Rising LeverageIncreasing leverage reduces financial flexibility, raises interest expense sensitivity, and heightens refinancing risk if market conditions tighten. For a growth company, higher debt levels can constrain investments or force dilutive financing if operating results falter, pressuring long-term strategy execution.
Negative Free Cash FlowDespite operating cash growth, negative free cash flow indicates the company is not converting earnings into surplus cash, likely due to capex or working capital needs. Prolonged FCF deficits necessitate external funding, which can increase leverage or limit ability to self-fund strategic initiatives.
Declining ROE And Net Margin PressureA falling ROE alongside compressing net margins signals weakening efficiency in converting capital into shareholder returns, potentially from rising costs or pricing pressure. If this trend persists it undermines long-term return generation and could force tougher trade-offs between growth and profitability.