Cloudflare stock sinks after earnings, cutting over 20% of employees

Source Domain: www.cnbc.com

Cloudflare reported first-quarter earnings that exceeded analyst expectations with earnings per share of 25 cents versus the expected 23 cents and revenue of $640 million against the $622 million expected.
Despite the positive earnings, Cloudflare’s shares fell by 18% after market hours due to the announcement of a 20% reduction in its workforce, which includes over 1,100 employees.
CEO Matthew Prince attributed the workforce reduction to the impact of agentic artificial intelligence, which he stated “fundamentally changed” the company’s work and rendered certain roles obsolete for the future.
The company’s use of AI has grown over 600% in the last three months as it adopts an “agentic AI-first operating model.”
Cloudflare’s first-quarter revenue increased by 34% year-over-year, and the company forecasted Q2 revenue between $664 million and $665 million, matching Wall Street expectations.
For the full year of 2026, Cloudflare projected revenue between $2.805 billion and $2.813 billion, narrowly beating the $2.8 billion estimates, and set full-year earnings per share between $1.19 and $1.20, surpassing the $1.14 estimate.
Cloudflare posted a net loss of $22.93 million, or 7 cents per share, for Q1 2026, which was an improvement from the net loss of $38.45 million, or 11 cents per share, in the same period last year.

You may have missed