Cloudflare, Inc. 10-Q filed Aug 6, 2026

Modified · Impact of Operating Model Evolution

On May 7, 2026, we announced a plan (the Plan) designed to further accelerate our evolution to an agentic AI-first operating model. As part The Plan reduced approximately 20% of the Plan, we expect our workforce. We estimate total restructuring charges under the Plan to reduce our current workforce by approximately 20%. We currently estimate that we will incur charges of betweenbe up to $165 million, consisting of $125 million in cash expenditures for severance and employee benefits, $14035 million in stock-based compensation and $1505 million in connection with the Plan, consisting primarilyother costs. We recognized the majority of cash expenditures for notice period, severance payments, employee benefits the restructuring charges during the three months ended June 30, 2026 and related costs of between $105 million and $110 million and non-cash expenses related to vesting of share-based awards of between $35 million expect to recognize the remaining charges in the three months ended September 30, 2026 as we substantially complete the Plan by September 30, 2026. These charges were included in restructuring and $40 million. We expect that the majorityother costs on our condensed consolidated statement of operations for the restructuring charges will be incurred in the second quarterthree and six months ended June 30, 2026. As of fiscal June 30, 2026, and that the execution of liability associated with the Plan will be substantially complete by the end of the third quarter of fiscal 2026. Our estimates are subject was mostly included in accrued compensation on our condensed consolidated balance sheet. For further details regarding restructuring and other charges, refer to a number of assumptionsNote 15 to the condensed consolidated financial statements in Part I, Item 1, and the actual costs incurred may differ materially from those initial estimatesItem 1A “Risk Factors” in Part II of this Quarterly Report on Form 10-Q.