Defense, intelligence, and IT solutions provider CACI International (NYSE: CACI) reported Q1 CY2025 results beating Wall Street’s revenue expectations, with sales up 11.8% year on year to $2.17 billion. The company expects the full year’s revenue to be around $8.6 billion, close to analysts’ estimates. Its non-GAAP profit of $6.23 per share was 11.3% above analysts’ consensus estimates.
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CACI (CACI) Q1 CY2025 Highlights:
- Revenue: $2.17 billion vs analyst estimates of $2.13 billion (11.8% year-on-year growth, 1.5% beat)
- Adjusted EPS: $6.23 vs analyst estimates of $5.60 (11.3% beat)
- Adjusted EBITDA: $253.5 million vs analyst estimates of $233.5 million (11.7% margin, 8.6% beat)
- The company slightly lifted its revenue guidance for the full year to $8.6 billion at the midpoint from $8.55 billion
- Management slightly raised its full-year Adjusted EPS guidance to $24.56 at the midpoint
- Operating Margin: 9.1%, in line with the same quarter last year
- Free Cash Flow Margin: 9.9%, similar to the same quarter last year
- Backlog: $31.4 billion at quarter end, up 9.8% year on year
- Market Capitalization: $10.51 billion
StockStory’s Take
CACI’s first quarter results reflected continued demand for its defense, intelligence, and IT solutions, as management credited the company’s software-defined approach and recent contract wins as key drivers. On the earnings call, CEO John Mengucci highlighted that CACI’s focus on software-enabled capabilities, such as its TLS Manpack and Navy spectrum programs, contributed to customer traction, particularly as federal agencies prioritize agility and modernization in national security. Mengucci noted, “Demand for this technology continues to strengthen,” referencing the growth in software-driven solutions and increased program ceilings.
Looking ahead, management attributed its slightly improved full-year guidance to the combination of a constructive funding environment, bipartisan support for national security, and CACI’s growing backlog. CFO Jeff MacLauchlan emphasized the company’s strong pipeline and multi-year visibility, stating that more than 97% of this year’s expected revenue comes from existing programs. The leadership team also pointed to operational discipline and capital allocation, including opportunistic share repurchases, as supporting factors for ongoing margin and free cash flow performance.
Key Insights from Management’s Remarks
CACI’s management underscored the importance of its software-first strategy and alignment with evolving government priorities. The company’s contract wins and program execution in critical areas like electronic warfare and IT modernization formed the foundation for above-consensus results and positive forward indicators.
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Software-Defined Solutions Traction: Management highlighted accelerating adoption of CACI’s commercial agile software and software-defined products, such as TLS Manpack and Navy spectrum programs. These solutions have seen increased demand as customers seek speed, flexibility, and upgradability in critical national security applications.
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Backlog and Pipeline Expansion: The company’s backlog grew year-over-year, and its active pipeline of $17 billion in bids under evaluation—nearly 80% for new business—was cited as a key signal of continued business development momentum, providing multi-year revenue visibility.
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Strategic Acquisitions Integration: The integration of Applied Insight and Azure Summit was described as progressing well, particularly in enhancing capabilities for shipboard signals and open-architecture software development. Management reported early synergies and capital efficiencies, especially in production capacity utilization.
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Operational Discipline and Capital Deployment: Recent open market share repurchases, totaling $150 million, were made under existing authorization. Management reiterated a flexible approach to capital allocation, balancing M&A, share buybacks, and organic investment.
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Minimal Impact from Policy Reviews: While government efficiency initiatives like DOGE and GSA reviews are ongoing, management reported only minor administrative slowdowns and minimal direct impact on contract awards or funding. CACI’s strategy and diversified portfolio were credited with insulating the business from major disruptions.
Drivers of Future Performance
Management expects CACI’s forward performance to be shaped by ongoing demand for software-enabled solutions, healthy federal budgets, and disciplined execution across its contract portfolio.
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Continued Emphasis on Software: The pivot to software-defined capabilities is central to CACI’s growth outlook, with management expecting expanded adoption across defense and intelligence markets as agencies prioritize agility and rapid technology upgrades.
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Federal Funding and Policy Support: Management cited bipartisan support for increasing national security budgets and constructive signals from pending legislation, suggesting sustained demand for CACI’s offerings. Potential supplemental funding for defense and border security could accelerate contract opportunities.
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Operational Resilience and Backlog Visibility: The company’s large, diversified backlog and pipeline provide multi-year revenue visibility, while management remains focused on maintaining profitability through disciplined capital allocation and operational efficiency.
Top Analyst Questions
- Scott Mikus (Melius Research): Asked about changes in contract growth and customer spending behavior post-administration change; management reported no material slowdown and pointed to continued strong awards and pipeline activity.
- Joshua Korn (Barclays): Inquired about the impact of government efficiency initiatives and software acquisition directives; CEO Mengucci stated these align with CACI’s software-first strategy and are seen as a net positive over time.
- Tobey Sommer (Truist Securities): Sought details on areas of incremental funding and CACI’s position in electronic warfare and border security; management highlighted opportunities in electronic warfare, network modernization, and counter-drone systems.
- Sheila Kahyaoglu (Jefferies): Questioned the integration progress of recent acquisitions and the effect of government staffing changes; management reported successful integration and only mild, short-lived administrative slowdowns.
- Mariana Perez Mora (Bank of America): Asked about the M&A pipeline and market competition for software agility; executives noted lower M&A activity due to seller expectations, but emphasized CACI’s strong track record and differentiated capabilities in agile development.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the pace and scale of new contract awards, especially in electronic warfare and federal IT modernization, (2) the progression and impact of policy initiatives such as DOGE, GSA reviews, and potential legislative funding increases, and (3) continued operational execution and integration of recent acquisitions. The ability to maintain margin performance amid evolving budget and procurement environments will also be a key area of focus.
CACI currently trades at a forward P/E ratio of 18×. Is the company at an inflection point that warrants a buy or sell? Find out in our free research report.
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