Workday cuts about 2.5% of workforce, holds fiscal 2027 guidance

The reductions, concentrated in product and technology, come with some leased office space cuts and no change to full-year targets

Workday is cutting about 2.5% of its workforce, with the reductions falling mainly in its product and technology team, the company said in a filing with the Securities and Exchange Commission. The plan also includes trimming some leased office space. Workday reiterated its fiscal 2027 third-quarter and full-year financial guidance alongside the announcement.

The company expects its third-quarter GAAP operating margin to run about 20 to 21 percentage points below its non-GAAP operating margin, and its full-year GAAP margin to run about 19 points below non-GAAP, largely because of restructuring charges tied to the cuts. Those charges are expected to total $65 million to $80 million, according to Rallies.ai, with most of that landing in the third quarter and the rest in the fourth, including $15 million in non-cash lease-impairment costs.

Workday has restructured twice in the past two years. In February 2025 it cut about 7.5% of its workforce and exited some owned office space, taking $233 million in charges. A year later, in February 2026, it cut roughly 2% of its workforce for $135 million in charges, a plan the company said was substantially completed by the first quarter of this fiscal year.

Shares fell 3.58% in after-hours trading. Because guidance was left unchanged and the size of the charges had already been flagged in advance, the cuts read as an expense-discipline move rather than a sign of weakening demand. With the growth outlook untouched, investors are likely to focus less on what the reduction implies about bookings and more on how much margin relief the lower headcount costs deliver.