CACI details the tech and talent legs of its strategy

CACI International turned 62 years old in July and, needless to say, has gone through several iterations prior to this current one as a government technology integrator.

On Nov. 9, CACI held an investor day presentation in New York City to give an in-depth glimpse of where the company wants to go and how. The last investor day took place in 2019.

Here are some key themes and highlights of what members of CACI’s senior executive team told attendees of that four-hour event.

The tech

CACI’s long-term push to have more product content in its portfolio focuses substantially on software, even as the company increasingly makes forays into the hardware realm.

Leave it to CACI’s chief technology officer Glenn Kurowski to put it this way for investors: “Software is our superpower, software development is our superpower.”

Speed, velocity, efficiency, capability, quality and transparency all must go together in order for that superpower vision to become reality.

Kurowski pointed out that many agencies have relied on the so-called waterfall method of software development and delivery for years, but largely want to move away from that to a more agile approach.

As CACI and Kurowski see things, agile does not equate to lack of scale and structure for software engagements with agencies. He said CACI has around 100 agile teams that produce roughly 1,000 releases per year to match the “incredible pace, velocity of what our customers need.”

On the structure front, Kurowski described CACI’s delivery execution model as one that seeks to combat what may be a preconceived notion that agile “can’t be measured.”

“We instrument the entire delivery execution model to be able to detect losses in velocity,” Kurowski said. “Because from the very first time that you're brainstorming the idea, to when you put it into roadmaps, to when you plan for it in your sprints to when you develop it, test and deploy it, we can show our customers ‘here's where we're losing time.’”

It would not be a technology presentation without some mention of artificial intelligence, which Kurowski said “the complexity of implementing” has “really been abstracted away” given the rapid advancement of AI tools.

Kurowski said CACI uses AI tools for some of its internal functions such as predictive models for looking at win probabilities, while the external front includes learning how software code works more quickly.

“The first thing you need to do in the best use of generative AI around software development is code explanation,” Kurowski said.

Enter CACI’s partnership with GitLab to base the former’s software development platform around. GitLab specializes in the DevSecOps software methodology that CACI is seeking to embrace.

“It turned out GitLab’s research is identical to ours and that's actually where they have focused,” Kurowski said. “Right now, the bang for the buck is in code explanation. The bang for the buck is in the software process velocity and efficiency.”

The people

Like the rest of the industry, much of CACI’s value proposition to its government clients remains grounded in the 24,000 employees that work there.

Enter Angie Combs, CACI’s chief human resources officer and main point person responsible for aligning the company’s talent initiatives with the overall strategy and vision.

“In order to grow our talent, we need to do two things really well: we need to acquire great talent and we need to keep them in the organization,” Combs said. “We call those our two levers for growth.”

Combs conceded that retention was a challenge for CACI in 2018, when employees who left the company would often state that they found another opportunity elsewhere.

CACI subsequently started a new effort called “Making Moves” that encouraged employees to look for other jobs across the company if they wanted to do something different.

One macrotrend CACI cannot do anything about, but must still take into consideration, is declining birth rates in the U.S. and an inevitability that one day deaths will exceed births.

“Prime age workers, the people we're going after, that population is declining as well. In fact, the only growth we're really seeing in the U.S. is due to immigration,” Combs said. “With our need for advanced clearances, that population doesn't really support our industry all that well.”

The second that CACI could probably do something about is how fast the skills it needs are changing like the technologies do. Combs said that one-third of the skills from job descriptions in 2019 are no longer in those postings today.

CACI is creating programs for employees to get new certifications and offering financial support for them to do so as well, Combs said.

The government market’s unique fabric means the customer often establishes job requirements for both years of experience and education, which is slowly becoming less of the norm in other industries where more value is placed on skills.

Or as Combs put it, other industries ask “Can this person code in XYZ language?” and then determine whether to hire them or not. She said CACI is seeing more students less inclined to get a traditional four-year degree, and instead take the technical classes that interest them.

“We've had some success in influencing our customers to do away with those blanket experience and education requirements, and we'll be doubling down on those efforts to influence both our customers as well as public policy going forward,” Combs said.

The goals

CACI’s starting point for its new set of financial objectives is how the company ended its 2024 fiscal year in June -- Revenue of $7.6 billion and a 10.4% EBITDA margin (earnings before interest, taxes, depreciation and amortization).

Also during the presentation, CACI gave an updated outlook for its current FY 2025 that now includes contributions from Azure Summit Technologies. CACI now sees revenue in the range of $8.37 billon-to-$8.57 billion and an EBITDA margin in the low-11% range.

The company’s three-year goals have revenue growth in the high single digits and an EBITDA margin of mid-11%. CACI’s path to get there sounds more like iteration than reinvention.

“What we're looking to do next is over the next few years, evolve ourselves to combine a number of the capabilities that are software-defined into a sensor information suite that can be packaged onto numerous platforms,” CEO John Mengucci said. “That's moving up the technology stack, making certain that we can take our software-defined technology, make that with others and deliver that at a platform level, perhaps as a merchant supplier, similar to what we're doing in our optical communications terminals.”

CACI kicked off its investor day by ringing the closing bell on the New York Stock Exchange the day before, Nov. 8.