Business Overview and History
CACI International Inc (CACI) is a leading provider of IT applications and infrastructure solutions that enhance communications, secure information systems, and improve mission effectiveness for its government and commercial customers. With a rich history spanning over 60 years, CACI has established itself as a trusted partner in delivering innovative technology and expertise to address the critical challenges faced by its clients in the areas of national security, defense, and intelligence.
CACI was founded in 1962 by Herb Karr and Harry Markowitz as California Analysis Center Inc., a professional services firm focused on providing computer-based data analysis and scientific computer programming services. Initially, the company primarily served the U.S. government, including the Department of Defense and various intelligence agencies.
Throughout its history, CACI has undergone significant growth and transformation. The company expanded its capabilities to include systems engineering, information technology, and business process outsourcing. CACI made several strategic acquisitions to enhance its service offerings and broaden its customer base, including the acquisition of American Systems Corporation in 1991 and Tekron International in 1998.
In the early 2000s, CACI faced a major challenge when it became involved in the Abu Ghraib prison scandal. The company was accused of providing interrogation services at the prison, leading to allegations of torture and abuse. This incident resulted in significant reputational damage and legal issues for CACI, ultimately leading to the settlement of numerous lawsuits related to the scandal.
Despite this setback, CACI continued to grow and evolve its business, expanding its focus on cybersecurity, agile software development, and technology solutions for the government and intelligence community. Under the leadership of CEO John Mengucci, who joined the company in 2018, CACI has worked to position itself as a leader in delivering distinctive expertise and differentiated technology to its customers.
Today, CACI is a publicly traded company with a market capitalization of over $8 billion. The company employs approximately 25,000 people and generates annual revenues of around $7.5 billion. CACI's portfolio of services and solutions spans areas such as national security, intelligence, defense, and civilian government agencies, making it a key player in the government services and technology industry.
Financial Performance and Outlook
CACI's financial performance has been consistently strong, with the company delivering solid top-line growth and profitability. In the most recent fiscal year (2024), the company reported revenue of $7.66 billion, a 14.4% increase from the prior year, and net income of $419.92 million. The company's annual operating cash flow was $497.33 million, with free cash flow of $433.64 million.
In the most recent quarter, CACI reported revenue of $2.10 billion, representing a year-over-year growth of 14.5%. This growth was primarily attributable to new contract awards, growth on existing programs, and the two acquisitions completed during fiscal 2025. Net income for the quarter was $109.94 million.
Financials
The company's financial ratios also demonstrate its financial strength and stability. As of the end of fiscal year 2024, CACI had a current ratio of 1.52, a quick ratio of 1.52, and a debt-to-equity ratio of 0.12, indicating a healthy liquidity position and a conservative capital structure.
Liquidity
As of December 31, 2024, CACI had $175.71 million in cash and cash equivalents. The company has a $3.20 billion credit facility, consisting of a $1.98 billion revolving credit facility and a $1.23 billion term loan. As of December 31, 2024, CACI had $1.22 billion outstanding under the revolving credit facility and $1.10 billion outstanding under the term loan.
Looking ahead, CACI remains well-positioned for continued growth and success. The company has raised its guidance for fiscal year 2025, targeting revenue between $8.45 billion and $8.65 billion, representing an increase of 13% to 16% on an underlying basis (including 6 points of growth from acquisitions). CACI also expects to deliver EBITDA margin in the low 11% range and adjusted earnings per share between $23.87 and $24.76, reflecting growth of approximately 13% to 18% compared to the prior year. The company has increased its free cash flow guidance to at least $450 million.
The updated guidance reflects continued momentum in the business and the impact of the Azure Summit acquisition. CACI's trailing 12-month book-to-bill ratio was 1.7x, and their backlog increased 18% to $32 billion, providing good long-term visibility.
Technological Expertise and Differentiated Offerings
CACI's core strength lies in its ability to deliver distinctive expertise and differentiated technology solutions that address the evolving needs of its government and commercial customers. The company has a long-standing track record of success in modernizing enterprise-scale software applications, critical networks, and mission-critical systems for its clients.
One of CACI's key differentiators is its focus on agile software development and the use of open architectures, which enables the company to deliver more effective, reliable, and secure solutions at a faster pace and lower cost. The company's expertise in areas such as artificial intelligence, data analytics, and cloud computing allows it to develop innovative solutions that enhance its customers' operational efficiency and mission effectiveness.
For example, CACI's work on the Defense Agencies Initiative (DAI) program provides a single financial management ERP system, implemented and supported by CACI as a service across the Department of Defense. This solution has enabled six out of the seven participating DoD agencies to receive clean financial audits, including the United States Marine Corps, the first branch of the U.S. Military to achieve this milestone.
