Onfolio Holdings Inc. (NASDAQ:ONFO) shares declined more than 6% in premarket trading on Monday after the company reported a sharp year-over-year fall in first-quarter revenue, even as management emphasized progress in reducing costs and improving operational efficiency.
Revenue declines as company prioritizes margins
For the quarter ended March 31, 2026, Onfolio reported revenue of $1.87 million, down 34% from $2.81 million in the same period last year.
The company said the decline reflected a deliberate strategy focused on improving margins rather than maximizing short-term sales growth.
Adjusted earnings per share came in at a loss of -$0.45 for the quarter.
Gross profit fell 46% year-over-year to $0.92 million, representing 49% of revenue, compared with gross profit of $1.71 million, or 61% of revenue, in the first quarter of 2025.
Cost reductions tied to AI-focused operating model
Operating expenses declined 30% to $1.75 million from $2.49 million a year earlier, driven primarily by lower selling, general and administrative expenses as the company transitioned toward an AI-driven operating structure.
Despite the cost reductions, net loss widened to $1.92 million from $0.81 million in the prior-year quarter.
The latest quarter included approximately $0.67 million in non-cash losses related to derivative liabilities, along with an additional $0.37 million in other non-cash expenses.
Adjusted EBITDA was negative $0.50 million, compared with negative $0.19 million in the first quarter of 2025.
Cash and cash equivalents totaled $0.84 million at quarter-end, down from $2.18 million as of December 31, 2025.
Management highlights operational improvements and acquisition plans
“In the first quarter, we continued to execute our strategy while making deliberate decisions that reduced near-term revenue but materially improved our operating profile,” chief executive Dominic Wells said. “As a result of these improvements, our loss from operations was essentially flat. We accomplished this despite approximately $1 million less revenue than the previous year.”
The company said it reduced advertising spending at Proofread Anywhere, leading to lower sales volumes but improved operating margins.
Within the B2B division, operating expenses were reduced by 30% through agency consolidation efforts. Onfolio added that RevenueZen achieved a reduction of more than 40% in operating expenses while nearly doubling operating margins.
The company also announced that it secured a $100 million equity financing facility in April 2026 and is now targeting acquisitions capable of generating between $5 million and $10 million in combined annual adjusted EBITDA before the end of the year.