Severe Revenue ContractionA near-50% revenue drop is a durable structural red flag: it erodes scale, weakens customer relationships, and reduces fixed-cost absorption. Unless revenue stabilizes or reverses, margins and cash generation will remain impaired for several quarters.
Persistent UnprofitabilityConsistent negative EBIT and net margins indicate structural operational inefficiencies or insufficient pricing power. Ongoing losses limit reinvestment, deplete equity, and make achieving sustainable profitability dependent on significant business model or cost-structure changes.
Negative Operating And Free Cash FlowPersistent negative operating and free cash flows mean the company cannot self-finance operations or investments. This constrains strategic choices, increases reliance on external capital, and heightens the risk of capital shortfalls over the medium term.