Copart 10-Q 2025-10-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2025

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission file number: 000-23255

COPART, INC.

(Exact name of registrant as specified in its charter)

Delaware	94-2867490
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
14185 Dallas Parkway**,** Suite 300 Dallas**,** Texas	75254
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (972) 391-5000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001	CPRT	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒		Accelerated filer	☐
Non-accelerated filer	☐		Smaller reporting company	☐
			Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 20, 2025, 968,017,684 shares of the registrant’s common stock were outstanding.

Copart, Inc.

Index to the Q****uarterly Report on Form 10-Q

October 31, 2025

Table of Contents		Page Number
PART I - Financial Information
Item 1 - Financial Statements (Unaudited)
Consolidated Balance Sheets		3
Consolidated Statements of Income		4
Consolidated Statements of Comprehensive Income		5
Consolidated Statement of Changes in Redeemable Noncontrolling Interests and Stockholders' Equity		6
Consolidated Statements of Cash Flows		7
Notes to Consolidated Financial Statements		8
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations		14
Liquidity and Capital Resources		16
Critical Accounting Policies and Estimates		18
Recently Issued Accounting Standards		18
Contractual Obligations and Commitments		18
Item 3 - Quantitative and Qualitative Disclosures About Market Risk		19
Item 4 - Controls and Procedures
Evaluation of Disclosure Controls and Procedures		19
Changes in Internal Control Over Financial Reporting		19
PART II - Other Information
Item 1 - Legal Proceedings		19
Item 1A - Risk Factors		19
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds		31
Item 3 - Defaults Upon Senior Securities		31
Item 4 - Mine Safety Disclosures		31
Item 5 - Other Information		31
Item 6 - Exhibits		32
Signatures		33

Copart, Inc.

Consoli****dated Balance Sheets

(Unaudited)

(In thousands, except share amounts)		October 31, 2025				July 31, 2025
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash		$	5,233,590			$	2,780,531
Investment in held to maturity securities			9,861				2,008,539
Accounts receivable, net of allowance for credit losses of $14,916 and $12,945, respectively			759,687				762,811
Vehicle pooling costs			118,166				116,145
Inventories			40,408				39,661
Income taxes receivable			574				580
Prepaid expenses and other assets			39,848				46,361
Total current assets			6,202,134				5,754,628
Property and equipment, net			3,650,424				3,598,093
Operating lease right-of-use assets			95,594				99,708
Intangibles, net			59,615				62,832
Goodwill			518,756				517,779
Other assets			54,491				57,862
Total assets		$	10,581,014			$	10,090,902
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities		$	607,386			$	591,831
Deferred revenue			30,471				30,440
Income taxes payable			125,469				41,141
Current portion of operating and finance lease liabilities			17,870				19,869
Total current liabilities			781,196				683,281
Deferred income taxes			85,839				80,625
Income taxes payable			12,802				35,635
Operating and finance lease liabilities, net of current portion			82,066				83,870
Total liabilities			961,903				883,411
Commitments and contingencies
Redeemable non-controlling interest			18,954				20,458
Stockholders’ equity:
Preferred stock: $0.0001 par value - 5,000,000 shares authorized; none issued			-				-
Common stock: $0.0001 par value - 1,600,000,000 shares authorized; 967,904,634 and 967,478,690 shares issued and outstanding, respectively.			97				97
Additional paid-in capital			1,224,683				1,214,150
Accumulated other comprehensive loss			(120,076	)			(120,283	)
Retained earnings			8,495,453				8,093,069
Total stockholders’ equity			9,600,157				9,187,033
Total liabilities, redeemable noncontrolling interests and stockholders’ equity		$	10,581,014			$	10,090,902

The accompanying notes are an integral part of these consolidated financial statements.

Copart, Inc.

