8-K: CACI Q1 FY26: Revenue Up 11.2%, $5B Contract Awards

CACI International Inc reported strong fiscal first quarter 2026 results with double-digit revenue growth and $5.0 billion in contract awards, reinforcing its national security market position.

Summary

• Revenues reached $2.3 billion, an 11.2% increase year-over-year, including 5.5% organic growth.
• Net income was $124.8 million, up 3.9% year-over-year, while adjusted net income grew 13.5% to $151.7 million.
• Diluted earnings per share (EPS) increased 5.6% to $5.63, and adjusted diluted EPS rose 15.5% to $6.85.
• EBITDA stood at $268.6 million, a 24.4% increase year-over-year, with an EBITDA margin of 11.7%.
• Contract awards totaled $5.0 billion, with approximately 60% for new business, resulting in a strong book-to-bill ratio of 2.2x.
• Total backlog increased 4.6% to $33.9 billion, and funded backlog grew 25.6% to $5.4 billion as of September 30, 2025.
• Free cash flow was robust at $143.0 million, marking a 189.4% increase year-over-year.
• Days Sales Outstanding (DSO) was 56 days, excluding the impact of the Master Accounts Receivable Purchase Agreement (MARPA).

Sentiment

Score: 8

Explanation: The company reported strong financial results across key metrics including revenue, net income, EPS, EBITDA, and free cash flow. Contract awards were exceptionally high, leading to a very strong book-to-bill ratio and significant backlog growth. While DSO increased and a government shutdown impacted award announcements, the overall performance and reaffirmed guidance indicate robust operational health and positive future prospects.

Positives

• Achieved double-digit revenue growth of 11.2% year-over-year, including 5.5% organic growth, demonstrating strong market demand.
• Reported robust profitability with adjusted net income up 13.5% and adjusted diluted EPS up 15.5% year-over-year.
• Delivered a significant 24.4% increase in EBITDA to $268.6 million, with an improved EBITDA margin of 11.7%.
• Secured record contract awards totaling $5.0 billion, with 60% representing new business, leading to an impressive 2.2x book-to-bill ratio.
• Experienced substantial growth in both total backlog (4.6% to $33.9 billion) and funded backlog (25.6% to $5.4 billion), indicating strong future revenue visibility.
• Generated exceptional free cash flow of $143.0 million, a 189.4% increase year-over-year, driven by higher net income and effective working capital management.
• Successfully showcased industry-leading C-UAS technology in three government-sponsored demonstrations, detecting and defeating unmanned systems.
• Demonstrated Beast+ technology, an AI-enabled software-defined EW and SIGINT sensor, during two U.S. Army demonstrations, highlighting rapid interface capabilities.

Negatives

• Days Sales Outstanding (DSO) increased to 56 days from 47 days a year ago, excluding the impact of MARPA.
• Net income growth (3.9%) was lower than adjusted net income growth (13.5%), partly due to higher intangible amortization expense.
• Higher interest expense and a higher tax provision partially offset the growth in diluted earnings per share.
• A government shutdown precluded the company from obtaining necessary approvals to announce or provide further details on certain contract awards.

Risks

• Reliance on U.S. government contracts, including general risks around the government contract procurement process (e.g., bid protest, small business set asides, loss of work due to organizational conflicts of interest, termination risks).
• Significant delays or reductions in appropriations for programs and broader changes in U.S. government funding and spending patterns.
• Legislation that amends or changes discretionary spending levels or budget priorities, such as for homeland security or to address global pandemics.
• Legal, regulatory, and political changes from successive presidential administrations that could result in economic uncertainty.
• Changes in U.S. federal agencies, current agreements with other nations, foreign events, or any other events which may affect the global economy, including the impact of global pandemics.
• Results of government audits and reviews conducted by entities such as the Defense Contract Audit Agency or Defense Contract Management Agency.
• Competitive factors such as pricing pressures and/or competition to hire and retain employees, particularly those with security clearances.
• Failure to achieve contract awards in connection with re-competes for present business and/or competition for new business.
• Regional and national economic conditions in the United States and globally, including terrorist activities or war, changes in interest rates, currency fluctuations, significant fluctuations in the equity markets, and market speculation regarding continued independence.
• Ability to meet contractual performance obligations, including technologically complex obligations dependent on factors not wholly within control.
• Limited access to certain facilities required to perform work, including during a global pandemic.
• Changes in tax law, the interpretation of associated rules and regulations, or any other events impacting the effective tax rate.
• Changes in technology.
• Potential impact of the announcement or consummation of a proposed transaction and the ability to successfully integrate the operations of recent and any future acquisitions.
• Ability to achieve the objectives of near-term or long-term business plans.
• Effects of health epidemics, pandemics, and similar outbreaks may have material adverse effects on business, financial position, results of operations, and/or cash flows.

