Defense Software & C4ISR

CACI International announced on September 16 that it received a new award, called Apollo, to support US Central Command's information advantage and irregular warfare missions, with a ceiling of $1.5 billion and roughly $1.2 billion expected to be booked. The award follows a fiscal year ended June 30 in which revenue reached $9.6 billion, up 10.9% from a year earlier, with 7.2% of that growth organic, while fourth-quarter revenue grew 17.6% year over year and 15.2% sequentially. Contract awards for the year totaled $10.2 billion, pushing total backlog to $32.0 billion and lifting funded backlog 28.6% to $5.4 billion, and management guided fiscal 2027 revenue to $10.65 billion to $10.85 billion with free cash flow of at least $900 million. That growth has come with a heavier balance sheet: CACI spent $2.64 billion on acquisitions in fiscal 2026, long-term debt nearly doubled to $4.85 billion from $2.85 billion largely tied to the ARKA acquisition, and interest expense rose 35.6% to $215.5 million, helping push fourth-quarter net income down 0.7% to $156.8 million and diluted earnings per share down 1.3% to $7.05. Fixed-price work made up 34.8% of fourth-quarter revenue, up from 26.9% a year earlier, shifting more execution risk onto CACI, while hedge fund ownership fell to 35 funds from 44 and short interest sat at 5.44% of float.

Thales has announced the launch of HexaForce, its next-generation AI-enhanced multi-domain command and control system, purpose-built to support national sovereignty for NATO and allied nations. The system was successfully tested during the NATO CWIX 2026 exercise and is tailored for high-intensity warfare, supporting command requirements for over 100,000 personnel. HexaForce operates across land, air, sea, cyber, electromagnetic spectrum, space, and information operations, and harnesses the artificial intelligence capabilities of cortAIx, Thales' dedicated AI accelerator, which brings together 800 engineers and data scientists. Live trial phases are currently paving the way for full-scale deployment, targeting an increase in capacity from 100 to 1,000 targets processed per day. The solution draws on operational feedback from Artemis.IA, a data-centric platform deployed with the French Ministry of Armed Forces since 2023, and is already available.

Salesforce's public-sector business has become its fastest-growing industry business at scale, with defense revenue expanding 80% year over year, one year after the company launched Missionforce, its government-focused platform combining AI, data, applications and cloud infrastructure. Salesforce said Missionforce now supports operations across more than 30 countries, 60 U.S. federal agencies, all 15 Cabinet departments, all 50 states and all six branches of the U.S. military. One of the biggest opportunities is a 10-year U.S. Army contract carrying a $5.6 billion ceiling to expand Missionforce National Security across the Army and Department of War, while the Army Human Resources Command is using the platform to provide AI-powered services to 9.2 million soldiers, veterans, civilian employees and military families. The U.S. Air Force has deployed Missionforce to modernize operations supporting a vehicle fleet valued at $13.5 billion, and the Transportation Security Administration is using an AI agent called Ace to handle roughly 100,000 traveler conversations each month, resolving 96% of routine inquiries without human escalation and cutting consumer-interaction costs by more than 90%. Salesforce is also collaborating with OpenAI to bring advanced AI models and accelerated computing into Missionforce workloads and secure government environments.

Leidos Holdings secured an $875 million contract extension to support and modernize networks serving more than 650,000 Navy and Marine Corps personnel worldwide. The agreement covers network services and infrastructure supporting the Navy Marine Corps Intranet, ONE-Net and Marine Corps Enterprise Network, enhancing secure connectivity for military operations across global locations. The award aligns with the company's NorthStar 2030 strategy, which focuses on digital modernization, cybersecurity and mission-critical technology solutions, and should provide additional revenue visibility while reinforcing Leidos' role in critical defense IT programs. Shares of Leidos have lost 29.7% in the past year compared with the industry's 17.7% decline, and the stock carries a Zacks Rank #3 (Hold).

