CACI International (CACI) Q1 2026 earnings review
Record Awards and Tech Segment Strength Drive Strong Start to FY26
CACI delivered a strong start to its fiscal year, with revenue growing 11.2% YoY to $2.3 billion and adjusted EPS increasing 15.5% to $6.85. The results were headlined by a massive $5.0 billion in contract awards, resulting in an impressive 2.2x book-to-bill ratio and providing excellent visibility. Growth was entirely driven by the Technology segment, which surged 22% YoY, while the Expertise segment stagnated with a 0.1% decline. Despite the ongoing government shutdown, management reaffirmed its full-year guidance, signaling strong confidence in the resilience of its national security-focused business and its record $33.9 billion backlog.
🐂 Bull Case
The $5.0 billion in Q1 awards (2.2x book-to-bill) and a 26% YoY increase in funded backlog significantly de-risk the fiscal year and demonstrate strong demand for CACI's offerings.
The Technology segment, now 57% of revenue, grew 22% YoY. This validates the company's long-term strategy of investing in software-defined, high-demand areas like Counter-UAS and network modernization.
Reaffirming full-year guidance amidst a government shutdown underscores the essential nature of CACI's work and management's confidence in its ability to execute on its record backlog.
🐻 Bear Case
The Expertise segment, which still accounts for 43% of revenue, declined 0.1% YoY. This lack of growth in a major part of the business creates a concentration risk and could weigh on future performance.
Reaffirmed FY26 guidance implies revenue growth of ~8% and adjusted EPS growth of ~4% at the midpoint, a notable deceleration from the double-digit pace seen in Q1 and throughout FY25.
⚖️ Verdict: 🟢
Bullish. The exceptional contract awards and accelerating momentum in the high-growth Technology segment are powerful indicators of future performance. While the stagnation in the Expertise segment is a valid concern, the sheer scale of new business wins and the reaffirmation of guidance in a tough macro environment suggest the company is well-positioned to execute on its strategy.
Key Themes
Technology Segment is the Sole Growth Engine
CACI's growth story is now exclusively driven by its Technology offerings. Revenue in this segment surged 21.7% YoY to $1.3 billion, increasing its share of total revenue to 56.9% from 52.0% a year ago. This performance is a direct result of the company's long-term strategy to invest ahead of need in software-defined capabilities for high-demand areas like electronic warfare, Counter-UAS, and network modernization. The strength here is more than offsetting weakness elsewhere in the business.
Massive Contract Awards De-Risk the Year
The company booked an exceptional $5.0 billion in new contract awards during the quarter, driving the book-to-bill ratio to 2.2x. Over half of the awards were for new business. This strong performance increased total backlog to a record $33.9 billion and, more importantly, grew funded backlog by 26% YoY to $5.4 billion. This provides strong revenue visibility and indicates customers are committing funds to CACI's essential programs ahead of potential budget disruptions.
Expertise Segment Stagnates, Becoming a Drag on Growth
Contradicting the overall positive narrative, CACI's Expertise segment revenue declined 0.1% YoY to $986.9 million. This segment, representing 43% of the business, has seen its growth decelerate for five consecutive quarters, from 12.6% in 25Q1 to negative today. This stagnation makes the company entirely dependent on the Technology segment for growth and raises questions about the long-term competitive positioning of its services offerings.
Counter-UAS and Differentiated Tech Winning in the Market
Management highlighted strong customer interest and wins for its differentiated technology, particularly in Counter-UAS and Counter-Space. The company showcased its operationally-proven Merlin system in government demonstrations and received a follow-on order from Canada. It also won a $240 million award for the TIGS Counter-Space program. These specific successes demonstrate CACI's ability to translate its R&D investments into tangible, high-value contracts.
Navigating Government Shutdown with Confidence
Management projects a resilient posture against the government shutdown, noting most work is deemed essential and funded. They reaffirmed full-year guidance, suggesting any near-term disruption is manageable and covered within their forecast range. However, the CFO did acknowledge some 'administrative sluggishness,' with cash collections running 10-15% slower than normal, reflected in a higher Days Sales Outstanding (DSO) figure this quarter.
Working Capital Metrics Weaken
Days Sales Outstanding (DSO) increased to 56 days, up significantly from 47 days a year ago and the highest level in the past five quarters. While management attributes this to temporary administrative slowdowns from the shutdown, it represents a deterioration in working capital efficiency. If this trend persists, it could become a headwind to the company's strong free cash flow generation targets.
Other KPIs
Accelerating. Funded backlog grew 25.6% year-over-year, a significant acceleration from the 10.5% growth seen last quarter. This metric represents the portion of the backlog for which funding has been appropriated by customers and is a key indicator of near-term revenue security, particularly important in an uncertain budget environment.
Stable. The 11.7% margin represents a 120 basis point improvement YoY and is consistent with recent quarters. Management noted the strength was partly due to favorable timing of high-margin technology deliveries, and guided for a slight sequential moderation to ~11% in Q2, indicating the first half/second half step-up will be less pronounced than in prior years.
CACI has broken out its Intelligence Community revenue for the first time, revealing it as a significant customer group at 26% of total revenue. This segment is growing in line with the company average and highlights CACI's deep entrenchment in well-funded national security priorities.
Guidance
Decelerating. The midpoint of the reaffirmed guidance ($9.3B) implies full-year growth of approximately 7.8%. This marks a deceleration from the 11.2% growth delivered in Q1 and the 12.6% growth achieved in FY25.
Decelerating. The guidance midpoint of $27.58 implies YoY growth of just 4.2%. This is a significant slowdown from the 15.5% growth in Q1 and the 25.8% growth recorded for the full FY25, reflecting tougher comparisons and potentially moderating margin expansion.
Accelerating. The guidance for at least $710M in FCF represents a massive 60%+ increase over the $442.5M generated in FY25. This acceleration is driven by strong profitability, better working capital management, and approximately $90 million in specific tax benefits expected during the fiscal year.