Raspberry Pi Holdings PLC (LSE:RPI) shares slipped then recovered on Tuesday on results that took a bit of digesting and led to analysts trimming their earnings forecasts.
This was due to a drop in royalty and component revenues in the first half, which offset stronger sales of accessories and semiconductors.
The results for the first six months of 2025, which showed sales down 6% year-on-year but up 9% sequentially compared to the second half of last year, while adjusted EBITDA fell 7% but was up 19% sequentially.
Shares in the FTSE 250-listed group fell 6% in early trade but by late afternoon were up 4.3% at 419.2p.
Analysts at Jefferies noted that royalties were down 24% and component sales 60% due to weaker board sales through licensees compared with a strong first half of 2024, just after the Raspberry Pi 5 was launched.
Although the decline mainly hit lower-margin revenue streams, the mix shift weighed on gross margins, which came in at 24.5%, slightly below Jefferies’ forecast. Gross profit per board, at $8, was stronger than expected but still below last year’s level.
Jefferies trimmed its full-year forecasts, cutting adjusted EBITDA to $40.8 million from $42.7 million and lowering its net cash forecast to $18 million as payables are paid down.
Looking ahead, management signalled that trading in the second half has started well, with higher volumes expected on the back of rising demand and a large order backlog.
Jefferies kept its full-year sales forecast unchanged at $290 million, implying a 34% increase year on year. Gross profit per board is expected to hold steady in the second half.
Beyond 2025, the broker noted risks from rising DRAM memory costs, with DDR4 prices having more than doubled in recent months, though RPI management is confident that commercial and technical measures can limit the impact on 2026 profitability.
RPI’s own profit expectations for the full year "remain unchanged”, house broker Peel Hunt said it was prudent to cut its volume forecasts 3%, leading to a 5% cut to full-year expected adjusted EBITDA of $41 million, below the prior consensus $43 estimate of million.
On the plus side, direct OEM sales accelerated in the half, with Raspberry Pi now boasting 100-plus OEMs in the pipeline, while microcontroller volume also doubled to 4.5 million, "validating the strategic bet RPI is taking with MCUs".
"Raspberry Pi is making great strategic progress in becoming an Edge AI platform - a big positive for the medium term," said the house broker.
However, its target price fell from 565p to 460p, based on current top-quartile peer multiples and a 26.7 EV/EBITDA ratio, despite the "tangible strategic progress".