Onfolio Holdings (NASDAQ:ONFO) saw its revenue jump over 150% in fourth quarter 2022 after a trio of transformative acquisitions helped to diversify and scale the holding company’s portfolio.
The acquisitions of SEOButler Ltd, Proofread Anywhere, and BWPS in October 2022 helped Onfolio generate more revenue in the fourth quarter than in the first three quarters of 2022 combined, according to its CEO Dominic Wells.
For the three months to end December 31, 2022, the firm reported revenue of $1.12 million, a 153% increase over the same year-ago quarter and a big jump from the $0.35 million in 3Q 2022.
Gross profit grew 340% to $0.75 million compared to $0.17 million in the prior year period.
Onfolio 2.0
Wells told shareholders that the acquisitions are the first under the company’s new “Onfolio 2.0” strategy, which is defined by an increased focus on service businesses, agencies, and e-commerce opportunities, such as online courses and digital products that are less susceptible to online search ranking algorithms and have higher recurring revenue.
“Our revenue grew $771,000 sequentially from 3Q22 to 4Q22, and given the nature of the subscription revenue from our BWPS acquisition that we ratably recognize over the subsequent 12-month period, one could view our incremental revenue in 4Q22 as being understated,” Wells said in a statement.
The CEO noted that incremental revenue generated an incremental $617,000 in gross profit, representing an incremental 82% gross margin, due to Onfolio’s “relatively flat” organizational structure and the “high-margin nature” of the acquired revenue.
“Our ability to identify profitable and/or cash flow positive business targets, acquire these businesses at modest prices, grow these businesses over time, and successfully manage these businesses ourselves using a modest-sized team is at the very foundation of our corporate strategy,” Wells added.
Other items from the balance sheet included a cash balance of $6.7 million as at December 31, 2022. The firm reported a 4Q net loss of $1.31 million versus $0.81 million in 4Q 2021.
Path to profitability
Wilmington, Delaware-based Onfolio went public in August 2022, raising just over $12 million in its IPO. The company acquires and manages a diversified portfolio of online businesses across a broad range of verticals, each with a niche content focus and brand identity.
The beginning of 2023 marked a change in strategy for the company, Wells told Proactive recently. “At the start of the year, we pulled the trigger on decentralizing all our acquisitions, so one company has one CEO, and that CEO just focuses on that company. It’s early, but the results we’ve seen so far have really justified that decision. Everybody has a better focus and they’re able to grow the businesses we acquire much better.”
In February 2023, Onfolio closed an asset purchase agreement with Contentellect, a specialist content writing service for software-as-a-service companies for a purchase price of $850,000 of cash at closing.
Contentellect reported $340,000 of adjusted EBITDA in 2022 on an unaudited basis, Onfolio noted.
Wells told investors that the acquisition will bring the company “even closer to profitability.”
Contact Angela at angela@proactiveinvestors.com
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