Mike Cannon-Brookes, co-founder and CEO of Atlassian, sent a memo to staff announcing 1,600 layoffs (about 10% of the global workforce), presenting it as a necessary adaptation to the age of Artificial Intelligence (AI).
That same week, the company's shares lost more than half of their value since January.
The memo said the cuts would allow Atlassian to 'fund further investments in AI and enterprise sales, while strengthening our financial profile'.
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Atlassian: AI and layoffs
Cannon-Brookes stressed that the approach is not about replacing people with AI, but acknowledged that AI is changing the skill mix required and the number of roles needed in some areas. Specifically, he said: 'This is mainly about adaptation. We are reshaping our skill mix and changing the way we work to build the future.'
More than 900 of the affected roles are in software research and development. Geographically, North America is most affected by the cuts (40% – about 640 people), followed by Australia (30% – about 480) and India (16% – about 250). Employees in Japan, the Philippines and various offices in Europe, the Middle East and Africa are also affected.
The laid-off employees will receive a minimum severance package of 16 weeks, with one additional week for each year of service, a prorated bonus for fiscal year 2026, a $1,000 technology payment and six months of expanded healthcare coverage.
Along with the layoffs, Atlassian confirmed that Rajeev Rajan will step down as Chief Technology Officer on March 31, after nearly four years. Rajan, a former vice president of engineering at Meta and a Microsoft veteran, has not commented publicly on his departure.
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Two executives, Taroon Mandhana and Vikram Rao, will share the CTO responsibilities. Mandhana, formerly the head of engineering for AI and products at Atlassian, will take on the title of CTO Teamwork. Rao, previously Chief Trust Officer, becomes CTO Enterprise and Chief Trust Officer. Atlassian has described both as "next-generation AI talent."
The restructuring contrasts with Atlassian's underlying business performance. The company reported cloud revenue of $1.067 billion in the most recent quarter (up 26% year-over-year).
Atlassian's Rovo AI assistant surpassed five million monthly active users in February, and the company now has over 600 customers generating more than $1 million in annual recurring revenue.
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This combination of strong operating metrics, healthy future revenue, and 1,600 layoffs has heightened scrutiny of the motivations behind these decisions across the industry. OpenAI CEO Sam Altmanreferred to the practice of using AI as an excuse for cuts made for other reasons as 'AI washing'. He noted that less than 1% of companies are actually using AI effectively.
