Oct 22, 2026 earnings call — Raised fiscal 2027 revenue and earnings guidance
Raised fiscal 2027 revenue guidance by $50 million to between $10.7 billion and $10.9 billion.
Revenue $2.5B (est $2.5B) · EPS $7.66 (est $6.57)
Key quotes
"We also won $4.8 billion in awards, producing a 2x book to bill for the quarter."
"Total backlog was $34 billion and funded backlog increased by 15% year over year. This represents the seventh time in the last 8 quarters we have delivered double digit year over year growth in funded backlog."
"First quarter revenue grew 8%, EBITDA margin reached 13.3%, Adjusted diluted EPS increased 12%, and we generated $133 million in free cash flow."
Analyst Q&A 11
why they outperform and growth drivers
Q (Sheila Karin Kahyaoglu · Jefferies): Why has the company consistently outperformed peers and where will future growth come from? Also, what is driving confidence in the organic growth guide for the rest of the year?
A: Management said the company has a clear strategy, long-term intentional leadership, and disciplined execution; they invested ahead of need, moved to commercial contract types, and backed that with funded backlog and recent awards that should drive revenue later in the year.
"The last thing I am gonna add is the metrics that we have shared. The fact that we are at the end of the first quarter, we are looking at 94% of our revenue already in house." — John S. Mengucci (CEO)
tech investments payback and ARKA timing
Q (Gavin Parsons · UBS Financial): How do you think about payback on your tech investments (using SkyValor as an example)? And is there any change to ARKA revenue for the full year or is it only timing?
A: Management said they invest for the decade, not the next quarter, and that many software-based tech investments have rewarded shareholders and will continue to do so. For ARKA they said performance is as expected and the $50 million is a timing shift a quarter to the right, not a reduction in full-year guidance.
"The $50 million moves a quarter to the right, we did not take the full year or their guidance down." — John S. Mengucci (CEO)
margins versus growth trade-off
Q (John Godin · Citi): Are margins peaking versus growth, and how should we think about growth versus margins in the core business versus ARKA? Is there a new lever to raise margins?
A: Management said they would come back and answer more directly, signaling they had more to say and would elaborate; a follow-up was taken and management then discussed margin levers in the next turn.
back-half margin step-up outlook
Q (John Godin · Citi): Given early-year margin outperformance, is there conservatism in the view that back-half margins will step up? Could the step-up be larger?
A: Management said they continue to run the same margin levers and cannot predict future investment decisions that might change outcomes, so they left the outlook at that level of visibility.
"Look, we continue to do what I have been describing that we do." — Jeffrey D. MacLauchlan (CFO)
supply chain constraints and pinch points
Q (Matt Martolo · Melius): Are you seeing inflation and long lead times in memory, semiconductors, rare earths, and how are you managing those constraints? Any other supply pinch points?
A: Management said they are seeing those pressures and managing them, hired an EVP of manufacturing to scale responses, and have reflected these items in guidance; they also said they design around shortages and may spend cash earlier to support longer-term growth.
"that is a key focus. Why we brought Chris Monoski in. who is our new EVP of manufacturing." — John S. Mengucci (CEO)
risk of OTA contract structures
Q (Peter Arment · Baird): How do you view exposure and risks from OTAs and similar contract structures, given they can be easier to cancel?
A: Management said their OTAs work because investment and customer engagement start months or years before signature, they aim for 50%–60% solutions rather than full-risk development, use software-based designs for quick changes, and build production centers of excellence to meet customers' needs.
"The reason why our OTAs and our CSOs are successful is because it starts months and years ahead of when that OTA is actually signed." — John S. Mengucci (CEO)
which products will lead in 3–5 years
Q (Tobey Sommer · Truist): In 3 to 5 years, which current products will generate the most revenue and profit for the firm?
A: Management said they expect a mix led by electronic warfare (EW) supported by space solutions, noting both markets are in early stages and software-based products will allow frequent feature updates and improved margins and free cash flow over time.
"If I had opened my crystal ball up on an open investor line, I would probably say it is a good mix between what we do in the EW area and then supported by what we are doing in space." — John S. Mengucci (CEO)
investment needs vs growth in space and EO
Q (Colin Canfield · Cantor): How do you view investment requirements versus scale of opportunities for ARKA, OCT, space-based EW, commercial EO, Vantor/True Anomaly, Star Shield, and prime classified work? And how are you thinking about M&A pricing?
A: Management said they invest when it grows free cash flow and provided an appendix slide to separate unusual cash items; they said ARKA and OCTs are strong cases, ARKA brings manufacturing know-how, and on M&A they curate pipeline, focus on gaps, and are mindful of valuation adjustments across deals.
"If we see an opportunity to invest in a way that grows free cash flow dollars, that is the decision that we make." — Jeffrey D. MacLauchlan (CFO)
recompete exposure and booking cadence
Q (Gautam Khanna · TD Cowen): Have any recompetes been extended and what is your exposure? Also, given strong awards, how do you expect bookings and cadence through the fiscal year, especially the December quarter?
A: Management said they have seen sole-source extensions and year-or-two extensions that delay but do not eliminate recompetes, that remaining re-compete exposure is about 3% made up of several smaller programs, and that awards remain sluggish but funded backlog and program performance are the focus for growth.
"So those are areas where, obviously, we have satisfied customers that are in a position that they can justify an extension, we are obviously always happy for that to happen." — Jeffrey D. MacLauchlan (CFO)
fixed-price mix and tech hires impact
Q (Rocco J Barbero · JPMorgan): How much of the rise in fixed-price work is from ARKA versus a government push, and how are the new tech/hardware hires integrating and driving growth?
A: Management said the rise in fixed-price work is broader than ARKA and that half of the recent increase is attributable to ARKA while the other half is organic; they also described new hires (Tom, David, Chris) who are strengthening EW, operations/produceability, and manufacturing centers of excellence to support growth.
"if you look at that increase from 27% to 33% about half of those. Of that 6 points is attributable to the inclusion of ARCA." — Jeffrey D. MacLauchlan (CFO)
how recent bookings convert to revenue
Q (Joshua Korn · Wells Fargo): How should we think about almost $5 billion in bookings this quarter converting to revenue this year and beyond, and are any specific programs driving growth in the next few quarters?
A: Management said conversion is broad-based across the portfolio rather than concentrated in one program; they highlighted the Apollo win as a technology-first example expected to ramp higher in Q3 and noted other programs like JTMS that will contribute to growth.
"it is really, Joshua, pretty broad-based across the portfolio. I would not call out any 1 specific program." — Jeffrey D. MacLauchlan (CFO)