High LeverageElevated reliance on debt increases funding and refinancing risk, reducing financial flexibility. Over the medium term, higher leverage limits capacity to absorb credit shocks or fund growth internally and makes margins and capital allocation vulnerable to rising interest rates.
Negative Free Cash FlowPersistent negative free cash flow forces dependence on external financing for growth and operations. This structural cash-generation gap constrains options for deleveraging, sustaining rewards programs, or increasing strategic investments without raising funding costs or diluting stakeholders.
Net Margin CompressionA falling net margin despite strong gross margins points to rising operating expenses, credit costs, or competitive pricing pressure. If persistent, margin compression undermines the conversion of revenue into shareholder returns and may weaken ROE and reinvestment capacity.