Atlassian announced a major workforce reduction Wednesday, eliminating 1,600 positions, or 10% of its staff. The move is a direct response to a steep decline in its stock price, which has fallen more than 50% this year amid a sector-wide retreat from software shares. CEO Mike Cannon-Brookes framed the layoffs as a strategic pivot, stating the savings will be used to internally finance new investments in artificial intelligence and enterprise sales operations.

Employees will learn their status via email, the company said. Atlassian expects to incur between $225 million and $236 million in charges related to the restructuring, with the process largely complete by June.

The company, known for Jira and Confluence, has seen its valuation drop 84% from its 2021 high. While it thrived during the pandemic's remote-work boom, it now faces pressure from generative AI advancements reshaping its market. Atlassian has been promoting its Rovo AI assistant, which reportedly reached 5 million monthly users in February and is included in many subscriptions. This focus coincides with a three-quarter streak of accelerating year-over-year revenue growth.

This is the second significant cut in recent years for Atlassian, which let go of 500 employees in 2023. The announcement reflects a broader pattern where tech executives are tying workforce reductions to strategic AI investments, a trend seen earlier this year at companies like Block.

Source: CNBC