‘A very hard day’: Atlassian sheds 5 per cent of workforce, Mike Cannon-Brookes and Scott Farquhar announce in letter

The tech giant led by billionaire co-founders Mike Cannon-Brookes and Scott Farquhar says the decision to axe 500 jobs was ‘very difficult’.

Mike Cannon-Brookes, right, and Scott Farquhar said it was a ‘hard day’

Australian tech giant Atlassian has laid off 500 workers – about five per cent of its workforce – with the deepening ‘tech wreck’ hitting the software company led by billionaire co-founders Mike Cannon-Brookes and Scott Farquhar.

The Sydney-based Atlassian, which builds team collaboration software, had managed to stave off the cuts impacting the likes of Google, Amazon, Netflix and Facebook parent company Meta but on Tuesday announced a “difficult decision” to shed five per cent of its workforce.

“Today marks a very hard day in our 20-year history. We have made the difficult decision to rebalance our team to better position Atlassian for the long term, meaning we will be saying goodbye to around 500 Atlassians, or 5 per cent of our employees,” co-CEOs Mike Cannon-Brookes and Scott Farquhar wrote in a letter to staff.

“We came to this decision as an executive team and with our board, but ultimately the final call is on us as co-founders. To those who are leaving us: we are deeply sorry. In the spirit of ‘Open Company, No Bulls**t, here’s our honest take on how these decisions came to be.

“To be clear, this decision is not a reflection of Atlassian’s own financial performance, as we will be reinvesting in roles that better support our priorities. As a company, we have massive growth opportunities in front of us, particularly across cloud migrations, ITSM (IT Service Management), and serving our enterprise customers in the cloud. Although hard, this rebalancing will help us put more wood behind these arrows.”

The pair said the most impacted teams are across HR, program management and research and insights, and they will host a ‘founder tour’ next week to answer questions.

“This is going to be hard news for every Atlassian to digest,” the post reads.

“Please take the time you need to process it. As we’ve said before, the calls we make in challenging times need to reflect a future Atlassian we are all building towards. Atlassian’s future remains incredibly bright, with a huge amount of opportunity and possibility ahead of us.”

Prime Minister Anthony Albanese and Scott Farquhar co-CEO of Atlassian at the Jobs and Skills Summit at Parliament House in Canberra. Picture: NCA NewsWire / Martin Ollman

Affected employees will receive 15 weeks of severance pay plus one week for each year of their employment, and can keep their laptops.

“We know the industry standard is to block access to communication tools immediately. This approach didn’t feel right to us. Our default to trust is an incredibly important part of our culture,” the executives said in the letter.

“Most people leaving will have the option to interact with their teams until the end of the day Friday, March 10, 2023 local time. For people who have access to sensitive data, laptops will be locked, however, they will still be able to use Confluence, Slack, Zoom, and Gmail on other enrolled devices.We encourage you to take the time for farewells, including writing goodbye blogs and sharing any handovers. Some of those leaving may not want to do any of this — and that’s okay too.”

Two of Australia’s wealthiest people, Mike Cannon-Brookes and Scott Farquhar have seen more than $10bn wiped from their estimated wealth this year amid a torrid period for technology companies.

As of August the co-founders held about 43 per cent of Atlassian shares, but had planned to slowly sell a portion of those shares over the next 12 months.

Their company, which has yet to turn a profit, said in a corporate filing that the lay-offs would incur a charge of between $US70m and $US75m.

Between them, the world’s largest tech companies including Australian tech start-ups have laid off hundreds of thousands of works in recent months amid an economic slowdown.

Many tech companies say now they hired too quickly during the pandemic, and other factors including rising interest rates and the ongoing war in Ukraine have forced the tech industry to cut costs.

Shares in Atlassian slumped more than 20 per cent in one day in November after the company swung to an annual operating loss and posted earnings and revenue results that missed market expectations. The company’s co-CEOs blamed macroeconomic headwinds for dual trends of fewer “free” instances converting to paid plans, and shrinking paid user growth from existing customers. They decreased their revenue guidance for the full-year.

As recently as October Atlassian said it was hiring 1,000 new workers, launching a road trip across major cities from Sydney to the Sunshine Coast in search of staff in a branded RV dubbed the ‘AtlassiVan’.

“Our research shows that tech jobs are more secure than other jobs, and that women have half the pay gap in tech compared to other high paying industries,” Mr Farquhar said in an interview in October.

“We’re hiring people whether they’re from Brisbane, Bendigo and Ballarat, depending on where you want to be. These are the jobs of the future. And if we can’t fill all these roles here, they are jobs that can be done around the world, so we’ll look elsewhere.”

Shares in Atlassian, listed on the US Nasdaq index, were up 2.2 per cent at $US179.99 in afterhours trading and were down 28 per cent over the past year.