Cloudflare shares drop 18% after announcing 20% workforce cut driven by AI shift.

Cloudflare reported first-quarter earnings that beat expectations, with revenue of $640 million and earnings per share of 25 cents. Despite this, shares fell 18% after the company announced it will cut over 1,100 jobs, about 20% of its workforce, citing a major shift to agentic artificial intelligence that has changed its operational needs. CEO Matthew Prince highlighted AI as a key growth driver but noted many roles are no longer needed. The company expects second-quarter revenue around $664-$665 million and full-year 2026 revenue slightly above $2.8 billion, with earnings per share forecasts beating estimates.