Workday CEO Carl Eschenbach said the “difficult, but necessary” layoffs and restructuring plan are “to better align our resources with our customers’ evolving needs.”
Workday has revealed a plan to cut 8.5 percent of its workforce–1,750 positions–as part of a restructuring days before the vendor reports earnings for its fourth fiscal quarter.
The Pleasanton, Calif.-based human resources and finance platform provider, which has a partner program for channel partners, services partners, MSPs and other business models, said in a regulatory filing that the “restructuring plan” should cost Workday about $230 million to $270 million, about $60 million to $70 million of that getting recognized in the fourth fiscal quarter.
Workday should finish most of the layoffs and other restructuring plans by the second quarter of its 2026 fiscal year, according to the filing.
[RELATED: Salesforce To Lay Off Over 1,000 Employees Amid AI Hiring Spree]
Workday Layoffs
CRN has reached out to Workday for comment.
In a letter to employees, Workday CEO Carl Eschenbach said the “difficult, but necessary” layoffs and restructuring plan are “to better align our resources with our customers’ evolving needs.”
“This means investing strategically, helping teams work better together, bringing innovations to market faster, and making it easier for our customers and partners to work with us,” he said. “I realize this is tough news, and it affects all of us—the Workmates who are leaving and those who’ll continue with us.”
Eschenbach said that in fiscal year 2026, Workday will keep investing in artificial intelligence (AI), platform development, “clarifying roles and responsibilities” and “expanding our global footprint.”
Workday “expects its fiscal 2025 fourth quarter and full-year financial results to be in-line with or above its guidance as provided on its fiscal 2025 third quarter earnings call,” the vendor said in the filing. The rest will show up in its report for the first quarter of fiscal year 2026.
However, the layoffs will make Workday’s fourth quarter operating margin under Generally Accepted Accounting Principles (GAAP) 22 to 23 percentage points lower than its fourth quarter non-GAAP operating margin and its fiscal 2025 full-year GAAP operating margin 21 percentage points lower than its full-year non-GAAP operating margin.
Workday plans to report fourth fiscal quarter earnings Feb. 25.
As part of the restructuring plan, Workday will get rid of some office space it owns. The vendor still expects to “hire in key strategic areas and locations throughout its fiscal year ending January 31, 2026,” according to the filing.
Diving into the money Workday expects to pay as part of its plan, about $145 million to $175 million is cash related to severance payments, employee benefits, and related costs. About $50 million to $60 million are non-cash charges for stock-based compensation. And about $35 million in non-cash charges is related to changes in office space.
Workday isn’t alone in cutting headcount early in 2025 and as vendors chase emerging opportunities in AI. Salesforce, Citrix parentCloud Software Group, SADAand Oktaare among the technology vendors and solution providers to announce layoffs so far this year.