Consoli****dated Statements of Income

(Unaudited)

		Three Months Ended October 31,
(In thousands, except per share amounts)		2025				2024
Service revenues and vehicle sales:
Service revenues		$	991,845			$	986,336
Vehicle sales			163,185				160,493
Total service revenues and vehicle sales			1,155,030				1,146,829
Operating expenses:
Facility operations			476,489				496,546
Cost of vehicle sales			141,543				138,178
General and administrative			106,304				105,738
Total operating expenses			724,336				740,462
Operating income			430,694				406,367
Other income (expense):
Interest income, net			53,505				45,547
Other income (expense), net			2,924				(596	)
Total other income			56,429				44,951
Income before income taxes			487,123				451,318
Income tax expense			84,913				90,142
Net income			402,210				361,176
Less: Net (loss) income attributable to redeemable noncontrolling interest			(1,504	)			(910	)
Net income attributable to Copart, Inc.		$	403,714			$	362,086
Basic net income per common share		$	0.42			$	0.38
Weighted average common shares outstanding			967,650				963,176
Diluted net income per common share		$	0.41			$	0.37
Diluted weighted average common shares outstanding			977,100				976,506

The accompanying notes are an integral part of these consolidated financial statements.

Copart, Inc.

Conso****lidated Statements of Comprehensive Income

(Unaudited)

		Three Months Ended October 31,
(In thousands)		2025				2024
Comprehensive income, net of tax:
Net income		$	402,210			$	361,176
Other comprehensive income:
Foreign currency translation adjustments			207				(1,767	)
Comprehensive income			402,417				359,409
Less: Comprehensive (loss) income attributable to redeemable noncontrolling interest			(1,504	)			(910	)
Comprehensive income attributable to Copart, Inc.		$	403,921			$	360,319

The accompanying notes are an integral part of these consolidated financial statements.

Copart, Inc.

Consolida****ted Statement of Changes in Redeemable Noncontrolling Interest and Stockholders’ Equity

(Unaudited)

		Common Stock								Additional				Accumulated Other								Total				Redeemable
(In thousands, except share amounts)		Outstanding Shares				Amount				Paid-in Capital				Comprehensive Income (Loss)				Retained Earnings				Stockholders’ Equity				Noncontrolling Interest
Balances at July 31, 2025			967,478,690			$	97			$	1,214,150			$	(120,283	)		$	8,093,069			$	9,187,033			$	20,458
Net income			—				—				—				—				403,714				403,714				(1,504	)
Currency translation adjustment			—				—				—				207				—				207				—
Exercise of stock options, net of repurchased shares			305,803				—				1,785				—				(1,330	)			455				—
Stock-based compensation			120,141				—				8,748				—				—				8,748				—
Balances at October 31, 2025			967,904,634				97				1,224,683				(120,076	)			8,495,453				9,600,157				18,954

		Common Stock								Additional				Accumulated Other								Total				Redeemable
(In thousands, except share amounts)		Outstanding Shares				Amount				Paid-in Capital				Comprehensive Income (Loss)				Retained Earnings				Stockholders’ Equity				Noncontrolling Interest
Balances at July 31, 2024			962,967,011			$	96			$	1,120,985			$	(142,972	)		$	6,545,902			$	7,524,011			$	24,544
Net income			—				—				—				—				362,086				362,086				(910	)
Currency translation adjustment			—				—				—				(1,767	)			—				(1,767	)			—
Exercise of stock options, net of repurchased shares			476,491				—				2,857				—				(720	)			2,137				—
Stock-based compensation			80,900				—				9,845				—				—				9,845				—
Balances at October 31, 2024			963,524,402				96				1,133,687				(144,739	)			6,907,268				7,896,312				23,634

The accompanying notes are an integral part of these consolidated financial statements.

Copart, Inc.

Consol****idated Statements of Cash Flows

(Unaudited)

