Cloudflare Q1 revenue up 34%, beats estimates, cuts 20% workforce
Cloudflare’s Q1 revenue rose 34% year-over-year to $639.8 million with adjusted EPS of $0.25 and free cash flow of $84.1 million (13% of sales), both beating Wall Street estimates. The company is cutting roughly 1,100 jobs (20% of its workforce) and expects $140–150 million in restructuring charges.
1. Q1 Financial Results
Cloudflare reported Q1 revenue of $639.8 million, a 34% increase year-over-year, with adjusted EPS of $0.25 and free cash flow of $84.1 million, or 13% of revenue, surpassing consensus estimates.
2. Workforce Reduction Details
The company announced it will eliminate approximately 1,100 positions globally, representing 20% of its full-time staff of 5,156, citing a 600% surge in AI tool adoption that reshaped operational needs.
3. Restructuring Charges and Outlook
Cloudflare expects total restructuring charges of $140 million to $150 million, including $105 million to $110 million in cash severance and $35 million to $40 million in equity-related expenses, with most charges hitting Q2 and restructuring completed before Q3. Full-year guidance targets revenue of $2.805 billion to $2.813 billion and adjusted EPS of $1.19 to $1.20, with Q2 revenue expected at $664 million to $665 million.
4. Market Reaction
Shares slid 18% to 19% in extended trading following the earnings release and workforce announcement, reflecting investor concern over the scale of the layoff despite the financial beat.