Declining Revenue And MarginsPersistent revenue decline and squeezed gross/net margins impair the firm's ability to invest in product development and marketing. Over several quarters this can erode market share, reduce pricing power, and make it harder to restore long-term growth trajectories.
Weak Cash Flow GenerationPoor cash conversion limits internal funding for growth, R&D, and marketing. Reliance on external financing increases, constraining strategic flexibility and raising vulnerability to tighter credit conditions; this is a durable headwind to scaling profitably.
Elevated Leverage And Low ROEHigh leverage raises interest and refinancing risk, amplifying earnings volatility during downturns. Combined with low ROE, it signals capital is not generating strong returns, limiting ability to deleverage and invest for sustainable long-term growth.