Raspberry Pi Holdings plc

Good afternoon and welcome to the Raspberry Pi Holdings plc interim results 2026 investor presentation. Throughout this recorded presentation investors will be in lesson only mode. Questions are encouraged and they can be submitted at any time using the Q&A tab situated on the right hand corner of your screen. Simply type in your questions and press send. Before we begin I would like to submit the following poll and I would now like to hand you over to CEO Eben Upton. Good afternoon.

Good afternoon and welcome everybody. Welcome to our 2026 interim results. I'm Eben, joined today by my colleague Richard. We're going to take you through the first half financial results for the business, give you some updates on progress against our strategy, but I think first perhaps we could just take a quick look at some of the highlights of the half. I mean, quite simply, this was an exceptional first half for us. So record revenue, record profitability in the business. We shipped over 4 million units. We shipped 4.2 million Raspberry Pis and a half with our customer order backlog doubling to 2.6 million units. And all of this happened despite an incredibly challenging supply chain environment. Our diversified DRAM supplier base helped us weather the worst of that, helped us keep our products in production and in availability through the half. Despite these challenges, we kept innovating. The half saw five new product and platform launches, improving support for AI workloads on Raspberry Pi 5, helping our OEM users through the memory crisis by giving them more memory density options on Raspberry Pi 4, and streamlining IoT deployments through improvements to our Raspberry Pi Connect platform. We kept investing in our OEM customers too, making targeted hires into our commercial team and our board-to-board program continued to deliver traction in the smart home and defense sectors with a number of meetings with C-suite members of the C-suites of UK listed industrials. We kept investing in broader operational capacity too. We hired Tim Mamtora in March as our first Chief Operating Officer. He and his team are already building the repeatable processes that will allow us to continue to scale our business without sacrificing the engineering-led culture which makes Raspberry Pi Raspberry Pi. and together these developments give us confidence in our outlook for the rest of the year. We're expecting higher volumes in the second half than in the first half and we're expecting full year adjusted EBITDA to be above market consensus. So now I'll hand over to Richard for the financials.

