Michael Cannon-Brookes, Co-CEO, Atlassian

Scott Mlyn | CNBC

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

The technology industry has been shrinks somewhat the past year after Covid caused individuals and businesses to change their behaviour, even though unemployment remains low in developed countries. Atlassian’s competitors Alphabet, Asana, GitLab, IBM, Microsoft and PagerDuty has also announced cuts in recent months, with central banks trying to curb rising prices by raising interest rates.

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Scott Farquhar and Mike Cannon-Brookes, Atlassian’s co-founders and co-CEOs, said the move is less about financial needs and more about focusing on key priorities such as IT service management and helping customers move workloads from on-premise data centers to the cloud. Cuts are not evenly distributed across the company, they wrote in one blog posts.

The company generated about $873 million in revenue in fourth quarter, up about 27% year-over-year, although it ended the period with a net loss of $205 million. Australia’s unemployment rate in January was 3.7%, according to government statistics.

“While many teams across Atlassian are affected, some of our most impacted teams include Talent Acquisition, Program Management, and Research & Insights,” Farquhar and Cannon-Brookes wrote. “We want to be clear that these decisions are not a reflection of the work of our teammates. Each individual has made contributions that have changed our company for the better and will leave a lasting impact on their peers and teams. This is about rebalance the roles we need across Atlassian first and foremost.”

Employees laid off by Atlassian will receive 15 weeks of severance pay, plus one week for each year of employment, and may keep their laptops. Friday will be their last day, a spokesperson told CNBC.

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

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

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