Persistent UnprofitabilitySustained losses and negative operating margins are a structural red flag: they erode equity, limit retained earnings, and reduce the firm's ability to self-fund investments. Without durable margin improvement, profitability shortfalls will constrain strategic options and long-term viability.
Declining RevenueMaterial year-on-year revenue decline reduces scale economies and raises per-unit fixed costs, pressuring margins. Persistent top-line contraction also signals weakening market position or client attrition, making sustained recovery harder and increasing reliance on costly customer win-back efforts.
Negative Operating Cash FlowConsistent operating cash outflows and negative free cash flow create structural liquidity strain: they limit the company's ability to fund operations, invest in growth, or smooth seasonality without external financing. This raises financing risk and could force dilutive raises if unchanged.