Atlassian cuts headcount by 5% because it focuses on excessive precedence areas

Michael Cannon-Brookes, Co-CEO, Atlassian

Scott Mill | CNBC

Manufacturer of business software Atlasian said Monday it would lay off 500 employees, or around 5% of its workforce. Atlassian shares rose 1% in extended trading following the announcement.

The tech industry has shrunk slightly over the past year after Covid prompted individuals and businesses to change their behavior, although unemployment remains 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 attempting to curb rising prices by raising interest rates.

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Scott Farquhar and Mike Cannon-Brookes, Atlassian co-founders and co-CEOs, said the move was less about financial needs and more about focusing on key priorities like IT service management and helping customers move from 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 had revenue of about $873 million in the fourth quarter, up about 27% year over year, though it ended the period with a net loss of $205 million. Australia’s unemployment rate was 3.7% in January, according to government statistics.

“While many teams at Atlassian have been impacted, some of our most impacted teams include talent acquisition, program management, and research and insights,” write Farquhar and Cannon-Brookes. “We want to make it clear that these decisions do not reflect the work of our teammates. Every single person has made contributions that have changed our company for the better and will have a lasting impact on their colleagues and teams. This is about rebalancing the roles. We need Atlassian first.”

Employees that Atlassian cuts receive 15 weeks of severance pay, plus one week for each year of service, and they can keep their laptops. Friday will be her last day, a spokesman told CNBC.

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

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

REGARD: Stop the layoffs: when do investors call for growth?