Copart Inc (CPRT) Q1 2026 Earnings Call Transcript

Neutral Specialty Business Services 35.61B USA

Next Earnings

2026-05-20

Copart, Inc. provides online auctions and vehicle remarketing services in the United States, Canada, the United Kingdom, Brazil, the Republic of Ireland, Germany, Finland, the United Arab Emirates, Oman, Bahrain, and Spain. It offers a range of services for processing and selling vehicles over the internet through its virtual bidding third generation internet auction-style sales technology to vehicle sellers, insurance companies, banks and finance companies, charities, fleet operators, dealers, vehicle rental companies, and individuals. The company's services include online seller access, salvage estimation, estimating, end-of-life vehicle processing, virtual insured exchange, transportation, vehicle inspection stations, on-demand reporting, title processing and procurement, loan payoff, flexible vehicle processing programs, buy it now, member network, sales process, and dealer services. Its services also comprise services to sell vehicles through CashForCars.com; U-Pull-It service that allows buyer to remove valuable parts and sell the remaining parts and car body; copart 360, an online technology for posting vehicle images; membership tiers for those registering to buy vehicles through Copart.com; and virtual queue to secure a place in line while visiting one of its locations. The company sells its products principally to licensed vehicle dismantlers, rebuilders, repair licensees, used vehicle dealers, and exporters, as well as to the public. The company was incorporated in 1982 and is headquartered in Dallas, Texas.

Copart posted a revenue decline in Q2 fiscal 2026 with higher ASPs and AI-driven efficiency, while maintaining strong liquidity and buybacks, leaving the overall outlook mixed but with structural advantages intact.

⭐ Key Highlights

Insurance business trends

Global insurance units declined 9% YoY, driven by lower policy-in-force and rising total loss frequency, with U.S. units down about 10.7% (4.8% ex-CAT).

Record ASPs in U.S. insurance

U.S. insurance average selling prices rose 6% YoY, or 9% excluding CAT, signaling pricing power and favorable mix despite softer volumes.

AI deployment and productivity

Copart highlighted scale AI deployment across operations, analytics, document processing, and dispatch, aimed at boosting productivity and service outcomes.

Strong liquidity and buybacks

Liquidity stood at ~$6.4B with no debt; YTD buybacks exceeded 13M shares for >$500M, signaling capital return despite revenue headwinds.

International growth and FX tailwinds

International segment revenue rose 6.1% (7.7% ex-CAT) with strong noninsurance growth and favorable FX, supporting margin resilience.

✔Positive Signals

U.S. insurance ASPs up 6% YoY, 9% ex-CAT, signaling pricing power
Record average selling prices for U.S. insurance consignors
Significant liquidity of ~$6.4B and no debt
Ongoing buybacks: >13 million shares repurchased for >$500M YTD
AI deployment across multiple functions improving productivity

✖Negative Signals

Consolidated revenue down 3.6% YoY amid CAT-related prior-year base
Global insurance units down 9.3% (4.1% ex-CAT) and noninsurance down 2.7%
Gross profit down 6.2% and net income/EPS down ~9%
Lower unit volumes globally, with 8% overall volume decline excluding CAT
Quarterly onetime international VAT accrual of $6.8M

📊Financial Results

Consolidated revenue: $1.12B, down 3.6% YoY; ex-CAT: +1.3%
Gross profit: $492.8M, down 6.2%; gross margin 45% (+178 bps ex-CAT)
Operating income: $388.7M, down 8.8%
Net income: $350.7M, down 9.5%; EPS: $0.36, down 9.2%

🔮Future Guidance

Guidance not provided in the press release; management did not offer specific forward-looking revenue, margin, or cash flow targets for the next quarters

💡Interesting Insights

Copart sees AI as a productivity multiplier with a dedicated 1,000+ engineering team and scalable deployment across operations, analytics, and dispatch
Management frames value in terms of delivered economic outcomes (price, cycle times, fees) rather than price alone

Detailed Analysis

AI-generated summary of Copart Inc earnings call transcript.

In Q2 FY2026, Copart reported a consolidated revenue decline of 3.6% to $1.12B, with a CAT-impacted prior year; excluding CAT, revenue grew 1.3%. U.S. segments faced a 9.5% unit decline (4.5% ex-CAT), while international units grew modestly and benefited from FX. Gross profit decreased 6.2% to $492.8M, but adjusted gross profit rose 0.4% with a margin expansion of 178 basis points to 45%. Net income fell ~9.5% to $350.7M and EPS declined 9.2% to $0.36. The company emphasized higher insurance ASPs (6% reported, 9% ex-CAT) and ongoing investments in product, tech, and AI to drive productivity and long-term value. Copart maintains a very strong liquidity position (~$6.4B) and aggressive buyback activity (~$500M YTD), while reaffirming disciplined capital allocation. Management discussed macroInsurance trends, cyclicality in premiums, and the importance of delivered economics (selling price, cycle times, and fees) over pure price competition. They also noted capacity discipline in land and facilities and highlighted AI's role across operations as a productivity multiplier, with a long-run focus on capacity, service levels, and customer outcomes.

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