Upwork's (NASDAQ:UPWK) stock surged nearly 23% after unveiling a bold plan to slash costs and streamline operations, including a 21% workforce reduction. The move, aimed at cutting $60 million in annual expenses, propels the company closer to its ambitious five-year target of a 35% adjusted EBITDA margin. Early third-quarter results show momentum, with revenue now expected to hit $194 millionwell above the original guidance of $179-$184 millionand adjusted EBITDA projected at $43 million, outpacing previous estimates.

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CEO Hayden Brown highlighted that the reorganization is not just about trimming costs; it's about driving Upwork's long-term profitable growth by focusing on high-return investments and creating a leaner, faster-moving structure. With deeper automation and a flatter hierarchy, Upwork is doubling down on efficiency, empowering teams to deliver better outcomes for clients while pushing the company further ahead in a rapidly evolving market. This latest shake-up reflects Upwork's relentless pursuit of growth levers that matter, streamlining R&D, and fine-tuning its Enterprise strategy to deliver sharper results.

The preliminary results underscore Upwork's upward momentum, boasting a record 22% adjusted EBITDA margina far cry from the 1% it achieved just seven quarters ago. As the company gears up for its full Q3 earnings release on November 6, investors are eyeing this overhaul as a strategic play to stay ahead in a tough economic climate, betting on Upwork's ability to outperform competitors and accelerate toward its profitability goals.

This article first appeared on GuruFocus.