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Cloudflare Sinks 16% After Hours as Mass Layoffs and Soft Q2 Guide Rattle Investors

San Francisco, May 7, 2026 — Shares in Cloudflare plunged around 16% in after-hours trading yesterday after the connectivity cloud company delivered a strong first quarter beat but simultaneously announced it is cutting approximately 1,100 employees — roughly 20% of its entire workforce — as part of a sweeping shift to what management is calling an "agentic AI-first operating model."

The Q1 numbers were genuinely impressive. Revenue grew 34% year-over-year to $639.8 million, beating analyst estimates of around $622 million by a comfortable margin. Adjusted EPS of $0.25 beat expectations of $0.23. Free cash flow rose to $84 million, or 13% of revenue. Full-year guidance was raised, with revenue now expected at $2.805 to $2.813 billion — above prior estimates — and adjusted EPS of $1.19 to $1.20, well ahead of the $1.14 consensus.

Yet none of that was enough to offset the shock of the layoff announcement. CEO Matthew Prince and COO Michelle Zatlyn announced the cuts in a letter to staff, framing them as a necessary transformation as AI agents increasingly take over work previously done by humans. The restructuring is expected to cost $140 to $150 million, with the bulk hitting Q2 earnings. Cloudflare, which had been aggressively hiring, joins a growing list of technology companies including Oracle, Meta, and Atlassian in using AI-driven efficiency as justification for significant headcount reductions.

Adding fuel to the selloff, Q2 revenue guidance of $664 to $665 million came in just below the analyst consensus of $665.3 million — a small miss in absolute terms but enough to amplify negative sentiment on a night already dominated by the layoff news. Valuation concerns also linger, with the stock having traded at a significant premium ahead of the report.

The irony is stark: Cloudflare is cutting jobs because AI is making its workforce more productive, while simultaneously telling investors that AI is the biggest tailwind in the company's history. The market, at least tonight, is focused on the human cost and the near-term uncertainty rather than the long-term opportunity.

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WS Investor 05-08-26

Cloudflare Inc. partnered with Wiz to strengthen security for AI applications by combining Cloudflare’s edge protections with Wiz’s cloud visibility platform.

The integration enables organizations to identify “shadow AI” tools, monitor AI traffic in real time, and detect risks such as prompt injection and sensitive data exposure. By mapping AI applications and data flows, the solution helps security teams prioritize vulnerabilities and respond to threats more effectively.

The partnership aims to provide a unified approach to managing the growing AI attack surface, allowing companies to adopt AI technologies more securely without sacrificing performance or requiring major infrastructure changes.
Business Wire

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WS Investor 04-14-26

Cloudflare announced an expansion of its Agent Cloud platform, introducing new tools and infrastructure to support the development and large-scale deployment of autonomous AI agents.

The update includes features such as Dynamic Workers for efficient execution of AI-generated code, Git-compatible “Artifacts” storage for managing agent-generated data, and general availability of Sandboxes—isolated environments where agents can run full operating systems. The platform also introduces “Think,” a framework enabling long-running, multi-step agent tasks.

Cloudflare aims to address key challenges in scaling AI agents, including cost, security, and infrastructure limitations, by offering a unified platform that integrates multiple AI models and simplifies switching between providers.

The company said the enhancements are designed to move AI agents from experimental use cases to production-grade applications, supporting a future where millions of autonomous agents operate simultaneously across enterprise environments.
Business Wire

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European Investor 04-13-26

Cloudflare, Inc. and GoDaddy Inc. announced a strategic partnership aimed at enabling a more transparent and secure “agentic web” for the AI era.

The collaboration introduces tools that allow website owners to control how AI-powered crawlers access their content, including integration of Cloudflare’s AI Crawl Control into GoDaddy’s hosting platform. It also supports new open standards such as Agent Name Service (ANS) and Web Bot Authentication to verify the identity of AI agents.

The companies said the initiative will help address growing concerns over unverified bot traffic and content usage, while enabling a more trusted digital ecosystem where AI agents can interact securely with websites.

The partnership reflects efforts to establish infrastructure and standards for managing AI-driven interactions as the internet evolves beyond human-centric use.
Business Wire

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WS Investor 04-07-26

Cloudflare, Inc. (NYSE: NET) announced it is the first SASE platform to fully support modern post-quantum encryption standards across its entire Cloudflare One ecosystem.

The update extends post-quantum (PQ) protection to wide-area networking (WAN) use cases through IPsec and Cloudflare One Appliance, complementing its existing Zero Trust and Secure Web Gateway capabilities. The move is designed to protect organizations against emerging quantum computing threats, including “harvest now, decrypt later” attacks, while ensuring interoperability and high-availability routing.

Cloudflare said the quantum-safe SASE capabilities are available immediately at no additional cost.

Source: Business Wire

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The Investor 02-23-26

Cloudflare, Inc. (NYSE: NET) and Mastercard Incorporated (NYSE: MA) announced a strategic partnership to expand cyber defense capabilities for small businesses, governments and critical infrastructure.