Everforth said its federal segment, Everforth ECS, won a four-year, $30 million contract to support the Defense Health Agency's technology modernization program. Under the award, Everforth ECS will build predictive AI models, executive dashboards, and performance metrics giving DHA leaders visibility into program cost, schedule, cybersecurity risk, and cloud spending within the Defense Health Agency's Information Technology Program Support and Analytics Services program. The deal lands less than two weeks after Everforth's July 29 second-quarter report, which showed revenue of $1.01 billion and Adjusted EBITDA of $96.7 million both clearing the high end of management's own guidance, with the Federal Government Segment's gross margin improving to 19.6%, up 40 basis points from a year earlier. The same report showed consolidated revenue down from $1.02 billion a year earlier, net income of $14.2 million, or $0.35 per diluted share, versus $29.3 million and $0.67, and a federal segment book-to-bill ratio of 0.8 to 1 over the trailing twelve months. Everforth repurchased 0.4 million shares for $11.5 million, repaid $23.9 million of debt, and after the quarter refinanced its revolver into a new five-year, $600 million facility, while total long-term debt rose to $1,438.1 million at June 30 from $1,169.4 million at the end of 2025.

The Department of the Navy has awarded Leidos $875 million for the second option year of the Next Generation Enterprise Network Service Management, Integration and Transport contract, keeping more than 650,000 U.S. Navy and Marine Corps personnel securely connected worldwide. Under the award, Leidos manages more than 425,000 devices at more than 2,500 sites around the globe, handling all aspects of user support, operations and IT transformational activities on the Navy Marine Corps Intranet, the Outside the Continental United States Navy Enterprise Network and the Marine Corps Enterprise Network. Steve Hull, president of Leidos Digital, said military and civilian personnel rely on these networks to communicate, make decisions and carry out missions that protect the nation and its allies. Since being awarded the contract in 2020, Leidos has introduced automation that delivers patches to network devices 93% faster and accelerates patching across the enterprise by 94%. DJ LeGoff, a retired Navy captain and the Navy and Marine Corps portfolio leader at Leidos, said the results reflect the team's round-the-clock dedication. The award supports Leidos' NorthStar 2030 strategy and its focus on digital modernization, cyber capabilities and mission software.

Northrop Grumman is expanding its industrial partnerships in Central and Eastern Europe as NATO members strengthen air defenses, increase weapons production and improve their ability to detect threats across multiple domains. The defense contractor announced new preliminary agreements with companies in Estonia and an expanded collaboration with Polish military-vehicle manufacturer Huta Stalowa Wola, unveiled at the MSPO International Defense Industry Exhibition in Kielce, Poland. Under the Estonian memorandums, Go Craft would provide defense-system integration and DefSecIntel would handle specialized mast fabrication and production in support of Northrop's Integrated Battle Command System, or IBCS, which is in full-rate production and already operational with the U.S. Army and Poland. The deepened Polish relationship covers technology transfers, servicing and production for the Bushmaster family of chain guns, which are installed on Poland's Rosomak armored personnel carriers and Borsuk infantry fighting vehicles and are used by the United States and 65 allied countries. Northrop also said it remains in discussions with Poland about the potential sale of its E-2D Advanced Hawkeye airborne command-and-control aircraft, and it highlighted Raid Hunter, a short-range air-defense system using guided 50-millimeter interceptors to counter drones, coordinated drone swarms and cruise missiles. The company did not disclose contract values, delivery schedules or expected financial contributions, and the memorandums do not guarantee future orders.

Nvidia is working with Palantir Technologies to deploy a sovereign AI stack across critical supply chains, beginning with Nvidia's own internal operations. The partnership builds on existing collaboration in which Palantir's Ontology software is combined with Nvidia's accelerated computing, CUDA-X libraries and Nemotron models to help companies and government agencies run AI on sensitive data and complex operations. Nvidia has also been pushing sovereign AI systems for U.S. agencies and critical infrastructure operators as governments and companies seek tighter local control over strategic data, models and infrastructure. For Palantir, the opportunity lies in what follows: a successful deployment inside one of the world's largest AI companies could strengthen its case when competing for similar projects across defense, manufacturing and government.

Cognyte Software Ltd. reported a 21% year-over-year increase in total software revenue for Q2 2027, driven by strong demand for its sovereign AI platform in government security markets. The company narrowed its full-year revenue guidance to approximately $448 million, citing high visibility into 85% of required revenue, and remains on track to achieve its fiscal 2028 target of $500 million. Management highlighted expanding operational leverage, with profitability growing more than four times faster than revenue, and noted that the U.S. segment is targeting $20 million in signed deals this fiscal year. The company is deliberately building inventory to mitigate supply chain risks, and operating expenses were impacted by approximately $7 million in foreign exchange headwinds from the weaker U.S. dollar against the Israeli shekel. A new Chief Revenue Officer, Adam Philpott, has been appointed to lead global commercial operations.

