The Raspberry Pi (LSE:RPI) share price leaped on Tuesday (24 September) after the firm’s all-important first earnings report beat analysts’ estimates.
The company, which makes small, low-cost computers, often used for educational purposes, was only listed on the London Stock Exchange in June.
Investors had seemingly become a little nervous ahead of this first earnings report, with the stock trimming its September gains.
And because we have so little data about Raspberry Pi before it listed on the stock market, these results were potentially make or break.
First results impress
Thankfully, the Cambridge-based computer company exceeded expectations in its first financial report since going public, reporting a remarkable 61% increase in revenue to $144m for the first half of 2024. Meanwhile, gross profit rose 47% to $34.2m, surpassing internal projections.
Performance was driven by impressive sales of its latest flagship product, Raspberry Pi5, with 1.1m units sold during the period. This was complemented by new offerings such as the Raspberry Pi AI Kit.
While initial expectations suggested performance would be weighted towards the second half of the year, the strong first-half results have led to an optimistic outlook for higher unit volumes supported by new product launches.
However, the firm left its expectations for the year unchanged. Some investors may see this as being a little cautious given its strong H1 performance.
A company to watch
When Raspberry Pi elected to list its stock on the LSE, it was seen as a big win for the UK. But it was also described as a “watershed moment” for the company by CEO Eben Upton with £178.9m raised through the share sale.
With fresh capital and new product launches, it’s certainly becoming a stock to watch. Moreover, analysts’ forecasts make for fascinating reading.
| 2024 | 2025 | 2026 | |
| Earnings per share (¢) | 8.9 | 13.1 | 16.4 |
| Price-to-earnings ratio | 51.7 | 35.4 | 28.3 |
It’s worth recognising that analysts often revise their forecasts after an earnings report. Interestingly, they had forecasted revenue of $287.1m for the year, but with H1 revenue at $144m, and a stronger second half potentially on the cards, these earnings forecasts could improve.
Of course, many UK-focused investors will find this stock rather expensive. The FTSE 100 and FTSE 250 don’t contain too many companies that trade with such lofty earnings ratios. Nonetheless, the expected growth rate’s rapid.
The bottom line on Raspberry Pi
Raspberry Pi’s a fairly unique proposition for UK-focused investors. The company has global reach, with sales pretty equal among regions — Asia, Europe, North America — and it’s a fast-growing tech stock trading with high multiples.
I also understand that the company’s recent capital injection will allow it to develop new products and open up new markets, including in sectors like industrials, where these tiny computers can be used to control and operate machinery and artificial intelligence (AI).
However, there aren’t huge barriers to entry in the small computer market. If the sector starts to look particularly lucrative, I’d expect Raspberry Pi to face even more competition.
I’m keeping my powder dry, while also keeping a close eye on this one.
This post was originally published on Motley Fool
