Australian software firm Atlassian has revealed plans to reduce its global workforce by approximately 10%, impacting approximately 1,600 employees. The layoff comes amid the company’s aggressive push towards AI and enterprise sales, helping it stay ahead in the AI era. The restructuring, which was announced via a regulatory filing and an internal memo from co-founder and CEO Mike Cannon-Brookes, aims to “self-fund” increased investments in AI features, infrastructure, and sales capabilities while strengthening the company’s financial profile and profitability.
The layoff announcement comes after Atlassian experienced a significant stock price decline earlier in 2026, with shares losing more than half their value at points. The stock price decline was attributed to investor concerns that AI advancements could disrupt traditional collaboration tools like Jira, Confluence, and Trello.
In his message to staff, CEO Cannon-Brookes acknowledged the emotional toll of the decision, stating, “I believe this is the right decision for Atlassian. But that doesn’t mean it’s easy. Far from it. I know this has a huge impact on each of you, and it weighs heavily on me and Atlassian today.”
“We’re also changing the way we work and reorganising around our System of Work to move faster,” he added.
The company stated that AI is reshaping the required skill mix and number of roles in certain areas, forcing a leaner structure to accelerate innovation.
‘Strategic restructuring’ amid AI disruption
Atlassian framed the layoffs as a deliberate rebalancing act to redirect resources toward the “future of teamwork in the AI era.” By trimming headcount, the company expects to free up hundreds of millions of dollars annually for AI development and enterprise-focused growth, without relying on external funding or debt. This “self-funding” approach reflects broader industry trends, where tech firms are cutting costs to pour money into generative AI, automation, and large-account sales amid pressure for faster growth and improved margins.
The restructuring includes leadership adjustments, such as replacing the chief technology officer, and potential office space reductions. Severance packages and related exit costs are expected to shoot up to $236 million, with most allocated to employee support.
Atlassian states that affected employees will be notified via email. The cuts are expected to hit various regions, including a notable portion in Australia (reportedly around 30% of the reductions).
Atlassian restructuring gets thumbs up from investors
Following the announcement, Atlassian shares rose nearly 2% in extended trading, hinting at investor approval of the cost discipline and focus on an ‘AI future’. The company, which had about 16,000 employees globally at the end of 2025, joins a growing list of tech firms going for layoffs and restructurings to adapt to AI’s transformative impact on software development, collaboration, and productivity tools.