Cloudflare, headquartered in San Francisco, is undergoing a significant transformation as it announces layoffs of over 1,100 employees, which constitutes approximately 20% of its workforce. In an internal memo, co-founders Matthew Prince and Michelle Zatlyn highlighted that the company's approach to work has 'fundamentally changed' due to a 600% increase in artificial intelligence usage over the past three months. The layoffs are part of a broader effort to restructure the organization to better align with AI-driven processes rather than a reflection of employee performance. Despite the layoffs, Cloudflare reported a 34% increase in first-quarter revenue, totaling $639.8 million. Employees affected by the layoffs will receive full base pay through the end of 2026, health coverage until the year's end, and equity vesting through mid-August. The company anticipates restructuring costs between $140 million to $150 million, primarily related to severance and benefits, with completion expected by the end of the third quarter.