CACI grows, but debt now matters
- CACI gets most of its money from long-term U.S. government work tied to defense, intelligence, and national security.
- In Q3 FY2026, revenue rose 8.5% year over year, with 6.8% organic growth before the full effect of deals.
- The ARKA Group deal added about $835 million to backlog and $150 million to projected FY2026 revenue.
- The same deal lifted pro forma net debt to TTM EBITDA to 4.2x, so debt paydown is now a key test.
- CACI looks solid as an operator, but the stock still carries a price and government budget risk.
Good quarter, heavier balance sheet
CACI is in a better growth spot than it was after FY2025. Backlog had looked flat then, but it returned to growth in FY2026. By March 31, 2026, total backlog was $33.4 billion, up 6.4% from a year earlier.
Q3 FY2026 was strong. Revenue was $2.4 billion, up 8.5% year over year, and organic growth was 6.8%. Adjusted diluted EPS rose 17% to $7.27, and EBITDA margin rose 60 basis points to 12.3%. Management also raised FY2026 revenue guidance to $9.5 billion to $9.6 billion.
The ARKA Group acquisition is the big change. It adds space and other high-priority mission work, plus about $835 million of backlog and $150 million of projected FY2026 revenue. That supports the bull case that CACI can keep adding higher-value work in areas the government cares about.
The offset is debt. After ARKA, pro forma net debt to TTM EBITDA rose to 4.2x. Management wants leverage in the low threes within six quarters. Until that happens, the stock depends on two things at once: steady contract wins and clear progress on debt.
Paid by Uncle Sam
CACI sells people, software, systems, and technical know-how to government agencies. The work covers defense, intelligence, cyber, space, secure networks, and mission support. In FY2025, federal government contracts were 95.7% of total revenue, and Department of Defense agencies were 75.4%.
The company earns revenue through several contract types. In FY2025, cost-plus-fee contracts were 60.5% of revenue, fixed-price contracts were 26.3%, and time-and-materials contracts were 13.2%. Cost-plus-fee work can lower cost risk because the customer pays allowed costs plus a fee. Fixed-price work can be better if CACI performs well, but it can hurt margins if costs run over plan.
CACI’s edge is trust and access. Many jobs need workers with security clearances, deep mission knowledge, and a record of doing sensitive work. That makes it hard for a new rival to replace CACI quickly. Still, this is a competitive market, and the government can delay awards, protest awards, or end contracts for convenience.
Mission work, not consumer tech
Digital Solutions
This covers application modernization, data analytics, and software work for government customers. It helps agencies update old systems and use data faster.
C3I
C3I means command, control, communications, and intelligence. These systems help military and intelligence users share information and act on it.
Cyber
CACI provides cyber defense and related services for sensitive government networks. Demand is tied to the need to protect defense and intelligence systems.
Space
Space work includes domain awareness and optical communications. The ARKA Group acquisition expands CACI’s reach in high-priority space missions.
Engineering Services
These teams help integrate and modernize platforms. The work can be long-lived when it sits inside major defense programs.
Enterprise IT
CACI manages secure cloud, networks, and IT services for government customers. This work is less flashy, but it can be recurring and important.
Mission Support
Mission Support includes intelligence analysis, logistics, and other services that keep agencies running. It depends on skilled staff and security clearances.
Almost all domestic
Segment mix is from FY2025. Domestic Operations were 97.0% of revenue, while International Operations were 3.0%, so CACI is mainly a U.S. government contractor.
What could break the story
U.S. budget shock
High impact · Medium oddsCACI depends heavily on federal spending. In FY2025, federal government contracts were 95.7% of revenue, and Department of Defense agencies were 75.4%. A budget cut, shutdown, or shift away from CACI’s program areas could slow awards and revenue.
Debt stays too high
High impact · Medium oddsThe ARKA deal lifted pro forma net debt to TTM EBITDA to 4.2x. That is manageable if cash flow stays strong, but it leaves less room for mistakes. Management’s target is to move leverage to the low threes within six quarters.
Awards stay sluggish
Medium impact · Medium oddsManagement called the award environment recovering but still sluggish. Government contracts can also be delayed by bid protests. A weak award pace would not hit all revenue at once, but it could hurt future growth.
Fixed-price cost overruns
Medium impact · Medium oddsIn FY2025, fixed-price contracts were 26.3% of revenue. Under these contracts, CACI can lose margin if labor, materials, or schedule costs exceed its bid. This risk matters more when inflation or integration work makes costs harder to control.
Clearance and audit problems
High impact · Low oddsMany CACI jobs need cleared employees and approved government systems. If the company cannot keep clearances, pass audits, or meet contract rules, it could lose work or face penalties. This risk is hard to see early but serious when it appears.
In one breath
What does CACI International do?
CACI provides technology and expertise services to government customers. Its main areas include defense, intelligence, cyber, space, enterprise IT, and mission support.
Who are CACI’s biggest customers?
The U.S. federal government is the main customer. In FY2025, federal government contracts were 95.7% of revenue, and Department of Defense agencies were 75.4%.
Why does the ARKA acquisition matter?
ARKA adds work in high-priority mission areas, including space-related capabilities. It also added about $835 million to backlog and $150 million to projected FY2026 revenue, but it raised leverage to 4.2x.
Is CACI a growth stock or a value stock?
CACI has real growth, with 6.8% organic growth in Q3 FY2026 and a larger backlog. But the valuation is not cheap enough to ignore the risks, especially leverage and the U.S. government budget cycle.