		Three Months Ended October 31,
(In thousands)		2025				2024
Cash flows from operating activities:
Net income		$	402,210			$	361,176
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including debt cost			54,199				54,862
Allowance for credit losses			1,977				1,094
Equity in (earnings) losses of unconsolidated affiliates			(47	)			(20	)
Stock-based compensation			9,319				10,415
Gain on sale of property and equipment			(1,128	)			(133	)
Deferred income taxes			5,290				1,740
Changes in operating assets and liabilities:
Accounts receivable			(25,168	)			(49,093	)
Vehicle pooling costs			(1,955	)			(15,218	)
Inventories			(655	)			(8,652	)
Prepaid expenses, other current and non-current assets			7,891				59,026
Operating lease right-of-use assets and lease liabilities			290				883
Accounts payable and accrued liabilities			21,474				59,826
Deferred revenue			56				(2,564	)
Income taxes receivable			-				1
Income taxes payable			61,500				8,931
Net cash provided by operating activities			535,253				482,274
Cash flows from investing activities:
Purchases of property and equipment			(108,042	)			(236,758	)
Assets and liabilities acquired in connection with acquisition			(4,699	)			(1,257	)
Proceeds from sale of property and equipment			7,932				243
Proceeds from held to maturity securities			2,025,000				1,940,000
Investment in unconsolidated affiliate			(3,885	)			-
Net cash provided by investing activities			1,916,306				1,702,228
Cash flows from financing activities:
Proceeds from the exercise of stock options			1,785				2,857
Payments for employee stock-based tax withholdings			(1,330	)			(720	)
Payments of finance lease obligations			(5	)			-
Net cash provided by financing activities			450				2,137
Effect of foreign currency translation			1,050				(2,632	)
Net increase in cash, cash equivalents, and restricted cash			2,453,059				2,184,007
Cash, cash equivalents, and restricted cash at beginning of period			2,780,531				1,514,111
Cash, cash equivalents, and restricted cash at end of period		$	5,233,590			$	3,698,118
Supplemental disclosure of cash flow information:
Interest paid		$	641			$	10
Income taxes paid, net of refunds		$	20,055			$	80,826
Purchase of property and equipment through settlement of deposit		$	2,035			$	-

The accompanying notes are an integral part of these consolidated financial statements.

Copart, Inc.

Notes to Co****nsolidated Financial Statements

October 31, 2025

(Unaudited)

NOTE 1 – Summary of Significant Accounting Policies

Description of Business

Copart, Inc. (“the Company”) provides vehicle sellers with a full range of services to process and sell vehicles over the internet through the Company’s Virtual Bidding Third Generation (“VB3”) internet auction-style sales technology. Vehicle sellers consist primarily of insurance companies, but also include dealers, individuals, charities, rental car companies, banks, finance companies, and fleet operators. The Company sells principally to licensed vehicle dismantlers, rebuilders, repair licensees, used vehicle dealers, exporters, and directly to the general public.

Basis of Presentation

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments of a normal recurring nature considered necessary for fair presentation of the Company’s financial position as of October 31, 2025 and July 31, 2025, its consolidated statements of income, comprehensive income, changes in redeemable noncontrolling interests and stockholders’ equity for the three months ended October 31, 2025 and 2024, and its cash flows for the three months ended October 31, 2025 and 2024. These consolidated financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2025. The consolidated financial statements of the Company include the accounts of the parent company, its wholly-owned subsidiaries and affiliates in which the Company holds a controlling financial interest as of financial statement date.

Use of Estimates

The consolidated financial statements have been prepared in conformity with GAAP. Those principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.

Fair Value of Financial Instruments

The Company records its financial assets and liabilities at fair value in accordance with the framework for measuring fair value in U.S. GAAP. In accordance with Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures, the Company considers fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants under current market conditions. This framework establishes a fair value hierarchy that prioritizes the inputs used to measure fair value:

Level I		Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets.
Level II		Inputs other than quoted prices included within Level I that are observable for the asset or liability, either directly or indirectly.
Level III		Inputs that are generally unobservable. These inputs may be used with internally developed methodologies that result in management’s best estimate.

The amounts recorded for financial instruments in the Company’s consolidated financial statements, which included cash, restricted cash, accounts receivable, accounts payable, and accrued liabilities approximated their fair values as of October 31, 2025 and July 31, 2025, due to the short-term nature of those instruments and are classified within Level II of the fair value hierarchy. Cash equivalents are classified within Level II of the fair value hierarchy because they are valued using quoted market prices of the underlying investments. Held to maturity investments are classified within Level I of the fair value hierarchy because they are valued at quoted prices for identical assets that are traded in active markets. See NOTE 3 – Fair Value Measurements*.*

Redeemable Noncontrolling Interest

Redeemable noncontrolling interests represent a 20% noncontrolling ownership in Purple Wave, Inc., a consolidated subsidiary of the Company. Redeemable noncontrolling interests are presented outside of permanent equity on the consolidated balance sheet as they are redeemable by the holders of the noncontrolling interest and the redemption is outside the control of the Company. The redeemable noncontrolling interests were initially recorded at their issuance date fair value of $25.2 million. We record the carrying amount of the redeemable noncontrolling interests at the greater of (i) the initial carrying amount, increased or decreased for the noncontrolling interest’s share of net income or loss and its share of other comprehensive income or loss, and dividends or (ii) the redemption value. For interests that are redeemable in the future, we recognize changes in the redemption value immediately as they

occur. Shares are redeemable at adjusted fair value from the third anniversary of the acquistion through the 10th anniversary of the acquisition, and are redeemable at fair value thereafter.

