Despite the impact on Workday’s results, the company is choosing to lay off two percent of its employees.
Workday is laying off approximately two percent of its global workforce. The company states that this is to “better align with its highest priorities.” At the same time, it also acknowledges that this decision has a negative impact on the results of this quarter and the entire fiscal year.
Adjusted expectations
The SaaS provider of HR and financial software says that most layoffs will occur in non-revenue-generating functions within the Global Customer Operations team. In a mandatory stock exchange announcement, Workday reports that the costs of the restructuring will weigh heavily on the profit margins that the company reports at the end of February.
During the previous quarterly figures in November, Workday indicated that it was well on track to achieve a profit margin of 9.5 percent for the quarter and 8 percent for the full fiscal year. Those expectations are now lower. The margin is expected to be 24 to 25 percentage points lower this quarter. It is also 22 to 23 percentage points lower for the full fiscal year.
High cost
The layoffs are accompanied by approximately $135 million in costs. Of that, approximately $40 million is earmarked for severance payments and personnel expenses, and $15 million for costs related to stock compensation. The largest portion is $80 million for the impairment of office space and other fixed assets.
Workday has approximately 20,400 employees in 34 countries worldwide, nearly two-thirds of whom are in the US, writes The Register. Last year, the company already announced a major restructuring, laying off 1,750 employees, or approximately eight percent of the workforce. The current intervention would again cost several hundred jobs.