Atlassian (NASDAQ:TEAM) has announced plans to cut roughly 10% of its workforce, or about 1,600 jobs, as part of a restructuring aimed at increasing investment in artificial intelligence.
The Australian-American software firm behind Trello and Jira said more than 900 of the affected positions are in software research and development. Atlassian reported having 13,813 full-time employees as of June 2025, with more than half of them working in software engineering and design roles.
The layoffs will affect employees across several regions. About 640 positions are being eliminated in North America, 480 in Australia and 250 in India. The remaining reductions will be spread across Japan, the Philippines, Europe, the Middle East and Africa.
The move comes alongside a leadership change in the company’s technology organization, with Atlassian replacing its chief technology officer. Current CTO Rajeev Rajan is set to step down after four years in the role. He will be replaced by Taroon Mandhana and Vikram Rao, both of whom have been with the company for about three years.
In a note to employees circulated late Wednesday US time, co-founder Mike Cannon-Brookes said the decision was intended to help position the company for future growth as artificial intelligence reshapes the software industry.
“But that doesn’t mean it’s easy,” Cannon-Brookes wrote. “Far from it. I know this has a huge impact on each of you, and it weighs heavily on me and Atlassian today.”
Analysts at Jefferies say the cuts mark the company’s first significant reduction in headcount and reflect a broader effort to adapt to what the firm described as a changing bar for “great” software companies in the AI era.
The firm wrote that the restructuring could improve Atlassian’s operating margins over the next two fiscal years. Jefferies said the job reductions could create upside to its fiscal 2026 operating margin estimate of 25.6%, with potential for further gains in fiscal 2027 depending on how much of the cost savings are reinvested.
The move could help reduce stock-based compensation as a share of revenue, which it estimates was about 26% in fiscal 2025, among the highest levels within its coverage of software companies.
Atlassian’s workforce had grown rapidly in recent years, with headcount increasing at a mid-teens pace over the past two years after nearly doubling during the COVID-19 period. Revenue per employee reached about $320,000 in fiscal 2025, approaching the company’s pre-pandemic peak, according to Jefferies.
Jefferies said the restructuring appears aimed at prioritizing investment in artificial intelligence and expanding enterprise sales efforts. While companies in the Fortune 500 account for roughly 85% of Atlassian’s customer base, analysts estimate they generate only about 10% of the company’s revenue.
The bank also pointed to opportunities for growth through cross-selling and product bundles, particularly among non-developer users, who make up roughly half of Atlassian’s seat base.
Despite potential execution risks associated with the layoffs, Jefferies said Atlassian maintains an “attractive Rule of 40 story”—a metric commonly used to evaluate the balance of growth and profitability in software companies—and identified potential catalysts for more than 20% medium-term growth.
Shares of Atlassian were little changed at $75 on Thursday, down more than 53% in the year to date.