Workday cuts 2.5% of workforce and incurs up to $80 million in charges
Workday announced workforce reductions and office space cuts alongside updates to its GAAP operating margin guidance for fiscal 2027.
Workday, Inc. (WDAY) said in a regulatory filing on Monday that it is cutting approximately 2.5% of its current workforce as part of a reorganization.
The reductions will occur primarily within the company's Product and Technology team. Workday stated that the actions are designed to better align team structures with strategic growth priorities.
The company expects to incur total charges of approximately $65 million to $80 million in connection with the restructuring. Of that total, approximately $55 million to $70 million is expected to be recognized in the third quarter of fiscal 2027, and approximately $10 million is expected to be recognized in the fourth quarter of fiscal 2027.
The expected charges consist of approximately $40 million to $55 million in future cash expenditures for severance payments, employee benefits, and related costs. The company also anticipates approximately $10 million in non-cash charges for stock-based compensation and approximately $15 million in non-cash charges related to the impairment of certain leased office space.
Workday plans to continue hiring in key strategic areas and locations throughout fiscal 2027. The employee-related actions are expected to be substantially completed by the first quarter of fiscal 2028, subject to local law and consultation requirements. Actions associated with the leased office space are expected to be substantially completed by the fourth quarter of fiscal 2027.
In a separate update, Workday is reiterating its fiscal 2027 third quarter and full-year financial guidance provided on its earnings call on August 27, 2026, with the exception of GAAP operating margin. Due to the reorganization and restructuring activities, the company now expects its fiscal 2027 third quarter GAAP operating margin to be approximately 20 to 21 percentage points lower than its third quarter non-GAAP operating margin.
Workday also expects its fiscal 2027 full-year GAAP operating margin to be approximately 19 percentage points lower than its full-year non-GAAP operating margin. The company stated it intends to exclude the charges associated with the restructuring from its non-GAAP financial measures.