Shares of Commerce.com rallied after the company disclosed a new cost-savings plan that aims to improve profitability and free cash flow.

The stock rose 21%, to $3.13, on Thursday. Despite the gain, shares are down roughly 23% year to date.

The company before the bell said it will look to cut $60 million to $80 million in annual costs and reduce spending in areas that are less central to its core business, while at the same time protecting investments in products and capabilities that are expected to drive future growth.

The plan primarily includes reductions in operating costs, including staffing. The company also expects to increase efficiencies, in part through the expanded use of artificial intelligence across its internal operations.

Commerce said it expects to realize about $3 million of the anticipated savings this year, with the full annualized benefit hitting in 2027.

The company additionally guided for between $4.2 million and $8.8 million of restructuring and other one-time expenses during the third quarter, as well as between $4.3 million and $17.5 million of expenses during the fourth quarter.

"This plan materially increases the profitability and free cash flow we believe Commerce can generate without changing our growth strategy," said Daniel Lentz, who serves as both finance chief and chief operating officer.

With its restructuring, Commerce said its board authorized the repurchase of up to $50 million worth of the company's common stock during the next two years.

The company now expects adjusted operating income of $31 million to $37 million for the year, up from a prior outlook of $28 million to $34 million. It continues to expect full-year revenue of $336.5 million to $344.5 million.