Workday Layoffs: 2 Cuts in Under 8 Months, $200M+ in Charges

Workday has now disclosed two rounds of layoffs in under eight months, and its own filings put a price on both. A Form 8-K for Tuesday, Sept. 29 estimates $65 million to $80 million of charges for cutting about 2.5% of the workforce and reducing select leased office space. A Feb. 4 8-K estimated about $135 million for a 2% cut, and Workday's latest 10-Q reports that amount as incurred in fiscal 2026. By TradeFlock's addition of the two, that is $200 million to $215 million, and more than half of it is non-cash.

What Workday Disclosed in September

Workday said certain functions "announced reorganizations designed to better align team structures with Workday's strategic growth priorities." The actions include a reduction of about 2.5% of the current workforce, "primarily within Workday's Product and Technology team," plus select leased office space reductions. The company said it plans to keep hiring in key strategic areas through its fiscal 2027.

Of the $65 million to $80 million, Workday expects $55 million to $70 million in its fiscal third quarter, which ends Oct. 31, and $10 million in the fourth quarter. Employee-related actions should be substantially complete by the first quarter of fiscal 2028, subject to local law and consultation requirements.

Where the $200 Million Goes: Cash vs. Non-Cash

The two filings break the charges into similar buckets. In February, Workday estimated about $40 million in cash for severance and benefits, about $15 million in stock-based compensation, and about $80 million in non-cash impairment of office space and long-lived assets. The 10-Q reports $55 million of employee-related costs and $80 million of impairments, for $135 million incurred. In September it estimated $40 million to $55 million in cash, about $10 million in stock-based compensation and about $15 million in lease impairment.

By TradeFlock's addition, the two rounds total $80 million to $95 million in cash and about $120 million in non-cash charges, or roughly 56% to 60% of the combined estimate. Workday cautioned that actual amounts for the September plan may differ materially from its estimates.

Cost per Role, by TradeFlock's Estimate

The February filing said that cut fell mainly on non-revenue-generating roles in Global Customer Operations. September's falls on product and technology. Workday's 10-K said its workforce was "over 21,000 employees" on Jan. 31, 2026. If the workforce was about 21,000, 2.5% is roughly 525 roles and the February 2% is roughly 420. On that assumption, the $40 million to $55 million in September cash charges works out to about $76,000 to $105,000 per role, and February's $40 million to about $95,000. Workday does not disclose role counts or per-role costs, so these are estimates, not company figures.

What the GAAP Margin Guide Now Implies

The September 8-K reiterated Workday's third-quarter and full-year guidance from its Aug. 27 earnings call, with one exception: GAAP operating margin. Workday said it expects third-quarter GAAP operating margin to be about 20 to 21 percentage points below its non-GAAP margin, and the full-year GAAP margin about 19 points below. It will exclude the charges from non-GAAP measures. The Aug. 27 release gave no GAAP margin guidance, so there is no earlier GAAP target to compare against.

The Aug. 27 results release guided to a non-GAAP operating margin of 30.0% for the third quarter and 31.0% for the year. By TradeFlock's calculation, that implies a third-quarter GAAP operating margin of about 9% to 10% and a full-year figure near 12%. For reference, Workday reported a second-quarter GAAP operating margin of 11.8% on revenue of $2.649 billion, a 19.3-point gap to its 31.1% non-GAAP margin.

Second-quarter GAAP operating income was $313 million, and the first half's was $651 million, according to Workday's 10-Q. By TradeFlock's calculation, the September estimate of $65 million to $80 million equals about 10% to 12% of that first-half figure. February's charge does not belong in that comparison: the 10-Q says Workday incurred it in fiscal 2026 and recorded no material charges under that plan in the first half of fiscal 2027. Workday reported no restructuring expense in the first half of fiscal 2027, against $167 million in the first half of fiscal 2026, when it was carrying out the plan it announced in February 2025. That plan cut about 7.5% of the workforce and cost $233 million in total, per the 10-Q, which makes September the third round since February 2025.

How Workday Stock Reacted

The 8-K was accepted by the SEC after the Sept. 29 market close. Yahoo Finance data shows Workday shares closed at $190.46 on Sept. 30, up 0.7% from $189.17 the day before. They closed at $190.81 on Friday, Oct. 16. The filings do not tie either price to the layoffs.

What to Watch Next

Workday has not reported third-quarter results, so the first look at the charge in its income statement is still ahead. Separately, an Oct. 13 8-K says Workday signed a definitive agreement on Oct. 12 to acquire C1.ai. TradeFlock did not review that deal's terms and has not independently verified anything beyond Workday's filings. For other recent cuts, see TradeFlock's coverage of Netflix, HubSpot and FICO.

Cover photo: The corner of a glass office building seen from below. Photo: Jonathan Simcoe (jdsimcoe) / Wikimedia Commons, CC0.