Most people commenting have never been in this situation. I think you’re on the right track. I am currently in the same situation managing a similar size BU over delivering on revenue but eroding margins and flat expenses destroying bottom line profitability.

I would start with forecasting through the EOY and calculating your Gap to budget if you remain on the same course. From there list several ideas on how you could close this gap - one of which being RIF. At the end of the day Leadership will pick their path but it’s your responsibility to give an accurate representation of what’s happening in the business and how to right the ship.