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    CACI
    Earnings call· Mar 2026(Q3 FY26)

    CACI INTERNATIONAL INC /DE/ Q3 FY26 earnings call CACI

    Apr 23, 2026 Source

    Executive summary

    CACI Q3 FY26 — Strong Performance Driven by ARKA Acquisition and Organic Growth

    CACI delivered strong Q3 FY26 results, marked by significant revenue growth and margin expansion, largely driven by the strategic acquisition of ARKA and solid organic performance. The company continues its evolution as a software-defined technology leader focused on national security, leveraging mission proximity and disciplined capital deployment to drive long-term shareholder value despite a lumpy award environment. Management raised full-year revenue and EBITDA margin guidance, reaffirming free cash flow targets.

    Highlights

    6

    • Revenue for the quarter was $2.4 billion, up 8.5% year-over-year.

    • EBITDA margin of 12.3%, representing a year-over-year increase of 60 basis points.

    • Robust free cash flow of $221 million.

    • Trailing 12-month book-to-bill of 1.2x.

    • Total backlog of $33.4 billion, up 6% year-over-year, and funded backlog up 19% year-over-year.

    • ARKA acquisition closed, contributing $150 million to FY26 revenue guidance and enhancing margin performance.

    Concerns

    6

    • Book-to-bill of 0.9x for the quarter, indicating awards were below revenue recognized.

    • Award activity has not yet fully recovered from multiple government shutdowns and organizational changes.

    • Modest disruption from the ongoing DHS shutdown.

    • $17 million of ARKA transaction costs absorbed in Q3 EBITDA.

    • Higher interest expense of $11 million related to ARKA.

    • Approximately $50 million of transaction costs, interest expense, and increased capital expenditures absorbed in free cash flow.

    Guidance & targets

    6
    CategoryTargetConfidence
    Fiscal Year 2026 Revenue
    $9.5 billion to $9.6 billion
    high materiality
    High
    Fiscal Year 2026 EBITDA Margin
    11.8% to 11.9%
    high materiality
    High
    Fiscal Year 2026 Adjusted Net Income
    $615 million and $630 million
    medium materiality
    High
    Fiscal Year 2026 Adjusted EPS
    $27.70 and $28.38 per share
    high materiality
    High
    Fiscal Year 2026 Free Cash Flow
    at least $725 million
    high materiality
    High
    Leverage Ratio
    low 3s
    medium materiality
    High

    Segment performance

    1
    SegmentRevenueYoYQoQMargin
    Civil Business
    Experienced solid growth, with principal drivers including the NASA NCAPs ramp, despite modest DHS headwinds.
    		—7%——

    Operational metrics

    19
    Revenue growth, total
    8.5%YoY
    Q3 FY26

    Total revenue growth for the quarter.

    Revenue growth, organic
    6.8%
    Q3 FY26

    Organic revenue growth for the quarter.

    EBITDA margin
    12.3%60 bps YoY increase
    Q3 FY26

    Includes absorption of $17 million of ARKA transaction costs.

    Adjusted diluted EPS
    $7.2717% higher YoY
    Q3 FY26

    Driven by greater operating income and lower share count, offsetting higher interest expense and transaction costs.

    Days sales outstanding (DSO)
    55 days2 days lower QoQ
    Q3 FY26

    Reflects good working capital management.

    Pro forma leverage
    4.2x
    Q3 FY26

    Slightly better than expected when ARKA acquisition was announced.

    Fiscal Year 2026 Revenue growth from acquisitions
    3.5 points
    FY26

    Contribution to total FY26 revenue growth.

    Fiscal Year 2026 Adjusted EPS growth
    5% to 7%
    FY26

    Expected growth even after absorbing transaction costs.

    Fiscal Year 2026 Free cash flow per share growth
    65%over FY25
    FY26

    Highlights free cash flow per share as the ultimate value creation metric.

    Fiscal Year 2026 Revenue from existing programs
    98%
    FY26

    Indicates strong program stability.