Additionally, CACI's Spectral program is developing the U.S. Navy's next-generation shipboard weapon system for signals intelligence and electronic warfare. The program's open architecture and software-defined approach allow for rapid and dynamic updates to address evolving threats, ensuring the Navy's ships remain on station and mission-ready.
Navigating the Evolving Landscape
CACI's strategic positioning and technological capabilities have proven invaluable in navigating the evolving landscape of the government services and IT solutions market. The company's strong alignment with critical national security priorities, as well as its expertise in addressing the efficiency and modernization goals of government agencies, have positioned it well to capitalize on the changing market dynamics.
The recent political landscape, including the administration's focus on the Department of Government Efficiency (DOGE) initiative, has presented both challenges and opportunities for CACI. While the DOGE initiative aims to increase the efficiency of government operations and reduce wasteful spending, CACI's portfolio of software-driven, agile, and cost-effective solutions are well-suited to address these objectives.
Furthermore, CACI's limited exposure to the civilian side of the federal government, where regulatory reforms may lead to budget reductions, is a significant differentiator compared to its peers. The company generates approximately 94% of its revenue from the Department of Defense, the Intelligence Community, and the Department of Homeland Security, areas that are expected to maintain strong funding priorities under the current administration.
Business Segments and Revenue Distribution
CACI operates through two main reportable segments: Domestic and International.
The Domestic operations segment provides Expertise and Technology primarily to U.S. federal government agencies. This includes functional software development expertise, data and business analysis, IT operations support, naval architecture, engineering, and life cycle support, intelligence and special operations support, and network and exploitation analysis. The segment also offers advanced technology solutions such as agile software development using open modern architectures and DevSecOps, advanced data platforms and applications augmented by Artificial Intelligence, Enterprise Resource Planning systems, Electromagnetic Spectrum capabilities, photonics, and network modernization.
For the six months ended December 31, 2024, the Domestic segment generated revenues of $4.04 billion, representing 97% of total revenues. This marked an increase from $3.58 billion in the same period of the previous year. The growth was primarily driven by new contract awards, expansion of existing programs, and the impact of two acquisitions completed during fiscal 2025.
The International operations segment provides similar Expertise and Technology offerings to international government and commercial customers. For the six months ended December 31, 2024, this segment generated revenues of $121.22 million, accounting for 3% of total revenues, up from $108.91 million in the same period of the previous year.
In terms of customer distribution, the Department of Defense accounted for 77% of the Domestic segment's revenues, while federal civilian agency customers contributed 22%. Commercial and other customers made up the remaining 1% of the Domestic segment's revenues and 100% of the International segment's revenues.
CACI also categorizes its revenues between Expertise and Technology offerings. For the six months ended December 31, 2024, Expertise generated $1.91 billion, or 46% of total revenues, while Technology generated $2.24 billion, or 54% of total revenues.
Risks and Challenges
Despite CACI's impressive track record and strong market positioning, the company is not without its risks and challenges. The highly competitive nature of the government services and IT solutions market, as well as the uncertainty surrounding government procurement processes and budget allocations, pose ongoing challenges for the company.
Additionally, CACI's heavy reliance on government contracts, particularly with the U.S. federal government, exposes the company to risks associated with changes in government policies, political landscapes, and budget priorities. Any significant shifts in these areas could impact CACI's revenue streams and growth prospects.
The company is also subject to the complexities of government audits and regulations, which can create uncertainties and potential liabilities. CACI's ability to maintain its strong security clearances and comply with stringent industry standards is crucial to its continued success.
Industry Trends and Market Outlook
CACI operates in the government IT services and solutions industry, which has seen steady growth in recent years driven by increasing demand for IT modernization, cybersecurity, and mission-critical technologies across the U.S. federal government. The industry is projected to grow at a compound annual growth rate (CAGR) of approximately 6-8% over the next 5 years.
This growth trajectory aligns well with CACI's strategic focus and capabilities, positioning the company to capitalize on the expanding market opportunities in the government services sector.
Conclusion
CACI International Inc (CACI) is a leading provider of IT solutions and expertise that has successfully navigated the evolving landscape of the government services market. With a rich history, a strong financial profile, and a differentiated technology portfolio, the company is well-positioned to continue delivering value to its customers and shareholders.
CACI's unwavering focus on addressing critical national security priorities, combined with its expertise in agile software development, cloud computing, and data analytics, positions the company as a trusted partner in supporting the government's efficiency and modernization initiatives. As the company continues to execute on its strategic priorities and capitalize on the growing demand for its solutions, CACI remains an attractive investment opportunity for those seeking exposure to the dynamic government services and IT solutions sector.