Workday Inc.
09/29/2026 | Press release | Distributed by Public on 09/29/2026 14:02
Reorganization, Business/Financial Results (Form 8-K)
Item 2.02 - Results of Operations and Financial Condition
Workday, Inc. ("Workday") is reiterating its fiscal 2027 third quarter and full-year financial guidance provided on its fiscal 2027 second quarter earnings call on August 27, 2026, with the exception of GAAP operating margin. Due to the activities discussed in Item 2.05 below, Workday now expects its fiscal 2027 third quarter GAAP operating margin to be approximately 20 to 21 percentage points lower than its third quarter non-GAAP operating margin and its fiscal 2027 full-year GAAP operating margin to be approximately 19 percentage points lower than its full-year non-GAAP operating margin. Workday intends to exclude the charges associated with the activities discussed in Item 2.05 below from its non-GAAP financial measures.
Item 2.05 - Costs Associated with Exit or Disposal Activities
On September 29, 2026, certain functions within Workday announced reorganizations designed to better align team structures with Workday's strategic growth priorities. These actions include a reduction of approximately 2.5% of Workday's current workforce, primarily within Workday's Product and Technology team, and select leased office space reductions. Workday plans to continue to hire in key strategic areas and locations throughout its fiscal 2027.
In connection with the above, Workday estimates that it will incur approximately $65 million to $80 million in charges, of which approximately $55 million to $70 million is expected to be recognized in the third quarter of fiscal 2027, and $10 million is expected to be recognized in the fourth quarter of fiscal 2027. These charges consist of approximately $40 million to $55 million of future cash expenditures related to severance payments, employee benefits, and related costs and approximately $10 million in non-cash charges for stock-based compensation. The charges also consist of approximately $15 million in non-cash charges related to the impairment of certain leased office space.
The employee-related actions described above are expected to be substantially completed by the first quarter of fiscal 2028, subject to local law and consultation requirements. The actions associated with the leased office space are expected to be substantially completed by the fourth quarter of fiscal 2027.
The estimates of the charges and expenditures that Workday expects to incur in connection with the above, and the timing thereof, are subject to a number of assumptions, including local law requirements in various jurisdictions, and actual amounts may differ materially from estimates.
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