Atlassian (TEAM) cut roughly 10% of its workforce on Thursday, letting go of approximately 1,460 to 1,600 employees as the company pivots further into artificial intelligence and enterprise sales.
The Australian software company employed around 14,626 people as of its most recent quarter. The reduction brings headcount back to early 2025 levels.
CEO Mike Cannon-Brookes announced the cuts in an internal memo — then published it publicly. That’s not something you see every day.
“Decisions require heart and balance,” Cannon-Brookes wrote, framing the move as the “right [but] hard” call. He was careful to push back on the idea that AI is simply replacing people, though he acknowledged it is changing what skills and how many roles the company needs.
Those losing their jobs will receive a $1,000 technology stipend after returning their corporate laptop, accelerated bonus payments, six months of extended healthcare coverage, and full paid parental leave payouts.
TEAM stock gained around 2.4% to 2.5% in premarket trading after the news dropped. That kind of move on a layoff announcement has become familiar — Block (XYZ) jumped 17% last month after announcing it would cut 40% of its staff for similar AI-related reasons.
TEAM has had a rough stretch otherwise. The stock is down roughly 77% from last year’s highs and off about 51% year-to-date.
BTIG analysts said the layoffs felt “less like a surprise and more like a matter of not if, but when.” The firm pointed to Atlassian’s unusually high R&D spending for a company at this stage of growth.
The analysts also flagged that the cuts could mark a turning point in Atlassian’s path to GAAP profitability — a goal the company has not yet reached. Stock-based compensation ate up 26% of revenue in fiscal 2025.
Atlassian generates over $5 billion in annual revenue, but has consistently prioritized growth over bottom-line profit. The workforce reduction, in BTIG’s view, signals a shift in that narrative.
The company reiterated its third-quarter guidance alongside the announcement, which BTIG described as unsurprising given roughly three weeks remain in the quarter.
The capital freed up from the headcount reduction will be redirected toward AI development and enterprise sales expansion, according to Cannon-Brookes.
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