Rackspace Hosting (Rackspace Hosting) Gross Margin % : 64.37% (As of Sep. 2016)

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What is Rackspace Hosting Gross Margin %?

Gross Margin % is calculated as gross profit divided by its revenue. Rackspace Hosting's Gross Profit for the three months ended in Sep. 2016 was $332 Mil. Rackspace Hosting's Revenue for the three months ended in Sep. 2016 was $516 Mil. Therefore, Rackspace Hosting's Gross Margin % for the quarter that ended in Sep. 2016 was 64.37%.

The historical rank and industry rank for Rackspace Hosting's Gross Margin % or its related term are showing as below:

RAX's Gross Margin % is not ranked ^*
in the Software industry.
Industry Median: 41.73
* Ranked among companies with meaningful Gross Margin % only.

Rackspace Hosting had a gross margin of 64.37% for the quarter that ended in Sep. 2016 => Durable competitive advantage

The 5-Year average Growth Rate of Gross Margin for Rackspace Hosting was 0.00% per year.

Rackspace Hosting Gross Margin % Historical Data

The historical data trend for Rackspace Hosting's Gross Margin % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Rackspace Hosting Gross Margin % Chart

Rackspace Hosting Annual Data

Trend

Dec06

Dec07

Dec08

Dec09

Dec10

Dec11

Dec12

Dec13

Dec14

Dec15

Gross Margin %

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69.85

71.93

67.91

67.55

65.94

Rackspace Hosting Quarterly Data
	Dec11	Mar12	Jun12	Sep12	Dec12	Mar13	Jun13	Sep13	Dec13	Mar14	Jun14	Sep14	Dec14	Mar15	Jun15	Sep15	Dec15	Mar16	Jun16	Sep16
Gross Margin %	Get a 7-Day Free Trial															66.06	65.44	65.18	67.25	64.37

Competitive Comparison of Rackspace Hosting's Gross Margin %

For the Information Technology Services subindustry, Rackspace Hosting's Gross Margin %, along with its competitors' market caps and Gross Margin % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

Rackspace Hosting's Gross Margin % Distribution in the Software Industry

For the Software industry and Technology sector, Rackspace Hosting's Gross Margin % distribution charts can be found below:

* The bar in red indicates where Rackspace Hosting's Gross Margin % falls into.

Rackspace Hosting Gross Margin % Calculation

Gross Margin is the percentage of Gross Profit out of sales or Revenue.

Rackspace Hosting's Gross Margin for the fiscal year that ended in Dec. 2015 is calculated as

Gross Margin % (A: Dec. 2015 )	=	Gross Profit (A: Dec. 2015 )	/	Revenue (A: Dec. 2015 )
	=	1319.7	/	2001.3
	=	(Revenue - Cost of Goods Sold)	/	Revenue
	=	(2001.3 - 681.6)	/	2001.3
	=	65.94 %

Rackspace Hosting's Gross Margin for the quarter that ended in Sep. 2016 is calculated as

Gross Margin % (Q: Sep. 2016 )	=	Gross Profit (Q: Sep. 2016 )	/	Revenue (Q: Sep. 2016 )
	=	332.3	/	516.2
	=	(Revenue - Cost of Goods Sold)	/	Revenue
	=	(516.2 - 183.9)	/	516.2
	=	64.37 %

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.

Rackspace Hosting (NYSE:RAX) Gross Margin % Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin % because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin %

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

Rackspace Hosting had a gross margin of 64.37% for the quarter that ended in Sep. 2016 => Durable competitive advantage

Be Aware

If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin % and Operating Margin % closely helps avoid value trap situations.

Rackspace Hosting Gross Margin % Related Terms

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Rackspace Hosting (Rackspace Hosting) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Software » Rackspace Hosting Inc (NYSE:RAX) » Definitions » Gross Margin %

Comparable Companies

Traded in Other Exchanges

N/A

Address

Website

http://www.rackspace.com

Rackspace Hosting Inc was incorporated in Delaware in March 2000. The Company, through its operating subsidiaries, is a provider of cloud computing services, managing web-based IT systems for small and medium-sized businesses as well as large enterprises. It offers a portfolio of integrated IT solutions for common business needs, including for ecommerce, web content management, website hosting, data services, office mail and collaboration, and private clouds. It also offers advisory services for technology strategy, security and compliance, application assessment and migration, and DevOps automation. It offers its solutions across a variety of IT form factors, including multi-tenant public cloud, dedicated single-tenant servers, private cloud, and hybrid cloud - all delivered with a commitment to open and standard technologies. Its marketing activities include web-based paid and natural search, participation in technology trade shows, conferences and customer events, advertisements in traditional and electronic (web and email-based) media, and targeted regional public relations activities. Its trademark includes Rackspace, Fanatical Support, and RackConnect. The Company is subject to U.S. federal income tax and various state, local, and international income taxes in numerous jurisdictions.

Executives

Alex Pinchev	officer: EVP, Global Sales & Marketing	BMC SOFTWARE INC, 2101 CITYWEST BLVD, HOUSTON TX 77042
Lila Tretikov	director	149 NEW MONTGOMERY STREET, FLOOR 6, SAN FRANCISCO CA 94105
John E Harper	director	2300 WEST PLANO PARKWAY, PLANO TX 75075
Joseph Saporito	officer: Chief Accounting Officer
Kevin Costello	director	C/O ARIBA INC, 807 11TH AVENUE, SUNNYVALE CA 94089
Graham M Weston	director, 10 percent owner	425 SOLEDAD SUITE 500, SAN ANTONIO TX 78205
Eugene V Defelice	officer: SVP, General Counsel	1506 COVENTRY LANE SOUTHLAKE TX 76092
Michael S Gilliland	director	3720 BEVERLY DRIVE, DALLAS TX 75205
Still George J Jr	director	NORWEST VENTURE PARTNERS, 525 UNIVERSITY AVENUE, SUITE 800, PALO ALTO CA 94301
A Lanham Napier	director, officer: CEO	701 W. CASTANO, SAN ANTONIO TX 78209
Palmer L Moe	director	5000 WALZEM SAN ANTONIO TX 78218
Wells Fargo & Company/mn	10 percent owner	420 MONTGOMERY STREET, SAN FRANCISCO CA 94163
Promod Haque	10 percent owner	C/O NORWEST VENTURE PARTNERS, 525 UNIVERSITY AVENUE, SUITE 800, PALO ALTO CA 94301
Norwest Venture Partners Viii Lp	10 percent owner	C/O NORWEST VENTURE PARTNERS 525 UNIVERSITY AVENUE, SUITE 800 PALO ALTO CA 94301
James J Goetz	10 percent owner	C/O SEQUOIA CAPITAL, 2800 SAND HILL RD, SUITE 101, MENLO PARK CA 94025