Motley Fool Money: Atlassian’s Layoffs are AI-Inspired

Date: March 12, 2026
Host: Tyler Crow
Guests: Matt Frankel, John Quast

Episode Overview

This episode of Motley Fool Money dives into the recent AI-driven layoffs at Atlassian, unpacks the market reaction to the Strategic Petroleum Reserve (SPR) release amid Middle East tensions impacting oil prices, and closes by dissecting Dollar General’s latest earnings and share price reaction. The discussion blends long-term investment thinking with immediate business news, focusing strongly on the knock-on effects of artificial intelligence, commodity volatility, and consumer retail trends.

Key Topics & Insights

1. Atlassian’s AI-Inspired Layoffs

[00:22–08:53]

Background & Context

• Atlassian announced layoffs amounting to about 10% of its workforce (~1,600 jobs).
• The market's response was muted (shares +0.4%), suggesting expectations were set.
• This is a significant change for Atlassian, which has historically focused on rapid hiring even as peers cut staff during previous tech downturns.

Workforce Trends & Reversal

• John Quast:
  • Atlassian grew from 6,400 (June 2021) → 8,800 (mid-2022), up 37% in a year.
  • Peers were laying off; Atlassian was aggressively hiring, touting access to “amazing talent who might not otherwise be available.”
  • By early 2025: workforce at 14,600, a 15% YoY increase—then, the layoff announcement.
  • Shift rationalized as "self-funding further investments in AI and enterprise sales."
  • “It's a massive, I'd say, reversal of what its hiring policy has historically been.” [01:55]

How Much Is AI and How Much Is Overhiring?

• Tyler Crow & Matt Frankel:
  • Uncertainty whether layoff narrative is cost efficiency via AI, or just masking overhiring.
  • Pattern seen elsewhere: Block (formerly Square) recently downsized 40% “because of AI productivity gains.”
  • “It does beg the question of whether they hired too aggressively, especially in a year when really the writing was on the wall for AI advancements.” – Matt [03:27]
  • Atlassian classified as a “SaaS Apocalypse company” vulnerable to customers quickly switching software.

Underlying Business Issues & Shareholder Impact

• John Quast:
  • Atlassian’s consistently high gross margins (~90%) should enable operating leverage, but expenses have matched or exceeded revenue growth.
  • Recent quarter: operating expenses up 25%, revenue only up 23%.
  • Heavy use of stock-based compensation has diluted shareholders—growth has been "self-funded" at investor expense.
  • “The shareholders are the ones who have been funding the growth all along … pulling back on that hiring now, … it's an interesting way to put it.” [05:23]
  • Concern that as tech companies lay off, SaaS firms with per-seat pricing (Atlassian among them) could see lower demand.

Second-Order Effects on SaaS

• SaaS providers relying on tech customers ("knowledge workers") risk shrinking addressable markets as layoffs cut seats.
• “It would seem a little contradictory if they weren't seeing that ... layoffs in client companies mean less potential seats for SaaS licenses.” – Matt [08:27]

2. Oil Market Volatility & the Strategic Petroleum Reserve

[09:08–17:04]

Explaining Oil Price Whiplash

• Recent days saw oil prices spike from ~$70 to $110/barrel, then fall and rebound to ~$95, driven by effects of the Strait of Hormuz closure (due to nearby conflict).
• Governments, including the U.S., are releasing oil from strategic reserves to stabilize supply.

SPR Math & Impact

• John Quast:
  • U.S. release: 172 million barrels over 120 days = 1.4 million barrels/day.
  • That’s only 1% of daily global consumption, or ~7% of typical Strait of Hormuz throughput.
  • “Because of how it's being spread out, it doesn't make as big of an impact as you might think.... That is why the market is reacting [with continued high prices].” [11:51]

Broader Market Effects & Uncertainty

• Matt Frankel:
  • Strategic releases and supply chain workarounds (e.g., pipelines, suspension of Jones Act) are not game-changers; oil market remains highly volatile.
  • "We don’t know the trajectory of the conflict—it could resolve quickly or drag on for months or years."
  • “So many industries are sensitive to fuel costs ... if it’s not short-lived, we could start to see kind of trickle down effects throughout a lot of our portfolios.” [14:23]

Why Global Oil Events Affect U.S. Gas Prices

• John Quast:
  • U.S. is a net exporter, but domestic prices are set globally; disruptions send buyers to the same available supply, driving up prices everywhere.
  • Also notes potential second/third-order effects on tech hyperscalers and AI hardware demand if energy prices soar.

