8-K: CACI Q2 FY26 Results Beat, Guidance Raised

CACI International Inc reported strong fiscal second quarter 2026 results, with revenues up 5.7% and diluted EPS up 14.5% year-over-year, leading to an upward revision of its full-year guidance across all key metrics.

Summary

• Revenues for Q2 FY26 were $2.2 billion, a 5.7% increase year-over-year, driven by 4.5% organic growth.
• Diluted earnings per share (EPS) rose 14.5% year-over-year to $5.59.
• Adjusted diluted EPS also increased by 14.5% year-over-year to $6.81.
• Net income reached $123.9 million, up 12.7% from the prior year.
• EBITDA was $262.6 million, with an EBITDA margin of 11.8%.
• Free cash flow surged by 109.1% year-over-year to $138.2 million.
• Total contract awards in Q2 FY26 amounted to $1.4 billion, with approximately 70% representing new business.
• Total backlog as of December 31, 2025, increased 3.1% to $32.8 billion, while funded backlog grew 7.3% to $4.4 billion.
• Fiscal year 2026 guidance was raised for all metrics, including revenues (new range $9.3-$9.5 billion), adjusted net income (new range $630-$645 million), adjusted diluted EPS (new range $28.25-$28.92), and free cash flow (at least $725 million).
• The company entered into a definitive agreement to acquire ARKA Group L.P. for $2.6 billion in an all-cash transaction.

Sentiment

Score: 9

Explanation: The company reported strong financial results across the board, with significant year-over-year growth in revenues, net income, EPS, EBITDA, and free cash flow. The upward revision of full-year guidance for all metrics, coupled with a strategic acquisition and major contract wins, indicates robust operational performance and a positive outlook. The only minor negative is a slight increase in DSO.

Positives

• Strong revenue growth of 5.7% year-over-year to $2.2 billion, with 4.5% organic growth.
• Significant increase in diluted EPS by 14.5% to $5.59 and adjusted diluted EPS by 14.5% to $6.81.
• Net income increased by 12.7% to $123.9 million.
• EBITDA grew by 12.8% to $262.6 million, with an improved EBITDA margin of 11.8%.
• Exceptional free cash flow growth of 109.1% year-over-year, reaching $138.2 million.
• Robust contract awards totaling $1.4 billion in the quarter, with 70% for new business.
• Expanding total backlog by 3.1% to $32.8 billion and funded backlog by 7.3% to $4.4 billion.
• Raised fiscal year 2026 guidance for all key financial metrics, indicating strong future performance expectations.
• Strategic acquisition of ARKA Group L.P. for $2.6 billion, enhancing space-based sensor and ground-based software processing capabilities for national security.
• Awarded a position on the Missile Defense Agency SHIELD IDIQ contract with a ceiling of $151 billion.
• CEO John Mengucci recognized as Executive of the Year.
• Received the NVSBC Champions Award for the 15th consecutive year for supporting veteran-owned small businesses.

Negatives

• Days Sales Outstanding (DSO) increased to 57 days from 53 days year-over-year, indicating a slight slowdown in cash collection efficiency.
• Higher interest expense and a higher tax provision partially offset growth in diluted earnings per share.
• Subcontractor revenues decreased by 11.4% in the three months ended December 31, 2025, compared to the prior year.
• Expertise-based revenues slightly decreased by 0.2% in the three months ended December 31, 2025, compared to the prior year.

Risks

• Reliance on U.S. government contracts, including general risks around the government contract procurement process (bid protest, small business set asides, loss of work due to organizational conflicts of interest, etc.) and 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 change 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.
• The results of government audits and reviews conducted by the Defense Contract Audit Agency, the Defense Contract Management Agency, or other governmental entities with cognizant oversight.
• 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 but not limited to: 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.
• The 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.
• The effects of health epidemics, pandemics and similar outbreaks may have material adverse effects on business, financial position, results of operations and/or cash flows.
• Other risks described in Securities and Exchange Commission filings.

