CACI Q4 2025: $16B New Bid Pipeline Signals Strong Growth
- Robust Pipeline and Backlog: The management highlighted a $16 billion bid pipeline (with 80% for new business) and a backlog exceeding $31 billion, representing about 3.5 years of revenue, which underscores strong order flow and long‐term revenue visibility.
- Innovative, Software-Driven Capabilities: Executives emphasized CACI’s leadership in software-defined technologies through initiatives like the TLS Manpack (including the development of a mounted variant) and advancements in space optical terminals. These innovations position the company to capture additional, high-value work in evolving defense and national security markets.
- Favorable Contract Environment and Resilient Government Spending: The Q&A discussion pointed to a contracting landscape with extended contract durations and possibilities for contract consolidation. This environment, driven by evolving government priorities towards software-based modernization, supports stable revenue growth and margin expansion.
- Government Funding Uncertainty: Several questions raised the risk that a continuing resolution (CR) or delays in the government budgeting process could push revenue recognition and delay margin improvements, potentially slowing growth in FY2026.
- Competitive and Pricing Pressures: Discussion about the pipeline noted that a significant portion comprises takeaway work from incumbent providers. This competitive dynamic might force CACI to bid more aggressively, pressuring contract pricing and margins.
- Operational and Award Delays: Management acknowledged that award decisions and invoice processing times are taking longer due to reduced contracting officer resources. This slowdown could lead to operational inefficiencies and postponed revenue recognition, negatively impacting quarterly results.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | FY 2026 | $8.55B to $8.65B | $9,200,000,000 to $9,400,000,000 | raised |
Revenue growth | FY 2026 | 14.5% to 16% | 6.6% to 8.9% | lowered |
EBITDA Margin | FY 2026 | low 11% | mid‑eleven percent range; 30 basis point increase at midpoint | raised |
Adjusted Net Income | FY 2026 | $543M to $557M | $605M to $625M | raised |
Adjusted EPS | FY 2026 | $24.24 to $24.87 per share | $27.13 to $28.03 per share | raised |
Free Cash Flow | FY 2026 | at least $465M | at least $710M; free cash flow per share of $31.84 | raised |
Free Cash Flow Per Share Growth | FY 2026 | no prior guidance | more than 60% | no prior guidance |
Free Cash Flow Conversion Rate | FY 2026 | no prior guidance | slightly above 100% of adjusted net income midpoint | no prior guidance |
Revenue Composition | FY 2026 | no prior guidance | 84% from existing programs, 11% from recompetes, 5% from new business | no prior guidance |
Bids Under Evaluation | FY 2026 | no prior guidance | $16,000,000,000, with 80% allocated to new business | no prior guidance |
Additional Bids Expected | FY 2026 | no prior guidance | $11,000,000,000 over the year | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Robust Contract Pipeline and Backlog | Highlighted in Q1 ( ), Q2 ( ), and Q3 ( ) as providing multi‐year revenue visibility and strong contract bids | Emphasized in Q4 ( ) with continued robust pipeline numbers and strategic bid breakdown | Consistent focus on long‑term contract visibility; messaging remains positive with minor refinements in new business mix |
Software-Defined Technologies and Agile Digital Innovation | Discussed in Q1 ( ), Q2 ( ), and Q3 ( ) with emphasis on rapid prototyping, agile releases, and network modernization | In Q4, the narrative remains strong ( ) with additional focus on enhanced capabilities (e.g., vehicle-mounted TLS Manpack) | Sustained and evolving emphasis on software agility; ongoing innovation with slight refinement toward integrated and field-ready solutions |
Government Funding Environment and CR Risks | Addressed in Q1 ( ) and Q3 ( ), highlighting cautious optimism and preparation under CR conditions | In Q4 ( ), similar resilience is noted with comfort operating under CR and readiness for various funding scenarios | A stable, cautiously optimistic stance persists; Q2 lacked coverage, but overall sentiment remains resilient amidst CR risks |
Operational Delays and Administrative Inefficiencies | Mentioned in Q2 ( ) and Q3 ( ) noting minor slowdowns in invoicing and funding processes | Q4 discussion ( ) similarly notes modest delays that do not materially disrupt operations | Minor and persistent administrative delays continue to be managed effectively; overall impact remains negligible |
Margin Volatility, Pricing Pressures, and Profitability Challenges | Explored in Q1 ( ), Q2 ( ) and Q3 ( ) with detailed margin and pricing discussions linked to contract mix | Q4 did not highlight these issues, with the focus instead on strong performance and strategic positioning | Earlier quarters offered detailed scrutiny of margins and pricing; absence in Q4 suggests improved stability and fewer profitability concerns |
