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Atlassian (NASDAQ:TEAM) announced yesterday that it will slash roughly 5% of its workforce or 500 full-time employees.
TEAM projects it will incur approximately $70 million to $75M in charges in connection with these actions.
“These actions are part of the Company’s initiatives to better position it to execute against its largest growth opportunities. This includes continuing to invest in strategic areas of the business, aligning talent to best meet customer needs and business priorities, and optimizing for operational efficiency.”
Atlassian added that the majority of these charges will be incurred in the third quarter of its fiscal year 2023. The most impacted teams include Talent Acquisition, Program Management, and Research & Insights.
Piper Sandler analysts believe the announced cuts are not surprising.
“We are unsurprised of this decision, given the macro has remained challenging throughout the beginning of 2023 and the company’s cadence of employee growth outpacing revenue growth for the past three fiscal years,” the analysts said in a client note.
Wolfe Research analysts added:
“With the cut having no reflection of the company’s financial performance, we remain positive on TEAM’s ability to outperform near-term expectations with an increasingly attractive financial profile on the other side of the Cloud transition as the end of support date for Server draws closer (02/24),” the analysts wrote.
Atlassian shares are up over 1% in pre-market Tuesday.
