Onfolio Q2 Revenues Soar 83% but Losses Persist, Shares Drop

Core Viewpoint - Onfolio Holdings, Inc. reported significant revenue growth in Q2 2025, but investor sentiment remains cautious due to ongoing net losses and operational challenges, leading to a decline in share price despite operational improvements [1][11]. Financial Performance - Revenues for Q2 2025 increased by 82.5% year over year to $3.15 million from $1.73 million, with gross profit nearly doubling to $1.94 million, reflecting a 98.9% increase [2]. - Operating expenses rose by 54.4% to $2.44 million, although this was a sequential decline from Q1 2025 [3]. - The net loss narrowed by 5.6% year over year to $0.67 million, or 13 cents per share, compared to $0.71 million, or 14 cents per share, a year ago [3]. Key Business Metrics - Service revenues surged to $2.06 million, more than doubling from $0.99 million in the prior-year period, while product sales increased to $1.09 million from $0.73 million [4]. - The cost of revenues increased to $1.21 million from $0.75 million, but gross margin improved significantly due to faster revenue growth [4]. Cash Flow and Financial Position - Cash at the end of June 2025 stood at $0.51 million, up from $0.48 million at year-end 2024, supported by preferred stock sales and financing inflows [5]. - Operating cash outflow narrowed to $0.58 million in the first half of 2025 compared to $0.76 million in the prior year, indicating improved operating leverage [5]. Management Insights - CEO Dominic Wells highlighted progress in key metrics, with year-over-year growth in revenues and gross profit, and a decrease in operating expenses quarter over quarter [6]. - Management indicated that exceptional audit-related costs inflated losses but are now behind the company, suggesting a near breakeven operational status excluding these one-time costs [6]. Factors Influencing Results - Audit-related costs from the 2023 re-audit and 2024 Eastern Standard audit significantly impacted expenses but are not expected to recur [7]. - Increased interest expenses rose to $72,600 from $22,700 a year ago due to higher debt levels, but improved operating scale offset these burdens at the gross profit level [7]. Future Guidance - Management expressed confidence in continued improvement, anticipating reductions in accounting and professional fees starting in Q3, along with incremental revenue from new business initiatives [8]. - The company will pursue only "highly strategic" acquisitions, focusing on improving existing business performance before further expansion [8]. Recent Developments - Onfolio launched Pace Generative LLC, an AI visibility agency, which began generating recurring monthly revenues, and introduced a revenue-share partnership program for course creators [10]. - No acquisitions were completed in the quarter, but the pipeline remains strong, with a focus on enhancing existing business performance [10].