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Cloudflare Lays Off 20% Despite Beat-and-Raise, Stock Falls 18%: First Time AI Usage 600% Surge Cited as Documented Justification

Cloudflare announced layoffs of 1,100 employees (~20% of workforce) on May 7, 2026, even as Q1 revenue rose 34% YoY. The stock fell 14–18% after-hours. CEO Matthew Prince cited a 600% increase in internal AI usage over three months as the documented justification — the first time a major IT company has put an internal AI usage metric into formal layoff disclosures.