CACI Q2 Deep Dive: Software Modernization and National Security Demand Drive Growth

August 12, 2025 at 03:15 AM EDT

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Defense, intelligence, and IT solutions provider CACI International (NYSE: CACI) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 13% year on year to $2.30 billion. The company expects the full year’s revenue to be around $9.3 billion, close to analysts’ estimates. Its non-GAAP profit of $8.40 per share was 27.7% above analysts’ consensus estimates.

Is now the time to buy CACI? Find out in our full research report (it’s free).

CACI (CACI) Q2 CY2025 Highlights:

Revenue: $2.30 billion vs analyst estimates of $2.29 billion (13% year-on-year growth, 0.5% beat)
Adjusted EPS: $8.40 vs analyst estimates of $6.58 (27.7% beat)
Adjusted EBITDA: $264.5 million vs analyst estimates of $261.6 million (11.5% margin, 1.1% beat)
Adjusted EPS guidance for the upcoming financial year 2026 is $27.58 at the midpoint, beating analyst estimates by 0.9%
Operating Margin: 9%, in line with the same quarter last year
Backlog: $31.4 billion at quarter end, in line with the same quarter last year
Market Capitalization: $10.53 billion

StockStory’s Take

CACI’s second quarter results were well received by the market, reflecting strong momentum in its software-driven national security solutions and robust execution across strategic contracts. Management credited demand for its electromagnetic spectrum and counter-drone technologies as primary growth drivers, emphasizing successful fielding of the TLS Manpack system and expansion into vehicle-mounted variants. CEO John Mengucci highlighted that, “Our investments ahead of customer need led to the development of the TLS Manpack, which integrates signals intelligence and electronic warfare,” enabling CACI to deliver rapid solutions to evolving military requirements. Additionally, new wins in enterprise software modernization and steady execution on NASA’s NCAPS program contributed to performance.

Looking forward, CACI’s guidance is shaped by confidence in its software-defined technology portfolio and the alignment of its offerings with national security priorities. Management expects demand to remain healthy, supported by increased government funding for defense and border security. CFO Jeffrey MacLauchlan pointed to strong backlog and a robust pipeline, stating, “Our trailing 12 months book-to-bill ratio of 1.1x reflects continued differentiation in the marketplace.” The executive team is focused on maintaining mid-11% EBITDA margins and achieving free cash flow per share growth, while closely monitoring the pace of government funding and contract awards as key factors influencing performance.

Key Insights from Management’s Remarks

Management attributed quarterly growth to the rapid adoption of software-driven systems, strong demand for counter-UAS (unmanned aerial systems) protection, and the company’s ability to anticipate and deliver on evolving national security requirements.

Electromagnetic spectrum solutions: CACI’s investments in SIGINT (signals intelligence) and electronic warfare technologies led to the Army’s selection of the TLS Manpack system as the primary solution for brigade combat teams, with future enhancements including vehicle-mounted options.
Counter-UAS traction: The company secured contracts for its counter-drone technology with the Canadian government and U.S. border protection agencies, positioning CACI as a key provider in an area seeing increased funding and urgency due to evolving threats.
Enterprise software modernization: CACI’s role in consolidating Army legacy systems through commercial-based enterprise solutions has strengthened its position for further Department of Defense and intelligence community modernization contracts.
NASA NCAPS execution: The launch and scaling of the NASA NCAPS program, which supports nearly 900 applications, demonstrated CACI’s ability to centralize and standardize software delivery for complex government clients, with all key metrics met since inception.
Strategic capital deployment: Management highlighted the completion of three acquisitions and opportunistic share repurchases, emphasizing a capital allocation strategy focused on long-term growth and shareholder returns rather than broad-based bidding.

Drivers of Future Performance

CACI’s outlook is anchored by rising demand for software-based national security solutions, robust backlog visibility, and targeted investments in technology and contract execution.

Sustained demand in national security: Management expects continued growth from defense, intelligence, and border security customers, as recent federal funding packages prioritize modernization and threat response capabilities, directly supporting CACI’s service areas.
Margin and cash flow improvement: The company aims to maintain EBITDA margins in the mid-11% range, supported by operational efficiencies, outcome-based contract models, and a disciplined approach to pursuing only high-value bids that align with its core strengths.
Timing risks and funding cycles: Leadership acknowledged that government budget processes, including potential continuing resolutions and delays in contract awards, could influence quarterly revenue timing, though CACI remains confident in achieving its annual and multi-year financial targets.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will focus on (1) CACI’s execution and award pace in high-priority software and electromagnetic spectrum programs, (2) progress in scaling outcome-based contract models and margin expansion initiatives, and (3) the effect of federal budget cycles and funding timing on backlog and new business wins. Additionally, developments in space and counter-UAS technology adoption will be key to tracking growth opportunities.

CACI currently trades at $478.64, in line with $476.50 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).

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