CACI Q3 Deep Dive: Technology Mix, Bookings Momentum, and National Security Demand Fuel Results

Defense, intelligence, and IT solutions provider CACI International (NYSE:CACI) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 11.2% year on year to $2.29 billion. On the other hand, the company’s full-year revenue guidance of $9.3 billion at the midpoint came in 0.5% below analysts’ estimates. Its non-GAAP profit of $6.85 per share was 10.9% above analysts’ consensus estimates.

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StockStory’s Take

CACI’s third-quarter results were met with a strong positive market reaction, as the company’s revenue and non-GAAP earnings per share exceeded Wall Street expectations. Management attributed the quarter’s outperformance to robust demand for its technology-driven solutions in national security, especially in areas such as counter-drone (Counter-UAS) and electronic warfare. CEO John Mengucci highlighted the company’s ability to win significant new business, noting a record backlog and the successful ramp-up of new and recompete awards. “Our first quarter performance gives us increased confidence in achieving both our full year guidance and our 3-year financial targets,” Mengucci said.

Looking ahead, CACI’s guidance is shaped by ongoing demand from defense and intelligence customers, as well as anticipated funding for critical national security initiatives. Management expects momentum in software-defined technology and digital modernization programs to continue supporting growth. CFO Jeffrey MacLauchlan noted, “We are well positioned to continue to deploy capital in a flexible and opportunistic manner to drive long-term growth.” The company is also closely monitoring the impact of government funding dynamics, including the potential use of reconciliation funds for Department of Defense and Homeland Security projects, which could affect the pace and mix of future contract awards.

Key Insights from Management’s Remarks

Management pointed to a combination of strong program execution, an expanding technology portfolio, and a resilient customer base focused on national security priorities as key drivers of the quarter’s results.

• Technology portfolio expansion: CACI’s growth was led by continued investment in software-defined technologies, including the Merlin Counter-UAS system and electronic warfare solutions, which have seen increased demand both domestically and internationally.
• Contract awards momentum: The company secured $5 billion in new awards during the quarter, over half of which were new business, resulting in a book-to-bill ratio of 2.2x. Management emphasized the diversity and long duration of these contracts, with an average term of over six years.
• Margin mix and delivery timing: Non-GAAP margin expansion was attributed to the timing of higher-margin technology deliveries and a favorable mix within the technology segment, which offset higher interest and tax expenses.
• Agile procurement and commercial sales: CACI has benefited from the government’s shift toward more agile procurement methods, including an increase in Other Transaction Authority (OTA) contracts and commercial-like purchasing, enabling quicker deployment of solutions and more flexible sales cycles.
• International and federal civilian growth: Management noted robust growth in federal civilian agency sales, particularly within the Department of Homeland Security (DHS), and highlighted an expanding presence in NATO markets as European defense budgets rise.

Drivers of Future Performance

CACI expects ongoing demand for national security technology, agile software, and digital modernization to drive revenue and margin performance in the coming quarters.

• Sustained national security demand: Management sees continued strong funding for national security programs from both the Department of Defense and Homeland Security, with a particular focus on counter-drone, electronic warfare, and network modernization projects, which are expected to support high-single-digit revenue growth.
• Agile and software-driven solutions: The company is investing in expanding its use of commercial software development processes and artificial intelligence tools. This is anticipated to enhance the speed and efficiency of software delivery, supporting digital application modernization initiatives and driving longer-term margin improvement.
• Funding and procurement dynamics: Management highlighted potential risks tied to government budget cycles, shutdowns, and shifts in procurement strategy but believes its diversified contract backlog, flexible sales channels, and high proportion of revenue from existing programs mitigate exposure to near-term funding delays.

Catalysts in Upcoming Quarters

Going forward, the StockStory team will be watching (1) the pace of new contract awards and backlog growth, especially in software-defined and counter-drone technologies; (2) the impact of evolving government funding dynamics, including the use of reconciliation funds for defense and homeland security initiatives; and (3) execution on digital modernization and agile software programs. Progress in expanding international sales and adapting to procurement changes will also be key milestones.

CACI currently trades at $577.83, up from $519.86 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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