Cloudflare Q1 earnings: revenue $639.8 million, beating expectations; AI applications led to layoffs of 1,100 people

Cloudflare, in its 2026 Q1 earnings report released on May 7, 2026, said quarterly total revenue was $639.8 million, up 34% year over year, beating analysts’ expectation of $622 million, and setting a company record high for revenue in a single quarter. The same day, Cloudflare announced layoffs of about 1,100 people, roughly 20% of the company’s total workforce, marking the first large-scale layoffs in the company’s 16-year history.

Q1 2026 Core Financial Highlights

According to Cloudflare’s official earnings report, the company’s key financial metrics for Q1 2026 are as follows:

Total revenue for the quarter: $639.8 million, up 34% year over year, beating analysts’ expectation of $622 million

Adjusted earnings per share (EPS): $0.25, above analysts’ expectation of $0.23

GAAP net loss: $62.0 million (Q1 2025: a loss of $53.2 million)

Remaining performance obligations (RPO): over $2.5 billion, up 34% year over year

Restructuring expenses: expected to be $140 million to $150 million in Q2 to Q3 2026

Number of employees before layoffs: about 5,500

Layoff Details: Management Statements and Scope

According to Cloudflare’s official blog and the earnings call, CFO Thomas Seifert said that aside from sales personnel responsible for revenue targets, the layoffs would cover all teams and regions across the company.

Matthew Prince said on the earnings call, “Cloudflare has never taken an action like this in its history.” Prince and co-founder and president Michelle Zatlyn said in a joint blog post: “Today’s action is not about cutting costs or evaluating individual performance; it is about how Cloudflare defines how a world-class high-growth company operates and creates value in the era of smart AI.”

When analysts asked why a large-scale layoff was announced despite strong performance in the quarter, Prince replied: “Just because you are healthy today doesn’t mean you can’t become healthier.” Prince also said the company will continue hiring, and it expects headcount in 2027 to exceed any point in 2026.

AI Application Status: Usage Growth Exceeds 600% in the Past Three Months

Based on Prince’s statements on the earnings call, the inflection point for internal AI application at Cloudflare occurred in November 2025, after which productivity increased significantly across departments. Prince said that over the past three months, Cloudflare’s AI usage grew by more than 600%, with employees in departments such as engineering, human resources, finance, and marketing running thousands of AI agent sessions per day.

Prince noted that the R&D team now has nearly everyone using the company’s in-house Workers platform (including Vibe coding functionality). All code generated and deployed in this way is “now reviewed by autonomous AI agents.” He described this transformation as reshaping the company’s structure with an “agentic AI-first operating model.”

FAQ

What is the release date of Cloudflare’s Q1 2026 earnings report and what are the core financial metrics?

According to Cloudflare’s official earnings report released on May 7, 2026 (Thursday), Q1 2026 revenue was $639.8 million, up 34% year over year, exceeding analysts’ expectations of $622 million; GAAP net loss was $62.0 million; adjusted EPS was $0.25, exceeding expectations of $0.23.

What is the scale, scope, and related costs of Cloudflare’s layoffs?

Based on management’s comments on the earnings call, the layoffs involve approximately 1,100 people, representing about 20% of roughly 5,500 employees, covering all teams and regions (excluding sales personnel responsible for revenue targets). Restructuring expenses are expected to total $140 million to $150 million, primarily concentrated in Q2 to Q3 2026.

How did Cloudflare’s CEO explain the relationship between layoffs and AI adoption?

According to statements by Matthew Prince in the May 7, 2026 earnings call and the official blog, the layoffs stem from a major increase in the application of the company’s AI tools. AI usage has grown by more than 600% over the past three months, and it is not about cost control; Prince said the company will continue recruiting and expects headcount in 2027 to exceed the 2026 level.