Declining RevenueA steep revenue decline reduces scale benefits, weakens bargaining power with suppliers and customers, and pressures margins. If the top-line contraction persists, it undermines investment capacity and cash conversion, making medium-term recovery and program retention more difficult.
Margin CompressionSustained declines in gross and operating margins point to either rising input costs, pricing pressure, or lower mix of higher-value work. Margin erosion reduces free cash generation and leaves less room for reinvestment in product development or capacity, risking competitiveness over the next several quarters.
Rising LeverageHigher leverage increases interest and refinancing risk, limiting financial flexibility to fund growth or absorb further revenue shocks. In an environment of weaker profitability, elevated debt elevates the probability of capital constraints and may force operational trade-offs in the medium term.