3. Dollar General Earnings & Retailer Valuation

[19:08–24:47]

Quarter Recap & Market Reaction

• Dollar General’s earnings solid; shares fell 5%.
• John Quast:
  • Company recovering from prior inventory excess—now right-sizing, reducing damaged/stolen/discounted stock.
  • Earnings up YoY but below prior peaks, inventory per store down 7% in 2025.
  • Market seems to have priced in much of the turnaround; shares trading at ~20x forward earnings, which he deems “about right.”
  • “I think the market is just looking at this and saying, okay, the numbers are fine, but what is this business worth? It’s worth about 5% less.” [20:45]

Turnaround Status and Economic Cycles

• Matt Frankel:
  • Positive: Greater efficiency, earnings growth.
  • But wonders if tailwinds simply reflect economic pressure; Dollar General benefits when consumers feel squeezed.
  • Past year share surge (+88%) looks to be justified by improvements, but may be pricing in much of this upside.
  • “They’re making a lot of the right moves. … I don’t know if the stock deserves to be up 88% over the past year ... but it’s going in the right direction.” [22:26]

Buy, Hold, or Look Elsewhere?

• John Quast:
  • Personally holds Dollar General from the lows and continues to do so.
  • Suggests Five Below as a stronger long-term retail growth story due to impressive same-store sales, pricing power, and debt-free expansion.
• Matt Frankel:
  • Wouldn’t sell if already owned, but finds Dollar General fairly valued, not compelling as a new buy.
  • Watching Target instead (“14x earnings and an earlier-stage turnaround play”), likening possible upside to Dollar General if turnaround succeeds.

Notable Quotes & Moments

• “Atlassian might be in panic mode just a little bit and really trying to change the narrative that AI is going to disrupt its business.” – Matt Frankel [04:05]
• “Shareholders are the ones who have been funding the growth all along because it's been diluting shareholders by issuing so much stock based compensation.” – John Quast [05:23]
• “If you don't like [oil] when the price is really really cheap, then you probably don't want to be involved when it's really expensive either.” – Tyler Crow [18:18]
• “Five Below is really firing on all cylinders … I did not think that Five Below had [this] pricing power … it's able to grow same store sales at an impressive rate and still has opportunity to open new stores around the country debt-free.” – John Quast [24:00]
• “I'm watching Target right now... could be like buying Dollar General when John did if things work out.” – Matt Frankel [24:36]

Timestamps for Major Segments

• [00:22] – Introduction & Overview
• [00:22–08:53] – Atlassian Layoffs: Motivation, Market Impact, and SaaS Sector Implications
• [09:08–17:04] – Oil Price Volatility, Strategic Reserve Releases, and Economic Ripple Effects
• [19:08–24:47] – Dollar General Earnings, Turnaround, and Retail Stock Picks

Overall Tone

The tone is characteristically conversational, balanced, and candid—focused on dissecting narratives behind business headlines, highlighting management incentives, market psychology, and the knock-on effects for long-term investors. There is a strong undercurrent of analytical skepticism: do company narratives match reality? Are market reactions rational?

Takeaways for Investors

• Be wary of company narratives—layoffs “for AI” may mask prior excesses.
• Tech/SaaS companies with per-seat pricing are structurally vulnerable to widespread layoffs in their client base.
• Strategic moves in commodities may not meaningfully offset deep, structural disruptions—volatility is likely.
• Retailers like Dollar General have rebounded, but upside may be priced in; look to valuations, turnaround progress, and secular tailwinds for new picks.
• Look beyond market moves; assess whether business fundamentals and management actions align with the long-term story.