Key Highlights

● Workday approved a restructuring plan on September 29, 2026 that affects about 2.5 percent of its current workforce.

● Workday estimates charges of $65 million to $80 million, including $55 million to $70 million in the third quarter.

● Future cash costs are estimated at $40 million to $55 million, with the rest non-cash Stock Compensation and Lease impairment.

● Workday reiterates fiscal 2027 guidance but expects full-year GAAP Operating Margin about 19 percentage points below non-GAAP margin.

Workday, Inc. (NASDAQ:WDAY) disclosed in an 8-K filed on September 29, 2026 that it has approved a restructuring plan affecting about 2.5 percent of its current workforce, along with reductions in some leased office space. The company estimates total charges of $65 million to $80 million and says it is reiterating its fiscal 2027 third-quarter and full-year financial guidance, with one exception related to GAAP operating margin. The filing is made under Item 2.02 (Results of Operations and Financial Condition) and Item 2.05 (Costs Associated with Exit or Disposal Activities).

What the Plan Covers

According to the filing, the plan was approved on September 29, 2026. The workforce reduction is primarily in Workday's Product and Technology team, and the plan also includes select reductions of leased office space. The filing does not give a headcount or name specific locations or offices. Workday says the employee-related actions are expected to be substantially completed by the first quarter of fiscal 2028, subject to local law requirements. The office space actions are expected to be completed by the fourth quarter of fiscal 2027.

Item 2.05 is the section companies use to disclose a plan that will lead to material charges for exit or disposal activities, and it typically includes an estimate of the charges and the cash portion. That is the purpose of this filing. It describes what the company has approved and what it expects to record, not the results of the actions themselves.

Estimated Charges

Workday estimates the total charges at $65 million to $80 million. It expects $55 million to $70 million to be recorded in the third quarter of fiscal 2027 and about $10 million in the fourth quarter. Workday's fiscal year ends on January 31, so the third quarter of fiscal 2027 runs through October 31, 2026.

The filing breaks the total into components. Future cash expenditures are estimated at $40 million to $55 million and relate to severance, employee benefits and related costs. The remainder is non-cash: approximately $10 million of stock-based compensation and approximately $15 million of Impairment of leased office space. Those three components add up to the same $65 million to $80 million range. The filing cautions that actual costs could differ from the estimates and that the company may not realize the benefits it anticipates.

Guidance and Non-GAAP Treatment

Under Item 2.02, Workday states that it is "reiterating its fiscal 2027 third quarter and full-year financial guidance," with one adjustment. Because the restructuring charges will be recorded under GAAP, the company now expects its GAAP operating margin to be approximately 20 to 21 percentage points lower than its non-GAAP operating margin in the third quarter, and approximately 19 percentage points lower for the full year.

The filing adds that "Workday intends to exclude the charges associated with the activities discussed in Item 2.05 below from its non-GAAP financial measures." That means the reiterated non-GAAP guidance is not changed by the charges, while GAAP results will include them. The 8-K does not restate the guidance figures themselves, and it does not report actual quarterly results.

Workday's Charge Timeline Through Fiscal 2028

The next milestone is Workday's third-quarter fiscal 2027 results, when the charges recorded in that quarter will appear in its GAAP financial statements. The company expects to record the remaining charge of about $10 million in the fourth quarter. Employee-related actions are expected to be substantially completed by the first quarter of fiscal 2028, and the leased office space actions by the fourth quarter of fiscal 2027. The filing does not say whether further workforce actions are planned.