Raspberry Pi FY2025 slides: semiconductor sales eclipse boards

Adjusted EBITDA rose 25% to $46.4m on revenue up 25% to $323.2m, while semiconductor unit shipments jumped 47% to 8.4m, marking the first year silicon sales exceeded board sales. Profit after tax more than doubled to $21.7m and adjusted diluted EPS reached 14.19c; inventory increased to $145.3m and year-end cash fell to $28.1m after working capital outflows. Management emphasizes OEM traction, 13 product launches, and positioning for edge AI (400k connected devices) as drivers for continued semiconductor-led growth.

Analysis

The pivot from being a board-first to a silicon-forward platform creates a structural margin and control story that extends beyond the company itself: third-party foundries, OSAT/test houses and edges-of-line IP vendors gain a recurring revenue stream tied to design wins, while distributors and commodity board assemblers face margin pressure as more value migrates upstream. Expect a multi-quarter ramp to show up in gross-to-operating cash conversion because wafer NRE, yield ramp and packaging/test cycles lengthen working-capital turns; monitor inventory days and payable/receivable rhythms over the next 3–9 months as the clearest early-warning signal.

DRAM pricing and wafer-supply timing are the two main fat-tail risks. Memory-cost pressure can sap ASP improvement and compress product-level economics until either contract pricing or capacity additions change the supply curve — that typically plays out over 12–36 months. Separately, the move into custom silicon introduces execution risk: missed mask iterations, yield shortfalls or a single large OEM design failing to scale would materially reset the story within 6–18 months.

Strategically, the company’s Connect platform is the soft moat: device management and OTA create switching costs for OEMs that can convert one-off deployments into multi-year annuity relationships, amplifying lifetime value if retention metrics hold. However, sentiment may be front-running technology risk; the market could re-rate quickly on either stronger OEM ATP/deployment updates in the next 6–12 months or on a liquidity shock from stretched working capital. Use near-term option structures to express asymmetric exposure while keeping outright balance-sheet risk limited.

Key Decisions for Investors

• Long LON:RPI (equity) with a 6–12 month horizon to capture OEM traction and silicon mix maturation; size initially 2–3% NAV, target +35–50% upside, hard stop -25% from entry; mitigate headline/cash risks by pairing with a 3–6 month protective put if available (limits max loss to defined level at cost of premium).
• Directional play on equipment suppliers: buy ASML (ASML) as a 12–24 month core hold to ride secular memory capex tailwinds; accumulate on sub-15% dips, target +25–40% upside, stop -15%; thesis wins if industry capex accelerates and memory lead times normalize within 12–36 months.
• Volatility-limited DRAM exposure: buy a 9–18 month call spread on Micron (MU) to play a DRAM rebound/capex cycle (max loss = premium, target 2–4x payoff); this captures rising memory pricing without naked long equity downside if DRAM prices remain weak.
• Hedged, event-driven approach: if you want exposure without balance-sheet risk, establish a 60/40 long RPI equity / short broad hobbyist-board proxy (or buy a collar around RPI) for 6–12 months — this isolates upside from semiconductor mix while protecting against a rapid unwind from inventory or DRAM shocks.