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

cloud flare reported first quarter profit That figure beat analysts’ expectations on Thursday, but shares fell 18% in extended trading as the company announced a 20% reduction in its workforce.

The cloud company’s performance according to LSEG forecasts is as follows:

• Earnings per share: 23 cents expected versus 25 cents
• Revenues: 640 million dollars, while the expectation was 622 million dollars

The company announced in a blog post: Layoffs of more than 1,100 employeeswrites that agency AI is “fundamentally changing” the company’s work.

“This wasn’t an easy decision, but it’s the right one,” CEO Matthew Prince said on the earnings call, adding that there are roles at the company that “are not the roles we need for the future.”

The company emphasized that the use of artificial intelligence has increased by over 600% in the last three months as it has adopted an “AI-first operating model”.

Cloudflare’s first-quarter revenue increased 34% year-over-year. The company predicted second-quarter revenue would fall between $664 million and $665 million. Analysts expected $665 million.

The company’s second-quarter forecast for 27 cents in earnings per share was in line with Wall Street’s expectations.

In the earnings call, Prince described the growth of artificial intelligence as the biggest headwind in the company’s history.

The company predicted full-year revenue for 2026 would fall between $2.805 billion and $2.813 billion, narrowly beating estimates of $2.8 billion. Cloudflare said it expects earnings of $1.19 to $1.20 per share for the full year, beating estimates of $1.14.

Cloudflare posted a net loss of $22.93 million in the first quarter of 2026, with a loss of 7 cents per share. A year ago, the company posted a net loss of $38.45 million, a loss of 11 cents per share.