Atlassian cuts 5% of its workforce

Atlassian, the company behind tools like Jira, Confluence and Trello, today announced that, after a reorg a month ago, it is now laying off about 500 employees. That’s about 5% of its total workforce.

Atlassian co-founders and co-CEOs Mike Cannon-Brookes and Scott Farquhar note in today’s announcement that this move shouldn’t be seen as a reflection of the company’s financial performance (though it’s worth noting that despite increasing its overall revenue in recent years, it continues to report net losses in its quarterly earnings releases). Instead, the co-founders are positioning this move as a “rebalancing” that will help the company prioritize the areas where it is growing.

“We’ve made hard calls to reduce our investment in specific areas, in order to reinvest in others,” to co-founders write. “This is different to a financially-driven reduction, where you would look to make ‘broad-based cuts’ – for example, a 10% cut equally distributed across every org within the company. This is not what is happening here.”

Specifically, Atlassian will cut employees in areas like talent acquisition, program management and what it calls “research and insights.”

In the terse language of the company’s SEC filing, the idea here is to “better position it to execute against its largest growth opportunities.” According to the co-founders, these opportunities are cloud migrations, IT service management (ITSM) and “serving our enterprise customers in the cloud.” It’s no secret that Atlassian’s focus in recent years has been on its cloud services and it looks like it’s doubling down on that, as well as products like Jira Service Management, the ITSM solution it launched in 2021.

According to Atlassian’s filing, the company will incur about $70 to $75 million in charges in connection with these layoffs.

While layoffs are never easy, the company is offering affected employees 15 weeks of severance pay, plus one additional week per year of service, with unused paid time off also getting paid out. Atlassian will offer accelerated vesting and employer-sponsored healthcare for the next six months, as well as visa support. Employees will be able to keep their work laptops, too (which is becoming increasingly common).

In what is a bit of an unusual move, laid off employees will keep access to the company’s communications tools for the rest of this week — though users with access to sensitive data will get locked out of their laptops (though they will still be able to access tools like Confluence, Slack, Zoom and Gmail on other previously enrolled devices).