CACI International NYSE: CACI reported third quarter fiscal 2026 results featuring mid-single-digit organic growth, margin expansion, and strong cash generation, while management raised full-year revenue and EBITDA margin guidance following the closing of its ARKA acquisition.
Quarterly results: revenue up 8.5%, margins expand despite acquisition costs
President and CEO John Mengucci said the company “delivered another quarter of outstanding performance,” with third quarter revenue of $2.4 billion, up 8.5% year-over-year. Management reported EBITDA margin of 12.3% and free cash flow of $221 million.
Chief Financial Officer Jeff MacLauchlan said 6.8% of the quarter’s revenue growth was organic, adding that results came “despite some modest disruption from the ongoing DHS shutdown.” He noted EBITDA margin expanded 60 basis points year-over-year even after $17 million of ARKA transaction costs, with profitability “driven primarily by overall mix and strong program execution.”
MacLauchlan reported adjusted diluted EPS of $7.27, up 17% from the prior-year quarter. He attributed the increase to higher operating income and a lower share count, which more than offset higher interest expense (including $11 million related to ARKA), a higher tax provision, and transaction costs. Days sales outstanding were 55 days, two days lower than the prior quarter.
Awards and backlog: book-to-bill of 0.9x in Q3 amid “sluggish” award decisions
Management said third quarter awards were $2.2 billion, representing a book-to-bill of 0.9x for the quarter and 1.2x on a trailing 12-month basis. Mengucci said award activity improved but “is not yet fully recovered from the multiple government shutdowns and acquisition organization changes,” emphasizing that quarterly awards can be lumpy.
On forward indicators, MacLauchlan said total backlog rose 6% year-over-year to $33.4 billion, while funded backlog increased 19%. He added that even after normalizing for ARKA’s contribution—$835 million to total backlog and $422 million to funded backlog—both metrics reflected healthy organic growth. MacLauchlan also highlighted that ARKA has “another $2 billion of non-competitive franchise programs” expected to convert to revenue over time, though they do not yet qualify for inclusion in backlog under applicable rules.
In response to questions on the contracting environment, Mengucci and MacLauchlan drew a distinction between slower award decisions and ongoing contract administration. MacLauchlan said CACI has not seen disruption in areas such as funding and invoicing, stating that “the government is, by and large, funding programs. They're paying bills. They're processing invoices.”
Management also provided pipeline metrics, with MacLauchlan saying CACI had more than $4 billion of bids under evaluation, over 80% of which were for new business, and expected to submit another $22 billion in bids over the next two quarters, with over 75% for new business.
ARKA acquisition: expanded space portfolio and “agentic AI” ground processing opportunities
During the quarter, CACI closed its acquisition of ARKA, which Mengucci described as a leading technology company focused on national security missions in the space domain. He said ARKA adds “exquisite space-based imaging sensor technology,” “agentic AI-based ground processing software,” and long-standing customer relationships. He also said CACI integrated ARKA and its existing space portfolio under the leadership of ARKA’s former CEO.
Asked to size the company’s space exposure following the deal, Mengucci said CACI now has “greater than $1 billion worth of total business” in space, with additional growth anticipated as the company looks toward fiscal 2027. He also pointed to ARKA’s $2 billion of non-competitive franchise programs as a driver of future growth.
On revenue and profitability cadence, Mengucci cautioned that ARKA’s revenue “is not going to be linear” because “you make deliveries, you book revenue, and you book profit,” and program schedules do not align neatly with quarter boundaries. MacLauchlan similarly said that within any quarter, margin can swing by “three or four point swings” around an average level, reiterating that ARKA’s fourth quarter contribution was consistent with expectations communicated when the deal was announced.
In a separate question about ARKA’s directed energy capabilities, Mengucci said ARKA brings “a portion of directed energy” that CACI did not previously have, but added, “things we can't talk about on the line,” and indicated the company may share more detail in future quarters.
Mengucci also described potential “revenue synergy” on ground processing, saying ARKA has operational authorizations for agentic AI solutions in GEOINT processing, while CACI is strong in SIGINT but has “not moved to agentic AI on that side.” He said customer discussions were just beginning following the April 1 integration date. He also cited collaboration opportunities in scaling optical communications terminals and manufacturing and engineering efficiencies across the combined space portfolio.
Guidance raised for revenue and EBITDA margin; free cash flow outlook reaffirmed
MacLauchlan said CACI increased fiscal 2026 revenue and EBITDA margin guidance “driven by the addition of ARKA and the strength of our organic margin performance.” Updated guidance calls for:
- Revenue: $9.5 billion to $9.6 billion, representing 10.1% to 11.3% total growth, including roughly 3.5 points from acquisitions and about $150 million from ARKA
- EBITDA margin: 11.8% to 11.9%, inclusive of approximately $22 million of ARKA transaction costs
- Adjusted net income: $615 million to $630 million
- Adjusted EPS: $27.70 to $28.38, representing 5% to 7% growth despite transaction costs and higher interest expense
- Free cash flow: at least $725 million (reaffirmed), even after “nearly $50 million” of transaction costs, interest expense, and increased capital expenditures
MacLauchlan reiterated that the company views free cash flow per share as its “ultimate value creation metric,” and said fiscal 2026 guidance implies 65% growth in free cash flow per share over fiscal 2025.
Program updates: Spectral reaches Milestone C; Counter-UAS demand and Golden Dome positioning
Mengucci highlighted several areas where CACI has invested ahead of customer demand, including its Spectral program for the U.S. Navy. He said Spectral achieved Milestone C during the quarter, marking the start of low-rate initial production and deployment. In Q&A, Mengucci said the company was beginning LRIP and expected “delivery zero” in the October–November timeframe. He also said CACI continued capital expenditures at a production facility in Melbourne, with investments supporting both Spectral and another program he referred to as “C8F,” and noted purchases of long-lead items slightly ahead of Milestone C to compress delivery timelines.
On Counter-UAS, Mengucci said demand was accelerating for Merlin, CACI’s commercially sold Counter-UAS system, which he described as part of a broader $2 billion electronic warfare portfolio. He said CACI provides Counter-UAS capabilities to all four armed services and is in active discussions or negotiations with 16 other federal agencies and organizations. He also said a Merlin system had been deployed on the southern border and that the company is pursuing international opportunities through relationships and in-theater sales efforts, including work with U.S. Army Task Force 59, JIATF 401, and CENTCOM for mobile units.
Mengucci also discussed positioning for “Golden Dome,” describing layered capabilities including Counter-UAS, “left-of-launch” capabilities (including cyber activities and embedded sensors), and expanded space-based sensing enabled by ARKA, including hyperspectral imaging for missile detection.
On the macro outlook, Mengucci said the fiscal 2027 budget is still evolving but management sees positive signals in areas such as electronic warfare and Counter-UAS, classified space and counterspace, C5ISR, and IT modernization including AI and the “digital backbone.”
About CACI International NYSE: CACI
CACI International Inc is a leading provider of information solutions and services to the U.S. federal government, with a primary focus on defense, intelligence, homeland security and federal civilian agencies. The company delivers advanced technology and domain expertise to support mission-critical operations, offering capabilities in areas such as data analytics, cyber security, network integration, enterprise IT modernization and logistics support. By integrating software, hardware and professional services, CACI helps clients enhance situational awareness, improve decision making and maintain critical infrastructure resilience.
Founded in 1962 and headquartered in Arlington, Virginia, CACI has evolved from a small consulting operation into a global enterprise.
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