An aggressive restructuring plan sent Cloudflare shares down more than 20% Friday, washing out a first-quarter earnings beat. The cybersecurity and content delivery firm reported $639.8 million in revenue, up 34% year-over-year, and non-GAAP earnings of $0.25 per diluted share. Analysts had forecast $622 million in revenue and $0.23 EPS.
Cloudflare will cut approximately 1,100 employees as part of a pivot to what CEO Matthew Prince calls an “agentic AI first operating model.” The company expects to incur $140 million to $150 million in restructuring charges, mostly in the second quarter.
Prince described AI as the biggest tailwind in Cloudflare’s history, but investors focused on the cost and scale of the layoffs. The stock fell as low as $192.60 on Friday, closing near $198.85-down roughly 22.6%.
For the second quarter, Cloudflare guided revenue between $664 million and $665 million, with full-year 2026 revenue projected at $2.805 billion to $2.813 billion and non-GAAP EPS of $1.19 to $1.20.