The narrowed losses follow a period of restructuring at the company, which saw its music site Music365 fold and its CEO Dan Thompson quit.
Turnover rose to £14.2m, up from £10m, helped by a 19.4% increase in revenues from its consumer division, which offset the loss of internet advertising sales with growth in areas such as e-commerce.
However, the company's business-to-business unit, which recently folded its B2B site Business365, saw revenues decline 3% to £6.6m from last time.
The company launched a voice portal, called Eckoh, in June but folded a number of consumer websites including its foreign-language operations in Paris, France and Santiago, Chile.
The company also announced the appointment of new CEO, Martin Turner, in June and a new chief operating officer, Nik Philpot. Turner was financial director at 365 Corp and Philpot is group managing director of the consumer division. Both were founders of Symphony Telecom, which 365 Corp acquired in February 1999.
Turner said, "365's management team remains highly focused on profitable growth and strict cost control. We are satisfied with our Q1 financial performance, as we see the financial benefit of recent initiatives designed to drive 365 towards profit.
"We are fully committed to reaching break-even as quickly as possible, and are looking for further material improvements in bottom line and cash flow performance during this financial year."