Great, so I think as Evan said, this was I think across almost all metrics a very good half. we had a strong improvement in unit volume it continued to grow half on half as you can see from the chart it's really progressed from actually the end of 2024 each half we've consistently grown finishing at 4.2 million units it was particularly good to see the demand was in compute modules raspberry pi 4 raspberry pi 5r higher our higher margin our higher value boards our latest boards That indeed, that demand was strong that left us with a backlog of units at the end of June 2026 compared to 600,000 at the end of 2025 to 2.6 million now. and similarly over the period we've had to increase prices because of memory increases but pleased to see how the demand for products has held up through that period and indeed the demand for our four gigabytes and eight gigabyte versions of Pi 5, Pi 4 has continued to be very strong even though prices have had to go up. Overall that gross profit per board improved significantly because of those price increases and also because of the benefit of memory that we had acquired at the end of 2025 at lower costs that we have used in that first half. So overall, we ended up with gross profit up to 59 million, up from 33 million a year ago, and that dropped through to a profit of adjusted EBITDA, our key profit metric of 40.3 million compared to 19.4 million in the first half of 2025. Sorry forgive me, it's a slight remote control this one. Moving on to the next slide, yes. 26% growth in our direct units. So overall, the units supplied by us, so manufactured in our factory and with Sony in Wales, grew by some 26%. The volumes with Farnell were a bit slower. And overall, we ended up with volumes up 17%. That was again said earlier, particularly strong growth in compute modules and Pi 5, Pi 4. We saw lower growth, probably slightly negative actually in the case of Pico and Xero, which you may know are our lower cost boards. In the case of Xero, that volume was limited by access to supply. Our packager of the processor chip in Taiwan was somewhat distracted by data centers. That is now Thank you very much. That translated into a strong growth in revenue so with the increase in units and also an increase in the average selling price as I said we increased our prices because of needing to pass through the increased costs of memory so our prices went up about 42% leading to an over 90% increase in revenue through the period. Our revenue comprises a mixture of things. It includes royalty income for Farnell. It includes the direct sales of boards. It includes the sale of accessories. It also includes the sale of memory chips and processor chips to Farnell to make Raspberry Pis. So it really does have a number of different things with quite different margin structures. So when we look at the business we focus more on gross profit and in particular gross profit per unit combined with the number of units that we've sold. Gross profit overall increased by 79% due to those higher sales I've talked about and also this improvement in gross profit per board. Gross profit per board, so that's the profit we're making from sale of boards divided by the total number of boards in the period, increased by 53% from $8 in the first half of last year to $12.20 in this half. and that reflected a combination of factors it was the increase in the prices that we were selling and actually the way in which those took effect once we'd announced them but also this benefit of inventory that we brought in to the beginning of the year where we had bought at significantly lower prices before the increase in memory costs that we've seen really in the last six to nine months That beneficial effect has probably been largely consumed now by the time of the middle of the year. I think it's fair to say that the current cost of inventory that we are now holding, we're now putting into boards is much closer to the price at which we would buy further inventory at the moment. The other standout was accessories. We had a very good half for accessories compared to the number of boards sold. It grew that gross profit per boards increased by The gross profit increased by 90% to $7.8 million compared to about half of that number a year ago at a number of about $1.90 per board sold, which is well above our target that we set ourselves of $1 per board. We saw particularly strong growth in computers and cameras. in SD cards displays but also in AI hats that we work we put together with our friends at Halo and we sell as an add-on to the Raspberry Pi. The Raspberry Pi is giving you additional compute for particularly for AI models such as neural Convalescent neural networks or also for large language models on the latest version with Halo. Overall, so a strong growth of gross profit in the period. Moving on to the next slide. Just putting those together in terms of how did our EBITDA evolve through the period. We came into the first half of last year was 19.4 million. Unit growth has given us probably nearly $5 million of additional profit, so the additional units. That gross profit per board, so moving from $8 to $12 for each of those boards, is probably worth nearly $18 million of additional profit. some of that clearly because of the memory that we brought in and also some orders that we had placed in the tail end of 25 particularly good prices this year we think the value of that was probably a one-off if you will of somewhere between 10 or 15 million dollars and then the appreciation accessories and then in terms of overheads the research and development expenditure that we have that is is not capitalized it's research and development it's research it's software development which typically we don't capitalize that increased by about 700 000 that's predominantly some more heads but also inflation salary increases and then adjusted administrative costs this is more of the general central team be that sales be it Lotus Eaters like myself that grew by about 4.6 million that was a combination of there was some one-off effects of foreign exchange There's some additional bonuses reflecting this much stronger performance that was probably there's about a million of extra accrual million and a half there and the remainder is really headcount increases and increases in salaries generally across the team. Allowing for those we ended with the half with the result of 40.3 million of EBITDA. The next slide sets out the income statement, very much the matters we've just covered recently. I'm going to skip over that one and I am going to move on to the description of the balance sheet here but I think the best way to express that is in the cash flow and how our cash flow has moved across the period. We came into the beginning of this year with 28 million dollars of cash. EBITDA, the profits that we've just been talking about, contributed 40 million. we've then spent significantly on inventory that is almost entirely that increase in inventory that we are now carrying is 106 million of that is purchases of DRAM that we use in our boards I think that has and that is the position at the end of June that's put us into a much stronger position in terms of having nearly three months of inventory we've continued to add to that recently such that we have good confidence that we can meet our production plans for the remainder of this year and into the first quarter of next year but that memory obviously these days is at a significantly higher price than it was a few years ago that inventory at the end of June was funded in part by payables we bought significant amounts in June itself and therefore there was a payable at the end of the period that has started to reduce so this is we've seen a cash outflow continuing post the end of June and therefore we're drawing on our bank facilities we increased those facilities to 140 million have committed funds that was completed in early July which has given us a position where we're able to buy inventory where the opportunity arises to secure that future production to secure good prices on the products such that we can maintain an attractive level of profitability but I think it's fair to say that in the second half the profit per unit will come down as those memory costs now are closer to market levels rather than based on prices from very good historic purchases receivables also we saw some outflow in those as at the end of June that was really a function of just how strong trading in the month of June was a very active month obviously compared to December which is a quieter month by the end of the We spent about 11 million on capex in in the first half very consistent with the guidance that we've given for the last few years of about 20 million of capex for any full year so that continues a little bit of tax leaving us with a closing position of about 8.4 million of tax As I say, I think in the second half those payables will reduce. They were particularly high at the end of June and we also expect to be buying and holding quite a bit of memory. We can see the opportunity to do so. That will leave us probably with acquiring further inventory such that we would expect to see our debt levels at say 40 to 50 million. but I think we should flag that if opportunities arise, if there are good prices, if there is the opportunity to acquire the right memory, we will utilise some of the additional headroom we have on the bank facilities to add to that inventory to make sure that we go into next year in a particularly strong shape. Just touching on a final slide from me, memory purchases. I think one of the things that's notable is compared to the announcement that we made in early June about how strong trading was, a lot of the numbers I've talked about here are very much in line with that. I think to me the additional feature, the additional new news probably is the strength of our position with memory purchases. I think Mike Buffham, our Chief Commercial Officer, has done a phenomenal job of talking to packages, manufacturers of memory to secure that. and that position I think is a step forwards from where we were even two or three months ago. How have we got into that position with a stronger position on memory? We've diversified suppliers. We now have approximately seven different companies providing memory to us compared to two a year ago. We have used our engineering skills to technically innovate to actually allow us to use two one gigabyte pieces of DRAM to create a two gigabyte board. I'm not sure I got the maths right on that. and two lots of two to make four which gosh it's all binary how easy similarly on pricing we have I think minimise the disruption to our customers expectations of us by communicating quite clearly the reasons for price increases to be seen to be passing through price increases rather than gouging on selected products and really also providing in terms of a Raspberry Pi three gigabyte variant additional options for customers who maybe did not want to go to suffer the whole of a price increase that was necessary and we've continued to make strategic purchases we have seen the opportunity with our balance sheet with our connections our reputation to make further purchases from suppliers who in certain cases are keen to establish a presence elsewhere and we have been a very good we have been seen to be a very good partner to them in achieving that. So I think overall a lot of activity in terms of securing memory and that's put us into a stronger position than we were say three months ago and I think in that good position hand over to Eben to talk some more.