Rackspace TechnologyRXT -6.00%47 Gross Margin % is 17.56% as of Mar. 2026, which is 44% below its 10-year median of 31.13. GuruFocus rates RXT with a GF Score™ of 47/100 and a GF Value™ of $1.42 (Significantly Overvalued). The stock has 7 warning signs investors should review. Among 2,683 Software companies, Rackspace Technology ranks worse than 81.7% on this metric.
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 Technology had a gross margin of 17.56% for the quarter that ended in Mar. 2026 => No sustainable 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 Technology Gross Margin % Related Terms
Rackspace Technology Gross Margin % Historical Data
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The historical data trend for Rackspace Technology'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.
For the Software - Infrastructure subindustry, Rackspace Technology'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 Technology Gross Margin % vs Software Industry
For the Software industry and Technology sector, Rackspace Technology's Gross Margin % distribution charts can be found below:
* The bar in red indicates where Rackspace Technology's Gross Margin % falls into.
* 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.
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 Technology (RXT) has a Gross Margin % of 17.56% as of Mar. 2026. Gross margin is the ratio of total gross profit to net sales. View historical data on Rackspace Technology and its competitors. This is 44% below median its historical median of 31.13. Over the past decade, Rackspace Technology's Gross Margin % has ranged from 18.48 to 41.47. According to the industry distribution chart, Rackspace Technology ranks #2192 out of 2683 companies in the Software industry, placing it in the top 81.7%.
Is Rackspace Technology's Gross Margin % too high?
Rackspace Technology's current Gross Margin % of 17.56% is 44% below median its 10-year median of 31.13. Over the past 10 years, this metric has ranged from a low of 18.48 to a high of 41.47. The Software industry median Gross Margin % is 40.45. Rackspace Technology's value of 17.56% is 56.6% below this industry median. Based on the distribution chart, Rackspace Technology ranks #2192 out of 2683 companies in the Software industry, which is in the bottom quartile relative to peers. Overall, Rackspace Technology has a GF Score™ of 47/100 and is considered Significantly Overvalued, reflecting its overall financial health beyond just this single metric.
How does Rackspace Technology's Gross Margin % compare to RDWR and GCT?
According to the Software industry distribution chart, Rackspace Technology ranks #2192 out of 2683 companies for Gross Margin %. This places Rackspace Technology in the lower half of its industry. The industry median Gross Margin % is 40.45. Rackspace Technology's value of 17.56% is 56.6% below this benchmark. Historically, Rackspace Technology's own Gross Margin % has ranged from 18.48 to 41.47 over the past decade. While the company's 10-year median is 31.13 vs. the industry median of 40.45, Rackspace Technology has consistently been below the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Gross Margin % for a Software company?
The median Gross Margin % among Software companies is 40.45, based on 2,683 companies in the industry. Companies in the top quartile (top 25%) have a Gross Margin % significantly above this median, while those in the bottom quartile fall well below. However, Gross Margin % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Rackspace Technology's current Gross Margin % of 17.56% is 56.6% below the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Gross Margin % mean?
A high Gross Margin % can signal that a stock is expensive relative to its fundamentals. Gross margin is the ratio of total gross profit to net sales. View historical data on Rackspace Technology and its competitors. For the Software industry, the median Gross Margin % is 40.45 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Rackspace Technology's current Gross Margin % is 17.56%, which is 44% below median its own 10-year median of 31.13. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Rackspace Technology stock overvalued right now?
Based on GuruFocus' analysis, Rackspace Technology (RXT) is currently considered Significantly Overvalued. The stock's GF Value™ is $1.42, compared to a current price of $6.82 — trading 380.3% above its estimated fair value. The current Gross Margin % is 17.56%, which is 44% below median its 10-year median of 31.13 and 56.6% below the Software industry median of 40.45. Rackspace Technology's overall GF Score™ is 47/100 with 7 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Gross Margin % calculated?
Gross Margin % is calculated from a company's financial statements. For Rackspace Technology (RXT), the current Gross Margin % is 17.56% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Rackspace Technology (RXT) Overvalued in 2026?
Based on GuruFocus' analysis, Rackspace Technology stock appears to be overvalued.
The current stock price of $6.82 is trading 380.3% above its estimated GF Value™ of $1.42.
GuruFocus considers Rackspace Technology to be Significantly Overvalued.
Key valuation signals for RXT:
Gross Margin %: 17.56% (44% below median its 10-year median of 31.13)
GF Value™: $1.42 vs. price of $6.82 (380.3% above fair value)
Industry Position: 56.6% below the Software median (#2192 of 2683)
No single metric tells the full story. See the RXT stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Rackspace Technology Inc is an end-to-end, hybrid, multi-cloud technology services company. It designs, builds, and operates its customers' cloud environments across all technology platforms, irrespective of technology stack or deployment model. The company's solutions include Application Services, Data, Colocation, Cloud, Managed Hosting, Professional Services, and Security and Compliance. It has two reportable segments: Private Cloud and Public Cloud. Maximum revenue is generated from the Public Cloud segment, which offers cloud solutions through managed services, elastic engineering, and professional services offerings for customer environments hosted on the AWS, Microsoft Azure, and Google Cloud public cloud platforms. Geographically, the company derives its key revenue from the U.S.
47GF Score
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