Cloudflare shares plummeted after-hours Thursday as the corporation revealed it is cutting over one-fifth of its workforce.

The company’s first-quarter earnings beat analysts’ expectations.

CEO Matthew Prince emphasized the role that agentic artificial intelligence played in the revealed cuts, which affect over 1,100 employees globally.

Cloudflare reported first-quarter earnings Thursday that beat analysts’ expectations, but shares fell 18% in extended trading as the business published a 20% reduction in its workforce.

Here’s how the cloud organization did versus LSEG estimates: Furthermore, experts in earnings report note the continued relevance.

Revenue: $640 million vs. $622 million expected

In a blog post, the enterprise stated that it is cutting over 1,100 employees, writing that agentic artificial intelligence has “fundamentally changed” the company’s work.

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

The firm highlighted that its leverage of AI has increased over 600% in the last three months as it embraces “an agentic AI-first operating model.”

Cloudflare’s first-quarter revenue increased 34% year-over-year. The enterprise forecasted revenue for the second quarter to fall between $664 million and $665 million. Analysts expected $665 million.

The company’s Q2 guidance of 27 cents in earnings per share was in line with Wall Street’s expectations.

In the earnings release, Prince described the growth of AI as the company’s biggest tailwind in history. This also touches on aspects of wall street.

The firm forecasted full-year revenue for 2026 to fall between $2.805 billion and $2.813 billion, narrowly beating estimates of $2.8 billion. Cloudflare mentioned it expects full-year earnings between $1.19 per share and $1.20 per share, beating estimates of $1.14.

Cloudflare posted a net deficit of $22.93 million, a shortfall of 7 cents per share in Q1 2026. A year ago, the business had a net depletion of $38.45 million, a debt of 11 cents per share.