Workday cuts 2.5% of workforce, revises GAAP margin outlook

Workday, Inc. (NASDAQ: WDAY) announced on September 29, 2026, a reorganization that includes reducing its workforce by approximately 2.5%, primarily within its Product and Technology team, along with select leased office space reductions.

The company estimates it will incur between $65 million and $80 million in charges related to these actions. Of that total, $55 million to $70 million is expected to be recognized in the third quarter of fiscal 2027, with the remaining $10 million in the fourth quarter. The charges include $40 million to $55 million in cash expenditures for severance and employee benefits, $10 million in non-cash stock-based compensation charges, and $15 million in non-cash charges tied to leased office space impairments.

As a result, Workday revised its GAAP operating margin guidance. The company now expects its fiscal 2027 third quarter GAAP operating margin to be approximately 20 to 21 percentage points lower than its non-GAAP operating margin, and its full-year GAAP operating margin to be approximately 19 percentage points lower than its full-year non-GAAP operating margin. All other fiscal 2027 guidance, originally provided on August 27, 2026, remains unchanged.

Workday said it plans to continue hiring in key strategic areas throughout fiscal 2027. Employee-related actions are expected to be substantially completed by the first quarter of fiscal 2028, subject to local law requirements, while office space-related actions are expected to wrap up by the fourth quarter of fiscal 2027.

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