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Sparks commentary

TMT

Sparks

Raspberry Pi (LSE: RPI) revenue falls despite unit shipment growth
Published by Finlay Mathers
Calibrating Raspberry Pi’s fundamental performance solely based the performance of one half is challenging, given the company’s exposure to inventory cycles, new product launches and large number of moving parts in general. So, while company’s year on year figures look lacklustre (revenues down 6% YoY at $135.5m, gross profit down 3% at $33.2m and EBITDA down 7% at $19.4m) the comparative period was strong as a result of post-shortage channel re-stocking and the launch of Raspberry Pi 5. On a sequential basis the performance is more encouraging (with gross profit and EBITDA up 14% and 19% respectively).
What is the progress with key strategic initiatives?
Raspberry Pi’s revenue decline masks underlying operational improvements, with gross margin expanding to 25% in the prior period and adjusted EBITDA of $19.4m declining only 7% despite the revenue fall. The shift toward direct sales strengthened, with direct unit sales accounting for 75% of total volumes (up 13% YoY) compared to 65% in H1 2024.Semiconductor unit volumes reached 4.5m units, exceeding board unit volumes for the first time.
What does this mean?
Overall, there seems good evidence to support a pick up in growth in H2 and beyond. Channel inventory levels have normalized, which should support steadier sell-through while the company ended June with an order backlog of approximately 600,000 units. There’s also been a marked increase in activity from both new and existing OEM customers, reflecting broader adoption and deeper engagement across industrial markets. The company launched seven new products in H1 2025 and expects a similar pace in H2, which should drive incremental demand and refresh the product portfolio. Management also states that it has sufficient DRAM supply to meet FY2025 sales goals despite rising memory prices.
Why should I care?
The company maintains unchanged profit expectations for the full year – although the lack of gross profit guidance may suggest a trim to consensus estimates. FY25 consensus EBITDA of $43.1m requires a strong uptick nevertheless (45% YoY growth, 22% sequential) nevertheless and the share price fall today likely reflect that concerns that this could be over ambitious. However, a resumption of growth, driven by key strategic initiatives should strengthen belief in the longer term growth story. The company’s penetration of industrial customers is still in its infancy and while growth of hardware companies is rarely linear, we believe that Raspberry PI’s potential for sustained, robust growth remains strong.
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