Workday announced a significant restructuring plan on February 5th, which includes laying off approximately 1,750 employees, or 8.5% of its workforce. This move is part of the company's strategy to realign its resources with evolving customer needs and to prioritize investments in artificial intelligence (AI) and platform development. CEO Carl Eschenbach described the layoffs as "difficult, but necessary," emphasizing the need to adapt to the current business environment by investing strategically and accelerating innovation. The restructuring is expected to cost Workday between $230 million and $270 million, with a portion of these charges recognized in the fourth quarter of fiscal 2025.
The layoffs come ahead of Workday's fourth-quarter earnings report, scheduled for February 25th. Despite the workforce reduction, the company expects its financial results to be in line with or above its previous guidance. However, the restructuring will impact Workday's operating margins, with the fourth-quarter GAAP operating margin anticipated to be 22 to 23 percentage points lower than the non-GAAP margin. The company plans to continue hiring in strategic areas and locations throughout fiscal year 2026, aiming to expand its global footprint and better serve its customers.
Workday's stock closed at $276.17 on February 5th, marking a 6.33% increase from the previous close of $259.73.