Atlassian cuts 10% of workforce, citing AI-driven restructuring and market pressures

Atlassian has announced it will cut 10% of its workforce, eliminating approximately 1,600 positions as the Australian software company restructures to focus on artificial intelligence and enterprise sales.

In a message to employees, CEO Mike Cannon-Brookes acknowledged that AI is fundamentally changing the company's skill requirements and operational needs. "It would be disingenuous to pretend AI doesn't change the mix of skills we need or the number of roles required in certain areas. It does," he wrote.

The job cuts are part of a broader strategy to "self-fund further investment in AI and enterprise sales, while strengthening our financial profile," according to Cannon-Brookes. The company is also reorganizing around its "System of Work" initiative to improve operational speed and efficiency.

Market pressures have intensified the need for these changes. Atlassian's market capitalization peaked at $112 billion in 2021 but fell to around $30 billion by early 2023. Despite a brief rally in February 2025, the company's stock closed Wednesday at approximately $75 per share, valuing the company at just over $20 billion.

The company has prioritized reinvesting profits rather than recording traditional GAAP profits, which has contributed to concerns about the "SaaSpocalypse" - the theoretical collapse of SaaS companies as organizations potentially replace them with AI-generated tools.

Despite these challenges, Cannon-Brookes highlighted positive momentum in several areas. The company reported over 25% growth in revenue from cloud products, more than 40% growth in remaining performance obligations, and securing 600 customers who spend over $1 million annually. The company's new "Rovo" AI suite has attracted more than five million users.

In a video message to departing employees, Cannon-Brookes expressed regret for the disruption caused by the layoffs. "I am deeply sorry for the disruption this creates in your life," he said.

The layoffs were implemented rapidly, with all employees receiving notification emails within 20 minutes of the CEO's announcement. Departing staff will receive 16 weeks of wages plus an additional week for each year of service, along with pro-rata bonuses. Those who have booked parental leave will be paid for it in advance.

Each departing employee will receive a $1,000 technology stipend after returning company equipment. However, the separation will be swift - employees will lose access to Slack within 12 hours, and the company will restrict access to internal Confluence resources to protect customer data.

In his video message, Cannon-Brookes urged remaining employees to "be kind to yourselves and others [and] check in on your teammates," while telling departing workers, "you are an important part of the Atlassian story."

This marks the second major round of layoffs at Atlassian in recent years, following the elimination of 500 positions in 2023. The company's approach to these cuts reflects its stated value of "Build with heart and balance," with Cannon-Brookes describing the decision as requiring both "humanity, empathy, passion" and "pragmatism, trade-offs, decisiveness."

The restructuring comes as Atlassian attempts to navigate what it sees as a fundamental shift in software development and enterprise collaboration tools. The company's pivot toward AI investment represents a bet that these technologies will drive future growth, even as they enable workforce reductions in the near term.

For the broader tech industry, Atlassian's announcement adds to a growing pattern of companies using AI as both a growth opportunity and a justification for workforce optimization. The speed and scale of these changes suggest that the impact of AI on employment may be accelerating faster than many anticipated.