Future Outlook

CACI reaffirms its fiscal year 2026 guidance, expecting revenues between $9.2 billion and $9.4 billion, adjusted net income of $605 million to $625 million, adjusted diluted EPS of $27.13 to $28.03, and free cash flow of at least $710 million. This guidance assumes approximately $50 million in tax benefit from the modification of Section 174 in the One Big Beautiful Bill Act of 2025 and an approximately $40 million cash tax refund related to a method change enacted in fiscal year 2021.

Management Comments

• Our exceptional start to fiscal year 2026 underscores our differentiated position in the market.
• We delivered strong financial results across the board, including robust free cash flow driven by double-digit revenue growth and strong profitability.
• Our $5 billion of contract awards and growth in both total and funded backlog demonstrate our focus on critical, well-funded national security priorities.
• Our performance, along with our continued investments ahead of need, healthy pipeline, and strong customer demand signals, gives us increased confidence in our ability to deliver on our fiscal year 2026 commitments, achieve our three-year financial targets, and generate value for our customers and our shareholders.

Industry Context

CACI operates in the highly competitive U.S. national security and government contracting sector. Its focus on critical, well-funded national security priorities, including advanced technologies like Counter-Unmanned Aircraft Systems (C-UAS) and Electronic Warfare (EW)/Signals Intelligence (SIGINT), aligns with increasing government spending on defense modernization and cyber capabilities. The significant contract awards from Department of Defense (DoD) and Intelligence Community (IC) customers reflect continued demand for specialized expertise and technology solutions in these areas, positioning CACI favorably amidst ongoing geopolitical complexities and technological advancements.

Comparison to Industry Standards

• The book-to-bill ratio of 2.2x is exceptionally strong, indicating that CACI is winning significantly more new business than it is executing, which is a positive indicator for future revenue growth compared to many industry peers who often target a book-to-bill of 1.0x or slightly above.
• The double-digit revenue growth (11.2%) and organic growth (5.5%) are robust for a company of CACI's size in the government services sector, often outperforming the average growth rates of larger, more mature defense contractors.
• The increase in EBITDA margin to 11.7% suggests efficient operations and strong contract execution, which is competitive within the government IT and services industry.
• The substantial increase in free cash flow (189.4%) demonstrates strong cash generation capabilities, which is a key metric for investors evaluating the financial health and flexibility of defense contractors.

Stakeholder Impact

• Shareholders: Positive impact due to strong financial performance, increased profitability, robust contract awards, and reaffirmed positive guidance, which could lead to increased shareholder value.
• Employees: Continued demand for services and new contract wins suggest job security and potential for growth, especially for those with security clearances and specialized skills.
• Customers (U.S. Government/DoD/IC): CACI's delivery of differentiated technology and expertise, as evidenced by new contract awards for critical national security priorities, ensures continued support for their missions.
• Suppliers/Partners: Increased contract activity and project scope may lead to more opportunities for CACI's supply chain and partners.

Next Steps

• A conference call and webcast are scheduled for October 23, 2025, at 8:00 AM Eastern Time to discuss Q1 FY26 results and operating trends.
• Continue to deliver on fiscal year 2026 commitments.
• Work towards achieving three-year financial targets.
• Continue strategic investments ahead of need.

Key Dates

Recommendation

CACI's fiscal Q1 2026 results demonstrate exceptional performance with double-digit revenue growth, significant increases in adjusted net income and EPS, and robust free cash flow. The $5.0 billion in contract awards, yielding a 2.2x book-to-bill ratio, and substantial growth in funded backlog provide strong visibility into future revenue and profitability. The reaffirmation of full-year guidance, despite a slight increase in DSO and a government shutdown impacting award announcements, underscores management's confidence. The company's strategic focus on critical national security priorities and advanced technology solutions positions it well for sustained growth in a resilient market. These strong operational and financial indicators make CACI a compelling 'strong buy' for investors seeking exposure to the defense and government IT sector.

Keywords

CACI International, National Security, Government Contracts, Defense Contractor, Intelligence Community, DoD, Cybersecurity, EW, SIGINT, C-UAS, IT Modernization, Financial Results, Q1 2026, Contract Awards, Backlog, Earnings, Free Cash Flow