Atlassian to cut 1,600 employees amid shift to AI and enterprise sales

Atlassian has announced the largest layoff in its history: the company will eliminate around 1,600 jobs, or 10% of its global workforce. The developer of Jira, Confluence, and Trello says the move is driven by a restructuring for the AI era, pressure on profitability, and a desire to grow faster in the enterprise segment.

Why the company is cutting staff

In a letter to employees, CEO Mike Cannon-Brookes wrote that Atlassian will direct freed-up resources into the two highest-priority areas — AI-related products and features, and enterprise sales. At the same time, the company wants to accelerate its path to sustainable GAAP profitability and reduce internal complexity.

Formally, management does not say that people were “replaced by AI,” but it openly acknowledges that new tools are changing the skill set the business needs and reducing demand for some roles.

“It would be dishonest to pretend that AI is not changing the skill

set and the number of roles in certain areas.”

The market took the news calmly: after the announcement, Atlassian shares gained about 2% in post-market trading.

For investors, this is a signal that the company is not simply cutting costs, but reallocating capital into the areas it sees as critical for the next growth cycle.

Amid demand normalization after the COVID boom and a broader cooling of the SaaS sector, this kind of pivot no longer looks unusual.

On the contrary, it is part of a broader trend in which software companies are proving they can grow faster while spending less.

How the plan is structured

Atlassian describes the decision as a three-part restructuring of the business.

It is not only about cutting headcount, but also about how the company will assemble product and commercial teams over the coming quarters.

Management also separately speaks about tighter revenue accountability, simplifying the structure, and speeding up decision-making.

It also became known that CTO Rajeev Rajan will leave the role on March 31, 2026, and that the restructuring itself should be largely completed by the end of the company’s fiscal year.

• Self-fund further AI investments
• Accelerate sales to large enterprise customers
• Reach sustainable GAAP profitability
• Reduce management layers and speed up teams

Atlassian estimates the restructuring will cost $225–236 million. Of that, $169–174 million will go toward severance, notices, employee payments, and the transition period, while another $56–62 million will be spent on reducing office space.

The company also reaffirmed its previously issued forecast for the quarter and the fiscal year, meaning it is trying to show the market that the decision is built into the current plan rather than being a reaction to a sudden business failure.

What employees will get

For those laid off, Atlassian announced a support package above minimum requirements in most countries where it operates.

The company says employees will receive notifications quickly, and in regions with mandatory consultations the process will follow local law.

Inside the company, this is being presented as an attempt to soften the most painful moment: the decision is made abruptly, but the exit terms are noticeably more generous than those typical of mass layoffs in the tech sector.

• At least 16 weeks of severance
• One additional week for each year of service
• Pro-rated bonus payout for FY26
• $1,000 for equipment after returning the corporate laptop
• Up to 6 months of extended health insurance and visa support

What it means

Atlassian is showing a logic that matters for enterprise software as a whole: AI is no longer just a new product feature, but also an argument for rebuilding headcount, structure, and the company’s economics.

For the market, this is bad news from a jobs perspective, but an important marker that the next wave of competition in SaaS will be built around speed, margins, and how deeply AI is embedded in the business, not just in the interface.