Material Revenue DeclineA >25% revenue drop signals persistent demand or execution problems that impair scalability and pricing power. If revenue contraction persists, it undermines fixed-cost absorption and the ability to fund strategic investments, making recovery slower and margins harder to sustain over the medium term.
Negative Free Cash FlowA sharp swing to deeply negative free cash flow drains liquidity and limits the company's ability to self-fund R&D or sales expansion. Over several quarters this can force asset sales, external financing, or cutbacks in strategic programs, increasing execution and refinancing risk.
Falling Profitability And ROERapid deterioration in net margin and ROE indicates worsening operating efficiency or pricing pressure. Reduced returns on shareholder capital constrain ability to attract investment, limit retained earnings for growth, and suggest structural issues in scaling profitable operations absent clear corrective measures.