    Fiscal Year 2026 Revenue from recompetes
    1%
    FY26

    Expected contribution from recompete wins.

    Fiscal Year 2026 Revenue from new business
    1%
    FY26

    Expected contribution from new business wins.

    Bids under evaluation
    >$4 billion
    Current

    Pipeline of potential new business.

    Expected bids over next 2 quarters
    >$22 million
    Next 2 quarters

    Anticipated bid submissions.

    Space business total revenue
    >$1 billion
    Current

    Total size of the space business after the ARKA acquisition.

    EW portfolio value
    $2 billion
    Current

    Value of the broader Electronic Warfare portfolio, which includes Merlin.

    Capital expenditures increase
    slightly up
    Current

    Increased investment in strategic areas.

    NASA NCAPs applications supported
    800 to 900
    Current

    Number of applications supported by the commercial, agile, and scale delivery model.

    Recompetes extended
    18 to 24 months
    FY27

    Future recompetes in Q1 FY27 have already been extended, reducing the need to bid on them.

    Orderbook & backlog

    6
    Book-to-bill ratio0.9xQ3 FY26
    Book-to-bill ratio, trailing 12-month1.2xQ3 FY26
    Weighted average duration of awardsjust over 6 yearsQ3 FY26
    Total backlog$33.4 billionQ3 FY26

    6% YoY increase

    Includes ARKA's contribution of $835 million.

    Funded backlogIncreased 19%Q3 FY26

    19% YoY increase

    Includes ARKA's contribution of $422 million. Healthy organic growth even when normalizing for ARKA.

    ARKA noncompetitive franchise programs$2 billionQ3 FY26

    Expected to recognize revenue over time, but do not yet meet regulatory criteria to be added to backlog.

    Product announcements

    2
    ProductTypeDetails
    Spectral Programmilestone
    Merlin Counter-UAS Systemexpansion

    Deals & partnerships

    1
    ARKAAcquisition of a leading technology company focused on national security missions in the space domain.

    ARKA brings exclusive space-based imaging sensor technology, agentic AI-based ground processing software, and deep customer relationships. It has been integrated with CACI's existing space portfolio under ARKA's former CEO. Positions CACI for opportunities including Golden Dome, IndoPaycom support, future ground architecture, and space superiority missions.

    Capital programs

    2
    Production facility in Melbourneunderway

    Benefit: Production of CAF and Spectral program systems

    CapEx investments have been made to support the rolling out of both CAF and the Spectral program. Long lead item purchases were made ahead of Milestone C to accelerate delivery.

    Merlin Counter-UAS production capabilitiesunderway

    Benefit: Ability to deliver Merlin systems

    Scaling up production capabilities in Sterling and Melbourne to deliver Merlin systems, despite a tough supply chain for flat panel radars.

    Risks & headwinds

    5
    Award activity slowdownQ3 FY26, ongoing

    Q3 book-to-bill of 0.9x

    Mitigation: Strong pipeline, excellent visibility, focus on recompete performance, and constructive macro environment. Government is funding programs and processing invoices despite award sluggishness.

    Government shutdowns and organizational changesQ3 FY26, ongoing

    Modest disruption from ongoing DHS shutdown; award activity not fully recovered.

    Mitigation: Focus on enduring national security priorities with bipartisan support. Expectation that government will return to more timely award decisions.

    Higher interest expenseQ3 FY26, ongoing

    $11 million related to ARKA in Q3

    Mitigation: Offset by greater operating income and lower share count; strong cash flow characteristics support deleveraging to low 3s within 6 quarters.

    Transaction costsQ3 FY26, FY26

    $17 million in Q3 EBITDA; $22 million in FY26 EBITDA; ~$50 million impacting FY26 FCF

    Mitigation: Part of the cost of strategic acquisitions like ARKA, which are accretive to growth and margins. Free cash flow guidance reaffirmed despite these costs.

    Supply chain constraintsOngoing

    Tough supply chain for flat panel radars for Merlin Counter-UAS system.

