Workday cuts about 2.5% of workforce, expects $65–$80 million in charges

Workday is trimming headcount and office space as it realigns teams around growth priorities. In a Tuesday 8-K, the company said certain functions announced reorganizations that include a reduction of approximately 2.5% of its current workforce, primarily within Product and Technology, plus select leased office space reductions. Shares closed Tuesday at $189.17, up about 0.3% on the session and down roughly 8% year to date.

Workday estimates it will incur about $65 million to $80 million in charges tied to the actions. Of that, roughly $55 million to $70 million is expected in the third quarter of fiscal 2027 and $10 million in the fourth quarter. The company broke the charges into about $40 million to $55 million of future cash costs for severance, employee benefits, and related items; about $10 million of non-cash stock-based compensation; and about $15 million of non-cash leased-office impairment.

Employee-related steps are expected to be substantially completed by the first quarter of fiscal 2028, subject to local law and consultation requirements. Office-space actions are expected to be substantially completed by the fourth quarter of fiscal 2027. Workday said it plans to continue hiring in key strategic areas and locations through fiscal 2027.

On guidance, Workday is reiterating fiscal 2027 third-quarter and full-year financial guidance from its Aug. 27, 2026 second-quarter earnings call, except for GAAP operating margin. Because of the reorganization charges, it now expects third-quarter GAAP operating margin to be about 20 to 21 percentage points lower than non-GAAP operating margin, and full-year GAAP operating margin about 19 percentage points lower than non-GAAP. It intends to exclude the related charges from non-GAAP measures.

By the numbers

• Workforce reduction: ~2.5% of current headcount (primarily Product and Technology)
• Estimated charges: $65–$80 million ($55–$70 million in FY27 Q3; $10 million in Q4)
• Cash severance/benefits: ~$40–$55 million; SBC non-cash: ~$10 million; lease impairment: ~$15 million
• GAAP vs non-GAAP operating margin gap: ~20–21 ppt (Q3); ~19 ppt (full year)
• WDAY Tuesday close: $189.17 (+0.3% day; −8.1% YTD)

Sources

1. Workday, Inc. Form 8-K (Items 2.02, 2.05), accepted Sept. 29, 2026 4:01:40 p.m. ET, accession 0001327811-26-000048

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