Atlassian to cut 1,600 jobs as it pivots to AI and enterprise sales

Atlassian has announced the largest layoff in its history: the company will eliminate about 1,600 jobs, or 10% of its global workforce. The maker of Jira, Confluence and Trello says the move reflects 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 redirect the freed-up resources into its two highest-priority areas: AI-related products and features, and enterprise sales. At the same time, the company wants to reach sustainable GAAP profitability sooner and reduce internal complexity. Management does not formally say that people were "replaced by AI," but it openly acknowledges that the new tools are changing the mix of skills the business needs and reducing demand for some roles.

"It would be disingenuous to pretend that AI does not change the mix

of skills and the number of roles in certain areas."

The market took the news calmly: after the announcement, Atlassian shares rose about 2% in after-hours trading. For investors, it signals that the company is not simply cutting costs but reallocating capital to the areas it considers key to the next growth cycle. Amid normalizing demand after the pandemic boom and a general cooling of the SaaS sector, such a turn no longer looks like an exception. On the contrary, it is part of a broader trend in which software companies are trying to prove they can grow faster while spending less.

How the plan works

Atlassian describes the decision as a three-part overhaul of the business. It is not only about cutting people, but also about how the company will assemble its product and commercial teams over the coming quarters. Management specifically cites tighter accountability for revenue, a simpler structure and faster decision-making. It has also emerged that CTO Rajeev Rajan will leave his post on March 31, 2026, and that the restructuring should be largely complete by the end of the company's fiscal year.

• Self-fund further investment in AI
• Speed up sales to large enterprise customers
• Reach sustainable GAAP profitability
• Cut management layers and speed up teams

Atlassian estimates the restructuring will cost $225–236 million. Of that, $169–174 million will go to severance, notifications, payments to employees and a transition period, and another $56–62 million to reducing office space. The company also reaffirmed its previously issued guidance for the quarter and the fiscal year, an attempt to show the market that the decision is built into the current plan and is not a reaction to a sudden collapse in the business.

What employees will get

For laid-off employees, Atlassian announced a support package above the minimum requirements in most of the countries where it operates. The company promises that employees will receive notifications quickly, and that in regions requiring mandatory consultations the process will follow local law. Internally, this is presented as an effort to soften the most painful moment: the decision is abrupt, but the terms of departure are noticeably more generous than is typical for mass layoffs in the tech sector.

• At least 16 weeks of severance
• One more week for each year of service
• A prorated payout of FY26 bonuses
• $1,000 for equipment after returning the company laptop
• Up to 6 months of extended health insurance and visa assistance

What this means

Atlassian illustrates a logic that matters for all enterprise software: AI is no longer just a new feature in a product but also an argument for rebuilding a company's staffing, structure and economics. For the job market, this is bad news, but it is an important marker that the next wave of competition in SaaS will revolve around speed, margins and how deeply AI is embedded in the business, not just in the interface.