Workday’s axe falls again, and this time it lands on the tech team

When a worker at a big company books a day off or checks a pay stub, Workday (WDAY) is often running in the background. Its software handles HR and finance for more than 11,500 organizations, including over 65% of the Fortune 500, according to its latest earnings release.

Now the company that tracks everyone else’s headcount is trimming its own again.

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Workday disclosed in a Sept. 29 SEC filing that it will cut about 2.5% of its workforce, mostly in its Product and Technology team. That works out to roughly 525 jobs, based on the 21,070 employees listed in its annual report.

It is Workday’s third layoff in under 20 months. The company cut about 1,750 jobs in February 2025, Bloomberg reported, and roughly 400 more this February, according to Business Insider.

The target is what changed. February’s round fell mostly on customer operations. This one reaches the teams that build the software that Workday says will carry its AI future.

READ MORE: Workday’s $51 billion takeover talks could reset the software trade

Workday is cutting builders, not its build budget

The price tag is modest. Total charges run $65 million to $80 million, small next to the $9.9 billion in subscription revenue Workday expects this fiscal year.

The spending trend is important here. Product development costs rose 13% to $747 million in the quarter ended July 31, according to the company’s second-quarter results. In that release, CFO Zane Rowe said Workday would “prioritize investment in our agentic AI roadmap.”

Workday’s headcount still grew 3% in fiscal 2026 despite the 2025 layoff, its annual report shows. The cuts look more like a rotation than a retreat.

Here is what the filing spells out:

Charges of $55 million to $70 million land in the fiscal third quarter and about $10 million in the fourth.
Cash severance and benefits range from $40 million to $55 million. The rest is stock compensation and a $15 million office lease write-down.
Job cuts should be largely complete by the first quarter of fiscal 2028, subject to local labor rules.
Only the GAAP operating margin outlook moved, now 20 to 21 points below non-GAAP in the third quarter.

Some coverage called this a forecast cut. In fact, management reaffirmed every guidance figure, except the accounting margin that absorbs the restructuring bill.

Workday plans to cut about 2.5% of its staff, mostly in Product and Technology, and expects $65 million to $80 million in restructuring charges.

Bloomberg / Getty Images

Workday layoffs land while buyout bid takes shape

The timing deserves more attention. On Aug. 13, Reuters reported that Silver Lake was in talks to take Workday private in what would rank among the largest software buyouts ever. According to Investing.com, the stock posted its best day since 2016.

No deal has emerged, but financing efforts were continuing as of Sept. 17, CNBC reported.

Private equity buyers pay for predictable cash flow, and Workday’s priorities are already pointed there. It spent $1.3 billion on buybacks last quarter, more than 20 times the top end of this severance bill.

The company has not tied the layoffs to any sale talks. Still, leaner costs would make a debt-funded buyout easier to finance.

Workday stock trades far below its 2024 peak

WDAY is Workday’s Class A stock on the Nasdaq. Owning it is a bet that companies will keep paying for HR and finance software priced largely by headcount.

The company is valued at about $45.9 billion, according to Stock Analysis. Shares trade near 16 times forward earnings, modest for a business growing subscription revenue by about 13%. That gap reflects the AI risk investors are pricing in.

The stock hit an all-time high of $311.28 in February 2024 and an all-time low of $45.05 on its 2012 debut, according to TradingView.

Its 52-week range runs from $110.36 to $249.14, Stock Analysis data shows.

Wall Street leans positive. The 42 analysts tracked by Stock Analysis rate the stock a Buy on average, with a $208.68 price target.

Skeptics remain, however. Morgan Stanley’s Adam Wood warned that AI adoption in back-office work will likely move more slowly than investors expect, Reuters reported.

More Layoffs:

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Another popular soda giant closes warehouse operation, cuts 184 jobs
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Workday’s own cuts mirror its customers’ biggest risk

Workday prices its software mainly per employee, said BofA analyst Tal Liani, as Benzinga reported. He warned in May that “AI decouples the value of the solution from the number of seats.”

Workday’s answer is agents. AI drove more than 25% of new annual contract value last quarter, CEO Aneel Bhusri said in the second-quarter release. More than 5,500 customers now use at least one Workday-built agent.

The pattern is spreading. Oracle’s job cuts and Microsoft’s latest round show employers trimming payrolls while pouring money into AI.

Workday sits on both sides of that trade. Every company that shrinks its staff with AI shrinks the base Workday has long billed against. Investors will look for a pricing answer at its Oct. 13 analyst day.

Workday spent two decades getting paid for every worker on a customer’s payroll. Its next decade depends on getting paid for work no one on that payroll does.