Atlassian Cuts 1,600 Jobs to Fund AI Push Following Block’s Playbook

Quick Facts

• Atlassian will lay off 1,600 employees (10% of workforce) by June 2026 to fund AI and enterprise sales investments
• The cuts will cost $225-236 million and follow Block’s February layoffs of 4,000 workers for similar AI-focused reasons
• Despite strong cloud revenue growth of 25% and 5 million monthly users on its Rovo AI platform, the company remains unprofitable since 2017

Atlassian announced March 11 it will eliminate approximately 1,600 positions as part of a strategic pivot toward artificial intelligence and enterprise sales. The layoffs represent 10% of the software company’s workforce and will be completed by the end of June 2026.

CEO Mike Cannon-Brookes said the cuts are necessary to adapt to AI’s changing skill requirements. “It would be disingenuous to pretend AI doesn’t change the mix of skills we need or the number of roles required in certain areas,” he stated. “We are reshaping our skill mix and changing how we work to build for the future.”

The restructuring will result in $225 million to $236 million in charges. Affected employees will receive a minimum of 16 weeks of pay plus one additional week per year of service, along with pro-rata bonuses and a $1,000 technology stipend.

Following Block’s AI Strategy

Atlassian’s move mirrors Block CEO Jack Dorsey’s February 2026 decision to cut more than 4,000 employees, nearly half of Block’s workforce. Dorsey predicted AI could automate much of the eliminated work and said other companies would reach the same conclusion within a year.

The prediction appears accurate. Data shows roughly 20% of the 45,363 tech layoffs recorded worldwide in 2026 have been linked to AI implementation, with projections suggesting total reductions could reach 264,730 by year-end if cuts continue at current intensity.

Strong Performance Despite Cuts

Unlike typical layoffs driven by financial distress, Atlassian is cutting from a position of strength. The company reported cloud revenue growth acceleration to over 25%, with remaining performance obligations growing 40%. More than 600 customers generate $1 million or more in annual recurring revenue.

The company’s Rovo AI platform has surpassed 5 million monthly active users. However, Atlassian has remained unprofitable every fiscal year since going public in 2015.

Atlassian shares gained 2.5% in premarket trading following the announcement, similar to Block’s 17% surge after its AI-focused layoffs. BTIG analysts characterized the cuts as “less like a surprise and more like a matter of not if, but when.”

Leadership Changes and Market Outlook

The company also announced CTO Rajeev Rajan will step down after nearly four years. Atlassian is promoting Taroon Mandhana as CTO Teamwork and Vikram Rao as CTO Enterprise and Chief Trust Officer.

Sanchit Vir Gogia, chief analyst at Greyhound Research, advised enterprise buyers to view the move as “strategic reallocation of capital, not a distress signal.” He noted management treats AI as something that “changes how the company should be staffed, what types of roles it needs, and where it should spend its money.”

However, some experts warn companies may use AI as cover for routine cost-cutting. Oxford Economics’ Ben May suggested firms might “dress up layoffs as a good news story rather than a bad one.”

Read more: Atlassian follows Block’s footsteps and cuts staff in the name of AI