CACI (CACI) Q4 2026 Earnings Call Transcript

CACI reported Q4 revenue of $2.7B (+17.6% YoY, +11.6% organic) with EBITDA margin up 150 bps to 13.0%. Adjusted EPS rose to $8.91 (+6.1% YoY) and FY26 free cash flow increased 66.2% to $735.4M, with management saying the company is on track to beat its $1.6B 3-year FCF target by 12/31/2027. For FY27, CACI guided revenue of $10.65B–$10.85B and adjusted EPS of $32.96–$33.86, alongside at least $900M free cash flow (FCF/sh ~+22%), supported by $32.0B total backlog and 83% of FY27 revenue expected from existing programs.

Analysis

CACI is shifting from a traditional defense-services compounder to a defense-tech asset with better unit economics: faster procurement, more fixed-price mix, and a larger share of software-defined content. The market should care less about headline bookings and more about conversion quality — OTAs and commercial-style buys reduce reported award visibility but can accelerate revenue recognition and lift margins, which is why the near-term book-to-bill noise may be misleading.

Relative winners are CACI and, second-order, platform vendors that sit upstream in the software stack such as ORCL, SAP and AMZN/AWS; they gain when the government buys licenses directly and integrators get paid for implementation rather than pass-through revenue. Relative losers are slower-moving large primes such as LMT and, to a lesser extent, LHX, if procurement keeps favoring embedded expertise plus rapid deployment over scale. The key competitive risk for those primes is not one quarter of lost awards, but a structural squeeze in EW, space, and counter-UAS where CACI is building repeatable product franchises.

The consensus is underappreciating how much of the upside is coming from mix, not just growth. That said, the thesis is vulnerable if the second-half reacceleration slips again, if OTA conversion fails to turn into larger production wins, or if government budget friction pushes awards out another 1-2 quarters. Over 1-3 months, any disappointment in organic growth or margin cadence could cap the move; over 6-18 months, sustained FCF conversion and deleveraging could justify a higher multiple versus traditional integrators.

Key Decisions for Investors

• Go long CACI on any 3-5% post-earnings pullback over the next 1-2 weeks; thesis is that the market will misread temporary award timing while missing the margin/FCF mix shift. Falsify if next quarter organic growth falls below low-single-digit expectations and funded backlog stalls.
• Pair trade: long CACI / short LMT for 1-3 months to express the view that software-defined EW/space exposure and faster procurement will outperform large-platform defense mix. Exit if LMT begins showing comparable margin acceleration or CACI’s second-half guide is cut.
• Use ORCL or SAP as secondary longs if you want exposure to government license-direct purchasing and implementation pull-through; this is a lower-conviction, longer-duration theme. Best entry is on any weakness tied to fears of pass-through revenue loss.
• Set an alert on CACI if FY27 organic growth does not accelerate in the back half or if leverage fails to trend toward the low-3s by mid-2027; those are the cleanest falsifiers for the rerating thesis.