Cash, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid investments purchased with original maturities of three months or less at the time of purchase to be cash equivalents. Cash, cash equivalents, and restricted cash include cash held in checking, U.S. Treasury Bills, and money market accounts. The Company periodically invests its excess cash in money market funds and U.S. Treasury Bills. The Company’s cash, cash equivalents, and restricted cash are placed with high credit quality financial institutions.

The Company had held to maturity securities comprised of U.S. Treasury Bills as of October 31, 2025 and July 31, 2025. These investments were classified as held to maturity as the Company had the intent and ability to hold these investments until they matured. The table below shows the amortized cost, associated gross unrealized gains and associated fair value of held to maturity securities.

(In thousands)		October 31, 2025
		Amortized Cost				Gross Unrealized Gains				Fair Value
Investment in held to maturity securities		$	9,861			$	123			$	9,984

(In thousands)		July 31, 2025
		Amortized Cost				Gross Unrealized Gains				Fair Value
Investment in held to maturity securities		$	2,008,539			$	15,575			$	2,024,114

NOTE 2 – Long-Term Debt

Credit Agreement

On December 21, 2021, the Company entered into a Second Amended and Restated Credit Agreement by and among the Company, certain subsidiaries of the Company party thereto, the lenders party thereto, and Bank of America, N.A., as administrative agent (the “Second Amended and Restated Credit Agreement”). The Second Amended and Restated Credit Agreement amends and restates certain terms of the First Amended and Restated Credit Agreement, dated as of July 21, 2020, by and among the Company, the lenders party thereto, and Bank of America, N.A., as administrative agent (as successor in interest to Wells Fargo Bank, National Association) (the “Existing Credit Agreement”). The Second Amended and Restated Credit Agreement provides for, among other things, (a) an increase in the secured revolving credit commitments by $200.0 million, bringing the aggregate principal amount of the revolving credit commitments under the Second Amended and Restated Credit Agreement (the “Revolving Loan Facility”) to $1,250.0 million, (b) an increase in the letter of credit sublimit from $60.0 million to $100.0 million, (c) addition of Copart UK Limited, CPRT GmbH and Copart Autos España, S.L.U., each a wholly-owned direct or indirect foreign subsidiary of the Company, as borrowers, (d) addition of the ability to borrow under the Second and Amended and Restated Credit Agreement in certain foreign currencies including Pounds Sterling, Euro and Canadian Dollars, (e) extension of the maturity date of the revolving credit facility under the Existing Credit Agreement from July 21, 2023 to December 21, 2026, (f) replacing the LIBOR interest rate applicable to U.S. Dollar denominated borrowings with a SOFR-based interest rate, and (g) changing the pricing levels with respect to the revolving loans as further described below.

The Second and Amended and Restated Credit Agreement provides for the Revolving Loan Facility of $1,250.0 million maturing on December 21, 2026 (including up to $550.0 million equivalent of borrowings in Pounds Sterling, Euro and Canadian Dollars) with a $150.0 million equivalent sub-facility available to CPRT GmbH, a $150.0 million equivalent sub-facility available to Copart Autos España, S.L.U. and a $250.0 million equivalent sub-facility available to Copart UK Limited. The proceeds may be used for general corporate purposes, including working capital and capital expenditures, potential share repurchases, acquisitions, or other investments relating to the Company’s expansion strategies in domestic and international markets.

Borrowings under the Second Amended and Restated Credit Agreement bear interest based on, at our option, either (1) the applicable fixed rate plus 1.00% to 1.75% or (2) the daily rate plus 0.0% to 0.75%, in each case, depending on the Company’s consolidated total net leverage ratio. Additionally, the unused revolving commitments under the Second Amended and Restated Credit Agreement are subject to the payment of a customary commitment fee at a range of 0.175% to 0.275%, depending on the Company’s consolidated total net leverage ratio. The applicable fixed rates described above with respect to borrowings denominated in (1) U.S. Dollars is SOFR plus certain “spread adjustments” described in the Second Amended and Restated Credit Agreement, (2) Pounds Sterling is SONIA plus certain “spread adjustments” described in the Second Amended and Restated Credit Agreement, (3) Euro is EURIBOR, and (4) Canadian Dollars is CDOR. The Company had no outstanding borrowings under the Revolving Loan Facility as of October 31, 2025 and July 31, 2025.

