CACI International Inc (CACI)

How it makes money

CACI is paid under government contracts and subcontracts, billed as work is performed. The filing says the mix spans fixed-price, cost-reimbursement and time-and-materials contracts, plus Indefinite Delivery/Indefinite Quantity vehicles and government-wide acquisition contracts on which individual task orders are competed; it does not disclose the revenue percentage of each contract type for fiscal 2026. Margins differ by type: on cost-reimbursement work the government pays allowable costs plus a fee, so risk is low and margins thin; on fixed-price work CACI keeps the difference if it delivers for less than the price, and absorbs the overrun if it does not. Revenue therefore depends on winning and holding contract vehicles and on the pace at which agencies fund task orders. Backlog is the forward indicator the company reports: total backlog was $32.0 billion at 30 June 2026, of which $5.4 billion was funded.

Revenue by segment

The advantage is regulatory and reputational rather than technological. To bid much of this work a contractor needs cleared personnel, cleared facilities and accredited systems, and the filing warns that failure to obtain or retain security clearances would directly limit what CACI can win — a barrier that keeps most firms out of the intelligence work that is a quarter of revenue. Past performance and incumbency also count in source selection, and agencies rarely disturb a programme that runs well. The limits are real: contracts are recompeted on schedule, the government owns most of the deliverables, and price often decides, so the advantage protects individual programmes more than it protects pricing.

Demand does not follow the consumer or industrial cycle: it follows the federal budget. Defence, intelligence and civilian agency missions continue through recessions, and multi-year contracts with a $32.0 billion total backlog smooth revenue further, which is why this kind of business tends to hold up when the economy weakens. The cycle that matters instead is political — appropriations timing, continuing resolutions, shutdowns, and shifts of priority between programmes — and it can stall growth in a strong economy just as easily as in a weak one. A beginner should read 'defensive' here as insulated from GDP, not as free of risk.

Key risks

• Almost all revenue comes from one customer — The company states that federal government contracts accounted for 95.6% of revenue in fiscal 2026 and 95.7% in fiscal 2025. Any loss of that relationship, or a decline in its standing with contracting agencies, would hit the business with no other customer base to fall back on.
• Federal budget levels and priorities can change — Item 1A flags changes in the level of federal spending and in budgetary priorities. Appropriations delays, continuing resolutions and shifts of money between programmes can slow funding of task orders even on contracts CACI already holds.
• Contracts can be terminated or cut short — The filing lists unfavourable termination provisions among its risks: government contracts may generally be ended for convenience or not extended into option years, and backlog may not convert into revenue as expected.
• Competitive bidding and protests — Work is won through competitive procurement and is recompeted periodically. The company cites the risks of the bidding process itself and of changes in government procurement practices, which can reshape how and to whom work is awarded.
• Cleared talent is scarce — Two separate risk factors cover the ability to obtain and retain security clearances and the ability to attract and retain qualified employees. This is a people business: without cleared staff a contract cannot be staffed, whatever the award says.
• Audits, cost disallowance and misconduct — Government contracts are audited and costs already billed can be questioned and adjusted afterwards. The filing also names employee misconduct and security breaches, and the broader burden of legal and regulatory compliance, as risks that can bring penalties or suspension from bidding.
• Debt taken on for acquisitions — A dedicated group of risk factors covers indebtedness: covenant restrictions, the capacity to take on more debt, whether cash flow suffices to service it, and change-of-control effects. Related risks cover the difficulty of finding, executing and integrating acquisitions and the possible impairment of goodwill.

Top customers account for 95.6% of revenue

The US federal government is effectively the single customer: 95.6% of fiscal 2026 revenue came from federal contracts, split 53.6% Department of War, 24.6% Intelligence Community, 17.4% federal civilian agencies, with 4.4% from commercial and other customers. Concentration is lower at the contract level: the ten largest revenue-producing contracts, many of them umbrella vehicles carrying several task orders, together produced $2.2 billion, or 22.5% of revenue.