US security agencies have accused six leading Chinese AI companies, including DeepSeek, Moonshot AI, and Alibaba, of using distillation techniques to systematically extract knowledge from American AI models on an industrial scale, in order to train and develop their own models. The NSA, FBI, and CISA issued a joint statement on Tuesday stating that Chinese companies have been using this method since at least 2024 and have deliberately circumvented usage restrictions imposed by US companies to gain unauthorized access to their systems. The accusation comes just weeks before a summit between President Donald Trump and President Xi Jinping in Washington, which could heighten tensions between the world's two largest economies. US agencies have recommended that American AI developers take immediate protective measures. Meanwhile, OpenAI and Anthropic have previously expressed concerns about unauthorized access to their models, and Anthropic accused Alibaba in June of running a large-scale operation to illegally access its Claude model. The Trump administration announced in April that it would take additional measures to address such distillation practices, and US Treasury Secretary Scott Bessent warned in July that Chinese companies found to be involved in intellectual property theft could face sanctions.

Palantir Technologies and Nebius Group announced a strategic partnership to deliver a complete sovereign AI stack to Palantir's commercial customers, with Palantir naming Nebius its preferred sovereign AI infrastructure partner. Following an integration period, Nebius compute and inference endpoints will be brought inside the Palantir enterprise perimeter, giving eligible customers control over their compute, data, and models. The companies will also collaborate to accelerate deployment of new compute capacity, including modular data-center deployments at sites with available power. Palantir's CEO Alex Karp and Nebius CEO Arkady Volozh both emphasized the importance of sovereignty and performance, with Nebius infrastructure designed for AI from the ground up and integrated into Palantir's Sovereign AI Operating System.

Planet Labs PBC has signed a new seven-figure, one-year agreement with a European defense and intelligence customer, expanding its commercial footprint in the region beyond previously disclosed contracts. The deal adds to Planet Labs' existing government relationships, including the NGA, Swedish Armed Forces, and the Defense Innovation Unit, and highlights the growing use of its data and services among major government clients. The contract, though short in duration, supports the company's narrative of focusing on higher-value solutions and larger customers, such as Planet Mosaics and Professional Services. Investors should watch for future quarterly updates to see if the company secures more multi-year or expanded contracts with large government partners, as the mix of solution-led contracts will be a key indicator of success.

CACI International reported fourth-quarter fiscal 2026 adjusted earnings of $8.91 per share, beating the Zacks Consensus Estimate of $7.26 by 22.7%, with revenues rising 17.6% year over year to $2.71 billion. The company also issued fiscal 2027 guidance for revenues between $10.65 billion and $10.85 billion and adjusted EPS between $32.96 and $33.86. Contract awards totaled $1.6 billion in the quarter, with total backlog reaching $32 billion, and EBITDA margin expanded to 13%. Management highlighted notable wins including a $308 million technology modernization contract with the Department of Veterans Affairs and classified awards exceeding $236 million. Following the report, estimates have trended downward, but CACI retains a Zacks Rank #2 (Buy).

V2X Inc. announced on August 4 that it has been awarded an indefinite-delivery/indefinite-quantity contract worth up to $500 million from the US Air Force to continue servicing the C-12 Huron fleet through June 2031. The award follows the company's second-quarter results, which showed revenue of $1.26 billion, up 17% year over year, and adjusted diluted earnings per share of $1.64, up 23%. Management raised its full-year 2026 outlook on revenue, adjusted EBITDA, and adjusted EPS, while net debt fell to $876.1 million, an improvement of $71.4 million from a year earlier. Total backlog stood at $12.7 billion as of July 3, 2026, with $2.5 billion funded. However, the company's adjusted EBITDA margin was only 7.1%, and book-to-bill for the quarter was about 0.5x, though the trailing twelve-month figure was roughly 1.4x. The C-12 contract is a firm fixed price agreement, meaning V2X absorbs cost overruns over its six-year term. The stock trades at a forward P/E of 11.51 as of September 2, with short interest at 8.09% of float.

