Steep Revenue DeclineA more-than-50% revenue contraction is a structural red flag: it reduces economies of scale, weakens pricing power, and curtails capacity to invest in product and sales. Prolonged top-line decline undermines subscription renewals and institutional relationships, threatening medium-term viability.
Negative Operating & Free Cash FlowPersistent negative operating and free cash flows indicate the core business is burning cash, necessitating external funding or asset cuts. Over months this reduces runway for product development, customer support, and marketing, and increases the risk of dilutive financings or service reductions.
Deteriorated Margins And Declining EquityNegative operating margins and falling shareholder equity point to structural operational inefficiencies and an inability to generate returns. This limits reinvestment capacity, hampers competitiveness versus better-capitalized rivals, and raises the likelihood of strategic retrenchment or restructuring.