    Mitigation: Differentiation through software capability of the system, allowing rapid updates and adaptability to new threats without solely relying on hardware changes.

    What to watch in Q4 FY26

    5

    Award activity recovery

    next quarter
    Currentnot yet fully recovered from the multiple government shutdowns and acquisition organization changes
    TargetImproved conversion of bids to awards

    Why it matters

    Indicates government procurement efficiency and CACI's future revenue growth, impacting book-to-bill ratios and backlog expansion.

    While award activity improved in the quarter, it has not yet fully recovered from the multiple government shutdowns and acquisition organization changes.

    Q&A highlights

    7

    How large is CACI's space exposure after the ARKA integration, and can you provide a framework for margin differences between technology and expertise segments, including any lumpiness?

    The space business is now greater than $1 billion, with future growth expected from ARKA's $2 billion in noncompetitive franchise programs. Margin expansion is anticipated from technology franchises, but quarterly margins can be lumpy, with Q4 expected to be softer than Q3. Revenue from technology is not linear, as it's a delivery-based business.

    “All in all, today, looking at the space, you're looking at greater than $1 billion worth was of total business, with future growth that we see coming forward when we get talking about fiscal year '27.”

    asked by Jon Siegmann · answered by John Mengucci

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Evolution and Differentiators

    CACI has strategically evolved over the past decade, focusing on 7 key markets with deep mission knowledge and enduring national security priorities. The company differentiates itself as a software-defined technology leader, investing ahead of customer needs and deploying capital opportunistically to expand its portfolio and drive free cash flow per share. This approach enables competition against a broader set of players and positions CACI for long-term success in national security.

    02

    ARKA Acquisition Integration

    The recent acquisition of ARKA, a national security-focused space technology company, significantly expands CACI's capabilities in the space domain. ARKA brings exclusive space-based imaging sensor technology, agentic AI-based ground processing software, and deep customer relationships. The integration of ARKA and CACI's existing space portfolio under ARKA's former CEO aims to leverage combined capabilities for opportunities like Golden Dome and future ground architectures, positioning CACI for long-term growth and increased free cash flow per share.

    03

    Spectral Program Progress

    The spectral program, developing next-generation shipboard signals intelligence and electronic warfare for the Navy, achieved Milestone C. This marks the start of low-rate initial production and deployment, accelerating delivery of critical EW technology to the fleet. Built with software-defined, open architectures, the program is expected to offer significant additional opportunities across the Department of War and internationally, demonstrating CACI's ability to invest ahead of need and execute disciplined innovation.

    04

    Counter-UAS Leadership with Merlin

    CACI is experiencing accelerating demand and increasing orders for its Counter-UAS system, Merlin. Leveraging nearly two decades of investment, Merlin provides advanced detection and defeat capabilities, including unique cellular detection. Its software-defined nature allows rapid updates, and it is currently deployed on the southern border, demonstrating speed and effectiveness in addressing critical national security needs. The company is actively pursuing both domestic and international sales for this technology.

    05

    Constructive Macro Environment and Budget Outlook

    Despite some short-term lumpiness in award activity due to government shutdowns, CACI sees a constructive macro environment with positive budget signals for FY27. Key areas like electronic warfare, Counter-UAS, space, C5ISR, and IT modernization (including AI) are well-funded and align with CACI's strategic focus. The company believes these trends will drive future growth, with reconciliation funding also contributing to programs like Golden Dome and border security.

    06

    Capital Deployment and Deleveraging Strategy

    CACI's flexible and opportunistic capital deployment strategy is exemplified by the ARKA acquisition, which is accretive to growth and margins. The company expects to return its pro forma leverage of 4.2x net debt to trailing 12-month EBITDA to the low 3s within six quarters. This deleveraging plan is supported by strong cash flow generation and a proven track record of successfully integrating acquisitions and managing financial performance.

    AI-generated summary of the company’s earnings call. Not investment advice.