Negative Cash ConversionPersistent negative operating and free cash flow despite accounting profits is a structural red flag. Over months this undermines the firm's ability to fund operations organically, raises refinancing need, and limits capacity for capex, dividends or cushioning against downturns without external financing.
Rising LeverageMaterial increase in leverage to ~0.61 reduces financial flexibility and raises interest and refinancing exposure. Coupled with weak cash conversion, higher debt makes the capital structure more sensitive to shocks and constrains strategic optionality over the medium term.
Margin Compression/Cost PressureNet margin falling from ~10% to ~7% suggests rising costs or heavier reinvestment as scale increases. This trend can erode the durability of recent profitability gains and, if persistent, will pressure free cash flow and returns unless offset by pricing power or efficiency improvements.