Workday (WDAY) Stock: Surges Despite $135M Charge and 400 Jobs Workforce Cuts

TLDR

• Workday jumps 5.6% after 400 job cuts and $135M restructuring charge
• Workday stock rises as layoffs and margin reset reshape strategy
• Workday rallies despite workforce cuts and heavy restructuring costs
• Shares surge after Workday announces layoffs and major charges
• Workday climbs as cost cuts and restructuring shift outlook

Workday (WDAY) shares ended the session higher as the company confirmed a new restructuring plan that includes job reductions and major charges. The stock closed at $170.15, rising 5.57%, while the company outlined changes aimed at sharpening operational focus. The update signaled a shift in strategy as Workday prepared for a more disciplined cost structure.

Workday, Inc., WDAY

Restructuring Push Brings Workforce Cuts and New Charges

Workday initiated a plan to cut about 400 roles, equal to roughly 2% of its workforce, to refocus resources. The company said the reductions would affect non-revenue functions within its Global Customer Operations unit. The move aims to streamline the structure while supporting areas tied to long-term growth.

Workday will record about $135 million in related charges for the fiscal fourth quarter that ended in January. These charges include severance costs, stock-based compensation, and real estate impairments. The company expects the reorganization to finish during the first quarter of fiscal 2027.

The filing stated that Workday will still hire in strategic areas despite the cuts. The company sees continued need for revenue-focused positions as new markets expand. This approach reflects a shift toward leaner operations while maintaining forward momentum.

Margin Guidance Shifts After Earlier Optimism

Workday updated its GAAP operating margin outlook as restructuring charges entered the forecast. The company now expects margins for the fourth quarter to drop 24 to 25 percentage points below its non-GAAP levels. Full-year GAAP margins will also drop 22 to 23 percentage points under the same measure.

This adjustment contrasts with the tone from the company’s November earnings call. Management had projected GAAP margins near 9.5% for the quarter and 8% for the year. The new outlook reflects the financial impact of the restructuring.

The shift illustrates the cost trade-offs tied to workforce reductions. Upfront expenses related to severance and office space often outweigh near-term savings. Workday aims to balance these pressures while positioning itself for stronger efficiency later in the fiscal year.

Operational Alignment Follows Earlier Cutbacks and Market Pressures

Workday’s latest move follows a larger reduction announced last year. At that time, the company cut about 1,600 roles, equal to 8% of its workforce. The new reductions indicate ongoing efforts to adjust operations in a slower enterprise software market.

SaaS companies face extended deal cycles and more measured spending by corporate clients. These dynamics continue to influence hiring plans and internal restructuring efforts. Workday is aligning its teams with segments that show the clearest strategic potential.

The company plans to reveal updated financials on February 24, including the full impact of the restructuring. Market participants will review the results to gauge the company’s ability to manage shifting demand conditions. Workday aims to maintain operational strength while navigating tighter expectations across the software sector.

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