The Company’s obligations under the Second Amended and Restated Credit Agreement are guaranteed by certain of the Company’s domestic subsidiaries meeting materiality thresholds set forth in the Second Amended and Restated Credit Agreement. Such obligations, including the guaranties, are secured by substantially all of the assets of the Company and the assets of the subsidiary guarantors pursuant to a Security Documents Confirmation Agreement as part of the Second Amended and Restated Credit Agreement.

The Second Amended and Restated Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict the Company and its subsidiaries’ ability to, among other things, incur indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into transactions with affiliates, pay dividends, or make distributions on and repurchase stock, in each case subject to certain exceptions. The Company is also required to maintain compliance, measured at the end of each fiscal quarter, with a consolidated total net leverage ratio and a consolidated interest coverage ratio. The Second Amended and Restated Credit Agreement contains no restrictions on the payment of dividends and other restricted payments, as defined, as long as (1) the consolidated total net leverage ratio, as defined, both before and after giving effect to any such dividend or restricted payment on a pro forma basis, is less than 3.25:1, in an unlimited amount, (2) if clause (1) is not available, so long as the consolidated total net leverage ratio both before and after giving effect to any such dividend on a pro forma basis is less than 3.50:1, in an aggregate amount not to exceed the available amount, as defined, and (3) if clauses (1) and (2) are not available, in an aggregate amount not to exceed $50.0 million; provided, that, minimum liquidity, as defined, shall be not less than $75.0 million both before and after giving effect to any such dividend or restricted payment. As of October 31, 2025, the consolidated total net leverage ratio was (2.55):1. Minimum liquidity available as of October 31, 2025 was $6.4 billion. Accordingly, the Company does not believe that the provisions of the Second Amended and Restated Credit Agreement represent a significant restriction to its ability to pay dividends or to the successful future operations of the business. The Company has not paid a cash dividend since becoming a public company in 1994. The Company was in compliance with all covenants related to the Second Amended and Restated Credit Agreement as of October 31, 2025.

Related to execution of the Second Amended and Restated Credit Agreement, the Company incurred $2.7 million in costs, which were capitalized as debt issuance fees. The debt issuance cost is amortized to interest expense over the term of the respective debt instruments and is included in other assets on the consolidated balance sheet.

NOTE 3 – Fair Value Measurements

The following table summarizes the carrying values and fair values of the Company’s financial instruments that were not carried at fair value in the consolidated balance sheets:

		October 31, 2025								July 31, 2025
(In thousands)		Carrying Value Total				Fair Value Total				Carrying Value Total				Fair Value Total
Assets
Cash equivalents		$	4,896,837			$	4,905,968			$	2,196,593			$	2,204,512
Investment in held to maturity securities			9,861				9,984				2,008,539				2,024,114
Total Assets		$	4,906,698			$	4,915,952			$	4,205,132			$	4,228,626

The Company has investments in U.S. Treasury Bills some of which mature over a period greater than 90 days and are classified as short-term investments. The U.S. Treasury Bills are carried at amortized cost and classified as held to maturity as the Company has the intent and the ability to hold them until they mature. The carrying value of the U.S. Treasury Bills are adjusted for accretion of discounts over the remaining life of the investment. Income related to the Treasury Bills is recognized in interest income in the Company’s consolidated statement of income. The U.S. Treasury Bills are classified within Level I of the fair value hierarchy.

During the three months ended October 31, 2025, no transfers were made between any levels within the fair value hierarchy.

NOTE 4 – Net Income Per Share

The table below reconciles basic weighted average shares outstanding to diluted weighted average shares outstanding:

		Three Months Ended October 31,
(In thousands)		2025				2024
Weighted average common shares outstanding			967,650				963,176
Effect of dilutive securities			9,450				13,330
Weighted average common and dilutive potential common shares outstanding			977,100				976,506

There were no material adjustments to net income required in calculating diluted net income per share. Excluded from the dilutive net income per share calculation were 2,078,513 and 1,105,573 options to purchase the Company’s common stock and restricted stock for the three months ended October 31, 2025 and 2024, respectively, because their inclusion would have been anti-dilutive.

