TLDR
- Workday is cutting about 500 jobs, roughly 2.5% of its workforce.
- The cuts mainly hit the Product and Technology team.
- Restructuring costs will run between $65M and $85M.
- This is Workday’s second layoff round this year, after cuts in February.
- WDAY stock is down about 12% year to date.
Workday (WDAY) stock ticked up 0.30% on Tuesday even as the company confirmed a fresh round of layoffs. The enterprise software firm is cutting about 500 jobs, roughly 2.5% of its global workforce.
The cuts were disclosed in a Form 8-K filed with the Securities and Exchange Commission. Most of the affected roles sit within Workday’s Product and Technology team.
The company said the move is meant to “better align team structures with Workday’s strategic growth priorities.” It also mentioned select reductions in leased office space.
Workday employed about 21,000 people at the end of January. The 2.5% cut works out to roughly 525 employees losing their jobs.
What the Layoffs Will Cost
The restructuring won’t come cheap. Workday expects charges of $65M to $85M tied to the cuts.
Most of that, between $55M and $70M, will hit the books in the third quarter of fiscal 2027. Another $10M lands in the fourth quarter.
Severance and employee benefits make up $40M to $55M of the total. Stock-based compensation charges add another $10M.
A further $15M comes from the impairment of leased office space Workday no longer needs. These are all non-cash or one-time items tied directly to the restructuring.
The charges will squeeze margins too. Workday expects its GAAP operating margin to run about 21 percentage points below its non-GAAP figure in Q3.
For the full fiscal year, that gap narrows slightly to about 19 percentage points. Investors will get the full picture when Workday reports third-quarter results on November 27.
A Pattern of Cuts
This is not Workday’s first layoff of 2026. Back in February, the company cut about 2% of its staff, mostly from its Global Customer Operations team.
That earlier round came with extra drama. About a week after those cuts, then-CEO Carl Eschenbach stepped down.
He was replaced by Workday cofounder Aneel Bhusri, who has now led the company four separate times. Bhusri has stayed publicly upbeat about Workday’s position.
Neither layoff announcement this year cited artificial intelligence as a driver. That’s worth noting given how AI fears have rattled software stocks in 2026.
Investors grew nervous earlier this year that AI would let companies build software in-house instead of buying it. The scare, nicknamed the “SaaSpocalypse,” wiped hundreds of billions of dollars off software company valuations.
Bhusri pushed back on that narrative during Workday’s August earnings call. He said he hadn’t met a single customer looking to replace Workday with an internally built or startup alternative, and that hadn’t changed a quarter later.
Still, the stock’s performance tells its own story. Workday shares are down about 12% year to date.
The company says it plans to keep hiring in select strategic areas and locations through fiscal 2027. That hiring will happen alongside the ongoing job cuts announced this week.
Workday’s third-quarter earnings report on November 27 will be the next test. It should show whether the restructuring costs and margin hit play out as the company projects.
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