- Better than expected first half
- Inventory levels continue to normalise
- Full year expectations reiterated
It is always better to under promise and over deliver and market newbie Raspberry Pi (RPI) seems to have pulled it off after reporting a better-than-expected maiden first half.
The shares soared more than 8% to 377p, topping the FTSE 250 leaderboard, taking gains since coming to the market in June to around 35%. The IPO (initial public offering) raised £178.9 million, of which £31.4 million was for the company.
As a reminder, the company makes low-cost single board computers and microcontrollers. It’s flagship Raspberry Pi5 retails for around £46.6.
BETTER THAN EXPECTED
For the six months ended 30 June revenue was up 61% year-on-year to $144 million, while profitability was stronger than expected with adjusted EBITDA (earnings before interest, tax, depreciation, and amortisation) jumping 55% to $20.9 million.
The company said that while volumes were slightly weaker than expected, revenue was skewed to higher margin products, lifting unit profitability.
CEO Eben Upton said: ‘In continued pleasing trading in the first half, we saw strong uptake of our latest flagship SBC, Raspberry Pi5, the launch of the Raspberry Pi AI Kit, and the successful ramp to production of RP2350, our second-generation microcontroller platform.
‘The higher than usual customer and channel inventory levels which were evident at the time of the IPO have continued to unwind, and there is a growing sense that this will have concluded by the year end.
Looking ahead the firm reiterated full year expectations including higher unit volumes, supported by new product launches, although weaker product mix is anticipated to result in lower unit profitability.
EXPERT VIEW
Investment director Russ Mould at AJ Bell commented: ‘Having enjoyed a big bump in the share price at IPO, Raspberry Pi had been struggling to sustain this strength in recent weeks.
‘However, the results have been well-received and put a new spring in its step. Certain investors will be staying on the sidelines, waiting for another set of earnings to be reported before making a firm judgment on whether to buy the shares or not.
‘The latest figures offer some reassurance but the fact they aren’t perfect could leave some lingering doubts about the company in parts of the investment community.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor (Steven Frazer) own shares in AJ Bell.
