Workday (WDAY, Financials) announced that its fourth-quarter and full-year financial results for fiscal 2025 are expected to meet or exceed prior guidance, with the exception of its GAAP operating margin.
Because of restructuring plan-related expenses, the business now forecasts that its GAAP operating margin for the fourth quarter will be 22 to 23 percentage points lower than its non-GAAP operating margin. The full-year GAAP operating margin is expected to be 21 percentage points below the non-GAAP benchmark. These preliminary numbers are still subject to the company's normal closing procedures; final results are scheduled for publication on Feb. 25.
Workday intends to cut around 1,750 roles, or 8.5% of its workforce, as part of a strategic reorganization effort while still recruiting in crucial areas of great importance. While simplifying internal operations, the restructure is expected to prioritize artificial intelligence and platform development. As part of its operational changes, the corporation recently announced plans to exit several office locations.
Workday believes that it will incur total costs between $230 million and $270 million in connection with the restructuring, with roughly $60 million to $70 million realized in the fourth quarter of fiscal 2025 and the remainder in the first quarter of fiscal 2026. Severance, employee benefits, and stock-based compensation will account for most of these expenses.
Workday emphasized that it remains committed to long-term growth and will continue investing in artificial intelligence-driven innovation. Although these staff cuts were challenging, CEO Carl Eschenbach said they are necessary to properly align resources with changing consumer expectations. Along with prolonged stock vesting and career transition assistance, the firm plans to provide support packages comprising a minimum of 12 weeks of severance compensation for affected U.S. workers.