Howard Lutnick, the US Secretary of Commerce, revealed that Anthropic, the major artificial intelligence (AI) company, has reconciled with the administration of President Donald Trump, according to a report by Axios on Wednesday (September 2). This comes amid easing tensions after a court recently ruled in favor of the company in its dispute with the US Department of Defense. Previously, Pete Hegseth, the US Secretary of Defense, had ordered a suspension of Anthropic's participation in military contracts, placing the company on a list of supply chain risks because it refused to allow the military to use its AI model "Claude" for domestic surveillance missions or in fully autonomous weapons systems. This led Anthropic to file a lawsuit in a California court. Later, on August 27, a US federal judge ruled in favor of Anthropic in the dispute over the use of AI in combat, stating that the Defense Department's blacklisting order was unlawful. On the same day, Tom Brown, a co-founder of Anthropic, participated in a panel discussion at the G20 Innovation Ministerial meeting in North Carolina, emphasizing the strategic importance of data centers and urging officials and representatives from various countries to expedite the approval of construction permits for data centers in their countries to support the growth of AI infrastructure.

The United States launched strikes on targets of Iran's Islamic Revolutionary Guard Corps (IRGC) inside Iran at 12:00 p.m. Eastern Time, according to U.S. Central Command (CENTCOM), following attempts to attack commercial ships in the Strait of Hormuz and U.S. personnel in the region. CENTCOM has not disclosed the number and locations of the targets hit, nor the munitions used. President Donald Trump said on Truth Social that the strikes were large and powerful, and were retaliation against Iran after it attempted to lay naval mines in the Strait of Hormuz and fired missiles at U.S. bases in Jordan. He warned that if Iran retaliates, the U.S. will escalate with heavier and more severe strikes. Later, Iran's Tasnim news agency reported that the Iranian military has begun decisive operations, and that U.S. bases and interests across the region will be targeted by Iranian missiles and drones. The situation makes a prolonged war more likely and could create political pressure ahead of the U.S. midterm elections in November. A Reuters/Ipsos poll showed Trump's approval rating at 33%, and only 36% of Americans approve of war with Iran. The strikes mark a new escalation in the conflict, after the U.S. and Iran resumed tit-for-tat attacks over the weekend for the first time in about a month. On Sunday, U.S. forces struck a rocket launch site on Iran's Larak Island, and Iran responded by firing missiles at U.S. bases in Jordan, but they were intercepted. The United Arab Emirates also said it intercepted Iranian drones over its waters. The Strait of Hormuz is the world's most important energy transit route; before the war, about one-fifth of global oil supply passed through it, according to the U.S. Energy Information Administration (EIA). The escalation increases risks to shipping and energy transport through the Strait, which could create volatility in global oil markets.

Palantir Technologies announced that its subsidiary, Palantir USG, has been awarded a prime agreement by the U.S. Army to produce and deliver eight TITAN ground station systems, comprising four advanced and four basic units, along with technology integration and fielding. TITAN is the Army's next-generation AI- and machine learning-enabled ground station that fuses data from space, aerial, high-altitude, and terrestrial sensors for targeting and mission support. As prime contractor, Palantir will oversee manufacturing, delivery, and software, moving the system from prototype to production while continuing support for existing deployed systems.

The US House Permanent Select Committee on Intelligence has warned that advanced artificial intelligence could be exploited by terrorists or adversaries to develop weapons and plan more devastating attacks, potentially leading to a hard-to-predict 'Black Swan' event. A new report assessing US efforts over the 25 years since 9/11 states that advanced large language models could make it easier for malicious actors to access information and knowledge conducive to planning attacks, while current safeguards may not keep pace with technological advances. The committee, led by Republican Rick Crawford and Democrat Jim Himes, urges intelligence agencies to accelerate the responsible adoption of AI and invest in secure AI tools for data collection, analysis, and alert systems, with rigorous testing and human oversight. The report also acknowledges that the US still has significant vulnerabilities and is not fully prepared for new AI-driven threats.

Baird analyst William Power reiterated an Outperform rating and $200 price target on Palantir Technologies after a recent technology demonstration, arguing the company is positioned to benefit from broader adoption of open-weight AI models, agentic AI, and sovereign AI. Power said the demonstration reinforced his confidence in Palantir's enterprise opportunity, and he believes the company can capitalize on the growing popularity of open-weight models. The optimism follows a strong second quarter in which Palantir's revenue surged 94% year over year to $1.94 billion, with U.S. government revenue jumping 90% to $809 million. William Blair analyst Louie DiPalma also reaffirmed a Buy rating, estimating Palantir's Maven Smart System could eventually approach $1 billion in annual recurring revenue. Government contracts represented roughly 42% of Q2 revenue, and a potential near-term catalyst is Maven receiving program-of-record status from the Pentagon by the end of the U.S. government fiscal year in September.