Future Outlook

CACI International Inc has raised its fiscal year 2026 guidance for all key financial metrics, including revenues, adjusted net income, adjusted diluted EPS, and free cash flow, reflecting confidence in continued strong performance. The company expects revenues between $9.3 billion and $9.5 billion, adjusted net income between $630 million and $645 million, adjusted diluted EPS between $28.25 and $28.92, and free cash flow of at least $725 million. This guidance does not yet include the planned acquisition of ARKA Group, which is expected to further strengthen the technology portfolio in space and accelerate delivery of actionable intelligence.

Management Comments

• "Our strong second quarter results demonstrate the continued successful execution of our strategy and the value of our differentiated capabilities."
• "With healthy free cash flow driven by solid revenue growth and strong EBITDA margin, we're delivering on our commitments to shareholders while addressing our customers' most critical mission needs."
• "Through bold, strategic investments we have built leading positions in electronic warfare and Agile software development, while continuing to strengthen our technology portfolio in space with the planned acquisition of ARKA Group – all areas vital to national security."
• "With our strong results, expanding backlog, and robust pipeline, we are raising our fiscal year 2026 guidance and remain extremely well-positioned to achieve our 3-year financial targets and drive long-term value for our customers and our shareholders."

Industry Context

CACI operates within the highly competitive U.S. government contracting and national security sector, which is characterized by significant demand for advanced technology and specialized expertise in areas like electronic warfare, agile software development, and space-based solutions. The company's strong organic growth, strategic acquisition of ARKA Group, and substantial IDIQ contract awards (like the $151 billion SHIELD contract) indicate its ability to secure critical government programs and align with evolving national security priorities. The focus on technology-driven solutions, particularly in space and electronic warfare, positions CACI well against competitors by addressing high-priority defense and intelligence needs, suggesting a robust market for its differentiated capabilities.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Legal Proceedings

• NA

Related Party Transactions

• NA

Stakeholder Impact

• Shareholders: Positive impact due to strong financial performance, increased EPS, significant free cash flow growth, raised guidance, strategic acquisition, and expanding backlog, all contributing to long-term value creation.
• Employees: Positive recognition for CEO and company culture supporting veterans, potentially boosting morale and attracting talent. The acquisition of ARKA Group may lead to integration efforts and new opportunities.
• Customers (U.S. Government): Continued delivery of differentiated technology and expertise, addressing critical mission needs, and enhancing national security capabilities through new contracts and strategic acquisitions.
• Suppliers: Potential for increased business volume due to expanding contracts and acquisitions, particularly for veteran-owned small businesses, as CACI has a strong track record of subcontracting.
• Creditors: Improved financial health and cash flow generation enhance the company's ability to meet its obligations.

Next Steps

• Integrate ARKA Group L.P. following the definitive agreement for acquisition.
• Continue execution of strategy to achieve 3-year financial targets.
• Participate in the conference call and webcast on January 22, 2026, to discuss Q2 FY26 results and operating trends.

Key Dates

Recommendation

The company delivered exceptionally strong Q2 FY26 results, significantly outperforming prior year figures across all key financial metrics including revenue, net income, EPS, EBITDA, and free cash flow. The substantial increase in free cash flow (109.1% YoY) is particularly noteworthy. Management's decision to raise full-year guidance for all metrics signals strong confidence in continued operational momentum and future profitability. The strategic acquisition of ARKA Group, coupled with major contract wins like the $151 billion SHIELD IDIQ, reinforces CACI's competitive position in critical national security domains. While there was a slight increase in DSO, the overall financial health and growth trajectory are highly positive, making it an attractive investment opportunity.

Keywords

CACI International, Government Contractor, National Security, Defense, Intelligence Community, Federal Civilian Agencies, Electronic Warfare, Agile Software Development, Space Technology, ARKA Group Acquisition, Q2 Fiscal Year 2026, Earnings Report, Financial Results, Guidance Raise, Contract Awards, Backlog, EBITDA, EPS, Free Cash Flow, Missile Defense Agency, SHIELD Contract, Corporate Governance, Veteran Support