The collaboration will combine Mastercard’s Recorded Future and RiskRecon attack surface monitoring tools with Cloudflare’s Application Security portfolio. The joint solution is designed to help organizations identify unknown internet-facing assets, assess cyber posture in real time and automate remediation through controls such as web application firewalls and encryption.

Users will receive continuously updated security ratings, visibility into vulnerabilities and third-party risks, and prioritized remediation guidance within Cloudflare’s Security Insights dashboard.

The companies aim to close security gaps created by shadow IT, legacy systems and expanding digital ecosystems, providing smaller and resource-constrained organizations with enterprise-grade protection without slowing innovation.
Business Wire

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The Investor 02-17-26

Cloudflare, Inc. reported strong fourth-quarter and full-year 2025 results, driven by accelerating enterprise demand and AI-related workloads.

Fourth-quarter revenue rose 34% year over year to $614.5 million. GAAP operating loss was $49.2 million, or 8% of revenue, while non-GAAP operating income reached $89.6 million, or 15% of revenue. GAAP net loss narrowed to $12.1 million ($0.03 per share), and non-GAAP net income increased to $106.8 million ($0.28 per diluted share). Operating cash flow was $190.4 million, and free cash flow totaled $99.4 million, or 16% of revenue. Remaining performance obligations (RPO) grew 48% year over year, with current RPO up 34%.

For full year 2025, revenue climbed 30% to $2.17 billion. GAAP operating loss was $207.2 million, while non-GAAP operating income reached $303.9 million (14% margin). GAAP net loss was $102.3 million ($0.29 per share), and non-GAAP net income totaled $342.9 million ($0.93 per diluted share). Operating cash flow increased to $603.1 million, with free cash flow of $260.6 million. The company ended the year with $4.1 billion in cash and investments.

Management highlighted record annual contract value growth in Q4 and pointed to rising demand tied to AI and “agentic” workloads as a key driver.

For Q1 2026, Cloudflare expects revenue of $620–$621 million and non-GAAP EPS of $0.23. For full year 2026, it forecasts revenue of $2.785–$2.795 billion and non-GAAP EPS of $1.11–$1.12.

Source: Business Wire press release

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WS Investor 02-11-26

Cloudflare announced that it has acquired the team behind Astro, a popular open-source framework used to build fast, content-driven websites. Under the agreement, Astro will remain open source, with Cloudflare committing long-term investment to ensure the framework continues to prioritize speed, reliability, and developer flexibility.

Cloudflare said the move strengthens its focus on high-performance web development as search engines and users increasingly favor fast-loading, lightweight pages. Astro is widely adopted by major brands and platforms and is designed to ship only the minimum code required for each page, improving load times and search visibility. With the Astro team joining Cloudflare, the company plans to accelerate Astro’s roadmap, including support for additional JavaScript runtimes and faster build times.

Cloudflare emphasized that Astro will remain framework-agnostic and usable beyond Cloudflare’s own infrastructure, while ongoing community contributions will continue to be supported through the Astro Ecosystem Fund and industry partners.

Source: Cloudflare, Business Wire

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Global Finance News 01-18-26

Cloudflare warned that organizations relying on legacy technology face a “technical glass ceiling” that is limiting artificial intelligence gains and increasing cybersecurity risks, according to its newly released 2026 App Innovation Report.

The report found that companies prioritizing application modernization are three times more likely to achieve clear returns from AI investments, while those burdened by technical debt struggle with rising costs, security vulnerabilities, and shortages of skilled developers. Nearly all leaders surveyed said modernizing software was critical to improving AI capabilities, with security-aligned modernization making organizations significantly more likely to reach advanced AI maturity.

Cloudflare said the findings highlight a growing divide between companies that modernize to integrate AI at scale and those that delay updates until after security incidents, arguing that modern infrastructure has become a core competitive requirement rather than a purely technical objective.

Source: Cloudflare, Inc., Business Wire, January 14, 2026

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Global Finance News 01-14-26

Cloudflare and JD Cloud Expand Partnership to Build Global AI Inference Platform

Cloudflare and JD Cloud announced an expanded strategic partnership aimed at accelerating the global deployment and scaling of AI inference workloads for developers. The collaboration is expected to reduce latency for AI inference workloads by up to 80 percent, creating a high-performance, globally distributed AI cloud environment.

Under the expanded partnership, Cloudflare’s global connectivity platform will integrate more deeply with JD Cloud’s infrastructure, enabling seamless routing of AI inference traffic. Developers will be able to deploy applications globally while automatically serving users in China through JD Cloud-operated local data centers, with the rest of the world served from Cloudflare’s nearest locations. This setup requires no code changes and is designed to deliver faster performance, stronger security, and simplified global operations.

The companies said the partnership responds to rising demand for geographically distributed AI inference as AI-driven applications continue to scale worldwide. The combined platform also strengthens security and reliability through Cloudflare’s services, including DDoS protection, web application firewall capabilities, and global content delivery.

Cloudflare stated that the collaboration helps connect global developers to the China market and enables Chinese developers to reach international users more efficiently, lowering technical and regulatory barriers for cross-border AI deployment.

Source: Cloudflare press release, Business Wire

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WS Investor 12-20-25

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