Atlassian Cuts 5% of Head Count as the Software Maker Focuses on High-Priority Areas

Scott Mlyn | CNBC
  • Atlassian's cuts are meant to help the company focus more on key areas such as cloud migrations, the company's co-CEOs said.
  • Several of the company's rivals have also cut jobs in the past few months.

Business-software maker Atlassian said Monday that it will lay off 500 employees, or around 5% of its workforce. Atlassian shares were up 1% in extended trading following the announcement.

The technology industry has been contracting slightly in the past year after Covid caused individuals and companies to change their behaviors, even as unemployment continues to be low in developed countries. Atlassian's competitors Alphabet, Asana, GitLab, IBM, Microsoft and PagerDuty have also announced job cuts in recent months, with central bankers seeking to tamp down rising prices by lifting interest rates.

Scott Farquhar and Mike Cannon-Brookes, Atlassian's co-founders and co-CEOs, said the move is less about financial needs and more about focusing on key priorities such as IT service management and helping customers move workloads from on-premises data centers to the cloud. Cuts are not evenly distributed across the company, they wrote in a blog post.

The company generated about $873 million in revenue in the fourth quarter, up about 27% year over year, although it ended the period with a $205 million net loss. Australia's unemployment rate in January was 3.7%, according to government statistics.

"While many teams across Atlassian are impacted, some of our most impacted teams include Talent Acquisition, Program Management, and Research & Insights," Farquhar and Cannon-Brookes wrote. "We want to be clear these decisions are not a reflection of our teammates' work. Every single person has made contributions that have changed our company for the better and will leave a lasting impact on their peers and teams. This is about rebalancing the roles we need across Atlassian first and foremost."

Employees whom Atlassian is cutting will receive 15 weeks of severance, plus one week for each year of employment, and they can keep their laptops. Friday will be their last day, a spokesperson told CNBC.

Atlassian is based in Sydney. Australia's unemployment rate in January was 3.7% on a seasonally adjusted basis, according to government statistics.

The cost cuts will result in $70 million to $75 million in charges, according to a filing.

WATCH: Lay off the layoffs: When do investors demand growth?

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