Raspberry Pi Holdings plc (RPBPF) Q4 2025 Earnings Call Transcript

Shipments of boards and modules rose 9% to 7.8 million units in 2025 and EBITDA increased 25%. Chip sales jumped 47% year-on-year to 8.4 million units, meaning Raspberry Pi sold more chips than boards for the first time. Demand strengthened through H2 and Q4, with particular strength in the United States and China. Management highlighted product focus and provided an outlook for the remainder of 2026.

Analysis

The corporate pivot toward monetizing silicon beyond finished boards cascades into the supply chain: foundries and test/assembly vendors capture a larger share of gross margin, while distributors and value-added resellers see increased SKU complexity and aftermarket service demand. That shift enlarges the addressable market into OEM embedded compute, which attracts different buyers (industrial, automotive tier-2s) and changes seasonality — revenue becomes less gift-season centric and more driven by multi-quarter design cycles.

Competitive second-order effects favor companies with flexible supply and broad distribution footprints. Public distributors that can warehouse, kitting and support long-tail SKUs will win share vs. pure retail channels; likewise, EDA/IP and contract engineering houses stand to benefit from new silicon customers needing turn-key support. Conversely, incumbent low-cost SoC vendors and commodity module-makers face margin compression or displacement as a recognizable product brand moves upstream into silicon licensing and chip sales.

Key risks are near-term channel inventory swings and policy friction. Inventory digestion in distributors can reverse perceived demand gains within a single quarter; over a 6–18 month horizon, export controls or certification hurdles (security, telecom) in large end markets could slow adoption of third-party silicon. Longer-term, maintaining a profitable silicon roadmap requires continued access to mature-node fab capacity and competitive IP; losing either could compress EBITDA materially and quickly.

Key Decisions for Investors

• ARW (Arrow Electronics) — Initiate a 6–12 month long position. Rationale: best-in-class distribution exposure to embedded compute and value-added services. Target +20% with stop-loss 10%; catalyst windows: quarterly distributor results and holiday-season OEM orders.
• TSM (Taiwan Semiconductor Manufacturing) — Buy a 12–24 month call spread (e.g., buy 12–18 month ITM calls, sell 24 month higher-strike calls). Rationale: foundry demand from increased small-volume silicon programs supports near-term utilization. Risk: macro-driven capex downturn; aim for asymmetric 2:1 reward:risk if node demand holds.
• SNPS or CDNS (Synopsys/Cadence) — Tactical long (9–24 months). Rationale: more customer-designed silicon drives higher EDA/IP spend per design win; small cadence of designs can lift software/IP revenue disproportionately. Use 6–12% position sizing with a 12% stop.
• Pair trade — Long ARW / Short AVT (Avnet) for 6–12 months. Rationale: ARW better positioned for higher-margin embedded distribution and engineering services while AVT is more cyclical with broader industrial exposure. Target spread tightening worth ~15% relative outperformance; maintain tight stops (10%) given macro sensitivity.