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Raspberry Pi makes affordable single-board computers that can be found anywhere from smoke detectors to electric vehicle chargers. They are power efficient and adaptable, which gives them a range of potential uses.
This summer, the company listed on the London Stock Exchange, a move that generated a lot of attention given the recent exodus of tech companies. Last month, it reported its first half-year results, which showed strong growth. Revenue increased 61 per cent to $144mn, while adjusted cash profit (Ebitda) was up 55 per cent to $21mn.
The business sells its computers directly to customers and original equipment manufacturers. It is now also licensing its designs so other companies can build the computers, which is driving growth. In the six months to June, unit sales through licensing increased 144 per cent to 1.3mn, while direct unit sales were up just 4 per cent to 2.4mn. Overall, unit sales rose a healthy 31 per cent.
In the first half, management said profit was ahead of expectations. However, growth has slowed in the second quarter and inventories more than doubled, which meant operational cash flow swung from an inflow of $11.5mn last year, to an outflow of $22.7mn.
Raspberry Pi expects this inventory to normalise by the end of the year. Its house broker Peel Hunt agrees and believes there could be some softness in the second half, but expects growth to pick up again. In the long run, the broker thinks “edge computing will do to Raspberry Pi what the desktop did to Microsoft”. Given this optimism, it is unsurprising Peel Hunt has Raspberry Pi trading on an expensive-looking forward PE ratio of 33.
However, despite these growth prospects chief commercial officer Mike Buffham, chief technology officer James Adams and co-founder Elizabeth Upton, the spouse of chief executive Eben Upton, have all recently sold shares. Buffham sold £570,000-worth, Adams £193,000 and Upton £248,000. Raspberry Pi said this was part of their “financial planning”.
If Raspberry Pi does go on to dominate edge computing, these sales will prove to be poorly timed. However, there is a long way to go before we know the accuracy of that forecast.
New M&C Saatchi bosses buy in
M&C Saatchi is used to turbulence. The advertising agency was set up by brothers Maurice and Charles in 1995 after they were ousted from their original creation, Saatchi & Saatchi, by dissatisfied shareholders. A quarter of a century later in 2019, an accounting scandal hit the group, prompting a boardroom overhaul and another dramatic departure by Lord Maurice Saatchi (Charles had cut ties several years earlier).
Now, more changes are afoot. Zaid Al-Qassab, former chief marketing officer for Channel 4, has taken the reins as chief executive and Zillah Byng-Thorne, fresh from magazine publisher Future, is chair. Simon Fuller, former finance head at newspaper group Reach, has also started as chief financial officer.
Amid the latest upheaval, however, M&C Saatchi has been finding its feet again. Its interim results last month revealed a significant uptick in organic sales growth, helped by stronger demand for advertising in the US, the Middle East and Europe. Meanwhile, the new management team is making good headway on costs — staff costs fell by 13 per cent in the first half of 2024 to £86.6mn and the property footprint has been scaled back. The shares have risen by 16 per cent since January as a result, and are up almost 40 per cent year-on-year.
The new directors also appear to be feeling confident. Al-Qassab has bought more than 50,000 shares for £1.87 each, or a total of £100,000. Meanwhile, Fuller has bought 36,000 shares for £1.80 each, or a total of £65,000. Their overall shareholdings remain relatively small, however; Al-Qassab’s beneficial interest in the group sits at 0.04 per cent, while Fuller owns 0.03 per cent.