The Defense Ministry announced on the 31st its budget request for fiscal 2027, with a total of 8.8908 trillion yen, the largest ever. The request focuses on adapting to "new ways of warfare" using artificial intelligence (AI) and drones, and includes organizational reforms such as the establishment of a new agency to support retired Self-Defense Force personnel and their families. Many requests do not specify amounts, so the total is likely to grow further during the year-end budget formulation stage. The request is based on the current defense buildup plan, which sets defense spending at about 43 trillion yen over the five years from fiscal 2023 to 2027. The government plans to revise the three security-related documents within this year, and fiscal 2027 will be the first year of the new plan. In preparation for new ways of warfare, the ministry plans to introduce AI into the Joint Operations Command and to introduce a "highly classified sovereign cloud" to manage highly sensitive information domestically. It also plans to develop inexpensive, mass-producible drones and submarine-launched hypersonic guided missiles. In organizational reforms, the ministry specified the establishment of a new "Retired SDF Personnel and Family Support Agency" (provisional name) with about 110 staff to support career development for retired SDF personnel, as well as three new bureaus within the ministry: the "International Policy Bureau," "Defense Infrastructure Bureau," and "Facilities Policy Bureau" (all provisional names).

The US Department of Justice (DOJ) has corrected a previous statement that several government agencies were hacked by the group QTFY, which is allegedly supported by the Chinese government. The correction clarifies that the US Senate, the Federal Reserve, NASA, and other agencies were merely targets of the hacker group, while only some agencies were successfully breached. The amendment was made to align with the government's affidavit used to support the seizure of internet domains. FBI documents indicate that QTFY has targeted US federal networks since at least 2018, including NASA, the Fed, the Department of Energy, the Department of Justice, the Department of Health and Human Services, the National Institutes of Health, and the US Senate, but attempts to breach NASA were unsuccessful. However, some agencies were successfully breached, such as three national laboratories under the Department of Energy, the National Institutes of Health, and an agency under the Department of Health and Human Services, which were compromised in September 2024. The US stated that these operations were part of a years-long Chinese cyber espionage campaign. Recently, the DOJ and FBI seized domains associated with the hacking platforms QScan and QTRouter to disrupt the group's operations. China has denied the allegations, with a spokesperson for the Chinese Embassy in Washington stating that the US is using cybersecurity issues to slander or undermine China's credibility.

Palantir Technologies' Maven Smart System is approaching a $1 billion annual revenue run rate and could secure formal program-of-record status in the U.S. defense establishment, according to William Blair analyst Louie DiPalma, who reiterated an Outperform rating on the stock. The Pentagon's involvement is deepening, with the Army awarding Palantir a $795 million contract amendment in May 2025 for Maven software licenses through May 2029. Palantir's second-quarter revenue climbed 93% to $1.935 billion, with U.S. government revenue surging 90% to $809 million and U.S. commercial revenue up 149% to $764 million. The company also signed 220 contracts worth at least $1 million, totaling $3.373 billion in contract value, and raised its full-year sales forecast to around $8.15 billion to $8.158 billion. With GAAP operating income of $912 million in Q2, Palantir is growing rapidly while generating substantial margins, but the rising federal spending on AI software raises questions for taxpayers about the strategic value of these investments.

The National Police Agency (NPA) of Japan is preparing to establish a "Foreign Intelligence Bureau" to support the nationwide intelligence restructuring policy, according to the initial budget request for fiscal year 2027 released today (August 28). The new bureau, upgraded from the former "Foreign Affairs and Intelligence Division," will be divided into three sections responsible for coordination and cases involving Russia, China security, and North Korea security, respectively. The restructuring aligns with the launch of the National Intelligence Bureau (NIB) in July and includes plans to submit a bill to revise the Police Act to the Diet next year to formalize the establishment. This comes amid the government's efforts under Prime Minister Sanae Takaichi to strengthen intelligence and economic security capabilities.

Rank One Computing announced Thursday that it has secured a five-year federal contract valued at $5.1 million, including exercised options, to provide its ROC ABIS platform to a major national security program. The contract includes committed revenue of $2.5 million, with the total value subject to funding and option exercise. Shares of ROC gained nearly 8% in pre-market trading.