Software giant Atlassian has announced it is laying off about 10% of its workforce, or roughly 1,600 positions, and replacing its chief technology officer as it restructures to invest further in artificial intelligence.

Shares of the company rose more than 4% in extended trading on the Nasdaq.

The company’s co-founder, Mike Cannon-Brookes, told employees the move was “the right decision for Atlassian” in a note circulated late Wednesday, US time.

“But that doesn’t mean it’s easy,” he said. “Far from it. I know this has a huge impact on each of you, and it weighs heavily on me and Atlassian today.”

About 640 affected employees are in North America, 480 in Australia and 250 in India, with the remainder spread across Japan, the Philippines, Europe, the Middle East and Africa, a spokesperson said.

Atlassian has lost more than half its market value since the start of 2026 as traders grow to fear AI will make the software company’s services obsolete. The share price plunge has wiped more than half the net worth of the company’s Australian founders, Cannon-Brookes and Scott Farquhar.

Cannon-Brookes suggested in his statement that AI use had changed the skills and roles the company needed, allowing a restructure to strengthen the company’s financial standing and “self-fund further investment in AI and enterprise sales”.

Addressing the question of whether AI had replaced the 1,600 sacked employees, he wrote: “Our approach is not ‘AI replaces people’. But 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.”

Atlassian left its Slack work chat functions open for at least six hours longer than usual, to permit employees to farewell their colleagues, Cannon-Brookes said.

Affected employees were expected to receive a minimum separation package of 16 weeks’ pay, extended healthcare plans and early pro rata bonuses, as well as a US$1,000 “technology payment” once they returned their corporate laptop.

The company reported redundancies and related costs were expected to total up to $174m (A$246m), while office space reductions would involve exit charges of at least $62m (A$87m). Most costs would be incurred from April to June and paid by the end of September.

Atlassian told regulators on Wednesday the restructure would also see its chief technology officer, Rajeev Rajan, step down at the end of March, to be replaced jointly by Taroon Mandhana and Vikram Rao, described as “next generation AI talent”.

Atlassian’s redundancy round comes weeks after similar cuts attributed to AI by tech giant Block, the owner of Afterpay, and Australian technology firm WiseTech.

Block cut 40% of its global workforce, from 10,000 to under 6,000, with cofounder Jack Dorsey saying improvements in productivity due to AI had “fundamentally” changed the company.

WiseTech announced it would cut 2,000 jobs over two years – about 30% of its workforce.

Both companies had seen their share prices plunge over the preceding six months and analysts have suggested each had reason to cut headcount other than AI use alone.