What Management Said
Read the full Q3 2026 transcript ↗We differentiate ourselves by using software, excuse me, to address critical needs with the speed, agility, and efficiency our customers demand. Fifth, we deploy capital in a flexible and opportunistic manner to create value for our customers and our shareholders. Executing this strategy has enabled us to expand our portfolio, increase free cash flow per share, and generate additional shareholder value. We also generated a strong EBITDA margin of 12.3% and robust free cash flow of $221 million.
These awards were driven by our exceptionally strong recompete performance, an important indicator of customer confidence and a key enabler of long-term growth. While award activity improved in the quarter, it is not yet fully recovered from the multiple government shutdowns and acquisition organization changes. As we said before, quarterly awards can be lumpy, but we continue to have excellent visibility, a strong pipeline, and see a very constructive macro environment. With that said, we're raising our fiscal 2026 revenue and EBITDA margin guidance driven by the addition of ARKA and the strength of our organic margin performance.
On that note, let's discuss our recent acquisition in a bit more detail. During the third quarter, we closed the acquisition of ARKA, a leading technology company focused on national security missions in the space domain. ARKA brings exquisite space-based imaging sensor technology with high technical barriers to entry, agentic AI-based ground processing software, and deep customer relationships built over decades of strong performance. ARKA exemplifies the type of acquisition that investors should want us to make.
- CACI delivered Q3 FY2026 revenue of $2.4 billion, up 8.5% year-over-year, of which 6.8% was organic. EBITDA margin was a strong 12.3%, up 60 basis points year-over-year even after absorbing $17 million of ARKA transaction costs, and free cash flow was a robust $221 million. Adjusted diluted EPS of $7.27 was 17% higher than a year ago. The company won $2.2 billion of awards (0.9x book-to-bill in the quarter, 1.2x trailing 12 months), driven by exceptionally strong recompete performance, and closed the strategic acquisition of ARKA, a space-domain national security technology company. Total backlog rose 6% to $33.4 billion and funded backlog rose 19% year-over-year, with organic funded backlog up 10%. CACI raised its FY2026 revenue and EBITDA margin guidance and reaffirmed free cash flow guidance, with FY2026 representing 65% growth in free cash flow per share over FY2025.
- Award activity, while improved, had not yet fully recovered from multiple government shutdowns and acquisition organization changes, leaving the award environment recovering but still sluggish. The company experienced modest disruption from the ongoing DHS shutdown, creating headwinds in its civil business. Pro forma leverage at quarter end was 4.2x net debt-to-trailing-12-month EBITDA following the ARKA acquisition, and management cautioned that strong Q3 margins imply some lumpiness with a softer organic margin quarter expected in Q4.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| Revenue | FY2026 | $9.5B-$9.6B (10.1%-11.3% growth) (raised) |
| EBITDA margin | FY2026 | 11.8%-11.9% (raised) |
| Adjusted net income | FY2026 | $615M-$630M |
| Adjusted EPS | FY2026 | $27.70-$28.38 (5%-7% growth) |
| Free cash flow | FY2026 | at least $725 million (reaffirmed) |
| Revenue from existing programs | FY2026 | 98% existing, 1% recompetes, 1% new business |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| Revenue | up 8.5% (6.8% organic) | Expected acceleration in organic growth into the second half plus ARKA acquisition |
| EBITDA margin | up 60 bps to 12.3% | Overall mix and strong program execution, even after ARKA transaction costs |
| Adjusted diluted EPS | up 17% to $7.27 | Greater operating income and lower share count, partially offset by higher interest expense, higher tax, and transaction costs |
| Funded backlog | up 19% (10% organic) | Healthy organic growth; government continuing to fund programs |
| Total backlog | up 6% to $33.4B | Healthy organic growth plus ARKA contribution |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| ARKA acquisition / space domain | Announced on December 22nd call | Closed in Q3, integrated under former ARKA CEO; total space business now greater than $1 billion with $2 billion of non-competitive franchise programs not yet in backlog | Expanding |
| Award environment | Disrupted by multiple government shutdowns and acquisition org changes | Improving but not fully recovered; awards remain lumpy; expects government to return to awarding within 100-300 days | Improving |
| FY2027 budget outlook | — | Proposed ~$1.5 trillion GFY2027 budget with reconciliation funding looks positive for EW, Counter-UAS, classified space, C5ISR, and IT modernization | Constructive |
| Software-defined technology leadership | — | Spectral achieved Milestone C (LRIP); Merlin Counter-UAS scaling with deployment on southern border | Expanding |
| Reconciliation funding | — | Starting to flow, prevalent in Golden Dome and border security; majority of CACI work remains in the base budget | Improving |
Q&A Summary
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