Workday (NASDAQ:WDAY) is cutting 1,750 jobs, representing about 8.5% of its workforce, as part of a broader initiative to improve operational efficiency and refocus on core business areas. Despite the layoffs, Workday plans to continue hiring in strategic areas while exiting certain owned office spaces. The restructuring plan will result in estimated charges of $230M-$270M, including $145M-$175M for severance and benefits, $50M-$60M in non-cash stock-based compensation, and $35M in office space impairment costs. The company expects its GAAP operating margin for Q4 FY2025 to be 22%-23% lower than its non-GAAP operating margin. Despite the layoffs, Workday’s stock rose 4% in pre-market trading on Wednesday.



February 5, 2025 – Silicon Valley – Enterprise software provider Workday Inc. (NASDAQ: WDAY) has announced plans to cut 1,750 jobs, representing 8.5% of its workforce, as part of a broader initiative to streamline operations and enhance efficiency.

The decision aligns with the company's long-term strategy to focus on core business areas and innovation efforts amid evolving market conditions. While Workday is reducing its overall headcount, it will continue hiring in key strategic areas and locations, demonstrating a commitment to future growth and technological advancements.

Financial Impact of the Restructuring Plan

Workday expects to incur $230 million to $270 million in total charges due to the restructuring, which will be spread across the next two fiscal quarters. The estimated breakdown includes:

• $145 million to $175 million in future cash expenditures for severance payments, employee benefits, and related costs.


• $50 million to $60 million in non-cash charges for stock-based compensation.


• $35 million in non-cash charges related to the impairment of office space, which will be recognized in Q1 of fiscal 2026.

The company also plans to exit certain owned office spaces, aligning with a broader industry trend of optimizing real estate footprints in a post-pandemic work environment.

Impact on Workday’s Financial Performance

Workday anticipates that its Q4 fiscal 2025 GAAP operating margin will be 22%-23% lower than its Q4 non-GAAP operating margin, with a similar impact expected for full-year fiscal 2025.

Despite the workforce reduction, investor sentiment appears positive, as Workday's stock price rose 4% in pre-market trading on Wednesday. The market's reaction suggests confidence in the company’s restructuring strategy and its potential to improve long-term operational efficiency.

Workday’s Strategic Direction

While the layoffs mark a significant shift for Workday, the company has emphasized its focus on future innovation and business growth. By reallocating resources and making strategic hires, Workday aims to strengthen its position in the corporate finance and HR software market.

As the tech industry continues to navigate an uncertain economic landscape, Workday’s restructuring efforts reflect broader trends of cost optimization and strategic workforce planning.