Counter-UAS and Advanced Defense Systems Leadership | Emphasized in Q1 ( ), Q2 ( ) and Q3 ( ) focusing on deployment of Counter-UAS systems and advanced EW capabilities | Q4 ( ) reinforces leadership with updated contracts and advanced TLS Manpack developments | Consistent, positive messaging with evolving product variants and robust system deployments underscoring market leadership |
Strategic Acquisitions and M&A Dynamics | Detailed in Q1 ( ), Q2 ( ) and Q3 ( ) with focus on disciplined, opportunistic deals and integration of key targets | Q4 ( ) outlines recent strategic acquisitions and enhanced financial flexibility via oversubscribed debt offerings | A steady focus on strategic acquisitions continues, with a disciplined approach and improved capital deployment support for M&A |
Emerging Defense Technologies: Space Optical Terminals and TLS Manpack Variants | Introduced in Q1 ( ) and expanded in Q3 ( ) as promising new defense technologies with high production and test milestones | In Q4 ( ), the discussion emphasizes strong demand for space optical terminals and new TLS Manpack variants with mounting opportunities | A growing emphasis on emerging defense tech with increased production targets and expanded product variants signifies a key future growth area |
Shifts in Business Mix and Working Capital Requirements | Discussed in Q1 ( ) and Q2 ( ) in relation to evolving contract types and increased capital needs post-acquisitions | Not specifically mentioned in Q3 and Q4 | Discussion has tapered off, suggesting that the shifts have either normalized or become less of a focal concern in recent periods |
Declining Emphasis on Legacy Capabilities | In Q1 ( ), executives confirmed continued investment in legacy capabilities (SIGINT, EW, Cyber, and Cloud Migration) as part of their model | Not mentioned in Q2, Q3, or Q4 | While legacy capabilities remain part of the portfolio, recent periods focus less on them, indicating a strategic pivot toward newer technologies |
-
Pipeline Composition
Q: How much of the pipeline is new work versus takeaways?
A: Management stressed that most of the $16B pipeline is derived from new customer work, underscoring strong, sustainable growth prospects. -
Free Cash Flow
Q: Are free cash flow targets exceeding previous expectations?
A: With tax initiatives like the $40M refund and ongoing Section 174 benefits, management expects three‑year free cash flow to potentially outperform initial targets, reflecting enhanced efficiency. -
FY26 Guidance
Q: Will faster budget approvals hit the top-end guidance?
A: Leadership affirmed that if funding and budget processes move swiftly, they can lean toward the upper end of FY ‘26 guidance, though various external factors remain. -
Award Timing
Q: Do slower awards impact revenue or margins?
A: They noted a slight delay in award processing (from 1–2 days to 3–4 days) but assured that these minor timing shifts have no material impact on overall revenue or margins. -
FedSev Exposure
Q: What is your exposure to federal civilian (FedSev) business?
A: Management reiterated that FedSev accounts for about 6% of revenue, as they strategically focus on defense, intelligence, and related secure programs to minimize budget uncertainties. -
Organic Growth Acceleration
Q: What will drive higher organic growth in H2?
A: The company expects accelerated second‑half organic growth as key programs like Focus Fox, Beagle, and ITAS ramp up, consistent with historical revenue distribution trends. -
NGC2 Prospects
Q: What opportunities or risks exist with next-gen C2 initiatives?
A: While the next‑generation command and control space is highly competitive, management remains supportive and anticipates further clarity and potential opportunities as the program unfolds. -
Space Terminals
Q: What’s the update on space optical terminals?
A: They highlighted progress with best‑in‑class, U.S.-made terminals and reaffirmed continued investments aimed at capturing sizeable market opportunities, undisturbed by GSA transitions. -
Software Consolidation
Q: Will DOD software directives boost contract consolidation?
A: Management is upbeat that evolving software acquisition and consolidation practices across services will benefit their business, contributing to stable margins and long‑term growth. -
Pipeline & Pricing
Q: How is pipeline split between new work and takeaways?
A: They described the split as roughly 60–40 in favor of new work, with efforts underway to incorporate more outcome‑based pricing to drive efficient, value‑focused contracts. -
TLS Manpack Update
Q: Is the mounted TLS Manpack part of the $500M contract?
A: Management clarified that the mounted variant is not included in the ongoing $500M TLS Manpack program, but represents a separate opportunity as Army requirements evolve.
Research analysts covering CACI INTERNATIONAL INC /DE/.