social programmes, disaster response, healthcare, and education, it added.
The lender said AI could significantly boost the weak growth performance of developing countries before the end of the 2020s while delivering tangible benefits to people.
READ ALSO: Engaging the blackbox-glassbox paradox: Media imperatives in the era of artificial intelligence, By Omoniyi Ibietan
The report added that the opportunity is limited, noting that most developing economies still lack the power, internet access, data, skills and institutions needed to use AI effectively.
The report stated that, without deliberate action, AI could widen disparities between countries, increase inequality within them, concentrate market power, weaken trust in public institutions, and create new risks to safety, rights, and social cohesion.
The report outlines a clear three-stage approach: adopt available tools, tailor them to local circumstances, and gradually progress towards frontier AI development.
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