NOTE 5 – Stock-based Compensation

Refer to Note 12 - Stockholders’ Equity of the Notes to the Consolidated Financial Statements in Form 10-K for further description of the various types of stock-based compensation awards, their valuations and their award terms. The table below sets forth the

stock-based compensation recognized by the Company for stock options, restricted stock awards ("RSA"), restricted stock unit awards ("RSU"), and performance stock units ("PSU"):

		Three Months Ended October 31,
(In thousands)		2025				2024
General and administrative		$	7,384			$	8,591
Facility operations			1,935				1,824
Total stock-based compensation		$	9,319			$	10,415

The Company grants stock option awards that vest based on time or time and market conditions. For stock option awards that vest based on time the Company recognizes compensation expense on a straight-line basis over the requisite service period of five years. For stock option awards that vest based on time and market conditions, the Company recognizes compensation expense using the accelerated attribution method over each vesting tranche of the award. These options will become exercisable over five years, subject to continued service by the executive. Separate and apart from the time-based vesting schedule, the options are also subject to a market condition requiring the trading price of the Company's common stock on the Nasdaq Global Select Market to be greater than or equal to 125% of the exercise price of the options, determined both (i) at the time of any exercise, and (ii) based on the closing price on each of the twenty consecutive trading days preceding the date of any exercise. The exercise price of the options is equivalent to the closing price of the Company’s common stock on the grant date. The fair value of the awards is determined at the grant date using either a Lattice or Monte Carlo model, risk-free interest rates ranging from 0.71% to 4.37%, estimated volatility ranging from 25.2% to 29.8%, and no expected dividends. The Company recognized $0.6 million and $1.3 million in compensation expense related to these awards in the three months ended October 31, 2025 and 2024, respectively.

The following is a summary of activity for the Company’s stock options for the three months ended October 31, 2025:

		Time Based								Time and Market Condition Based
(In thousands, except per share and term data)		Shares				Weighted Average Exercise Price				Shares				Weighted Average Exercise Price
Outstanding as of July 31, 2025			12,487			$	21.61				5,995			$	24.70
Grants of options			567				46.39				75				46.57
Exercises			(306	)			5.84				—				—
Forfeitures or expirations			(63	)			50.13				—				—
Outstanding as of October 31, 2025			12,685			$	22.96				6,070			$	24.97
Exercisable as of October 31, 2025			11,005			$	19.98				5,402			$	23.78

The Company’s RSA, RSU, and PSU awards have been issued with vesting periods ranging from two years to five years. RSA and RSU awards vest solely on service conditions while PSU awards will vest over five years, when and if certain financial performance targets are met. Accordingly, the Company recognizes compensation expense for RSA and RSU awards on a straight-line basis over the requisite service period of the award. Compensation expense for PSU awards is recognized on an accelerated attribution method when the achievement of certain financial performance targets appear probable and is recognized over the remaining requisite service period.

The following is a summary of activity for the Company’s RSA, RSU and PSU awards for the three months ended October 31, 2025:

(In thousands, except per share data)		Restricted and Performance Shares				Weighted Average Grant Date Fair Value
Outstanding as of July 31, 2025			1,778			$	48.93
Grants			488				45.83
Vested			(92	)			42.01
Forfeitures or expirations			(104	)			47.78
Outstanding as of October 31, 2025			2,070			$	48.33

NOTE 6 – Income Taxes

The Company’s effective income tax rates were 17.4% and 20.0% for the three months ended October 31, 2025 and 2024, respectively, which differs from the U.S. statutory rate of 21% primarily due to state income taxes, deduction for Foreign Derived Intangible Income, and excess tax benefits associated with equity-based compensation. The recognition of excess tax benefits from the exercise of employee stock options was $2.8 million and $4.6 million for the three months ended October 31, 2025 and 2024, respectively.

NOTE 7 – Recent Accounting Pronouncements

Pending

In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topics 740): Improvements to Income Tax Disclosures" to expand the disclosure requirements for income taxes, primarily related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. Management is currently evaluating this ASU to determine its impact on the Company's disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40). ASU 2024-03 requires disclosure of specified information about certain costs and expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied either prospectively or retrospectively. Management is currently evaluating this ASU to determine its impact on the Company's disclosures.

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which allows entities to elect a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current classified accounts receivable and contract assets. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. Management is currently evaluating this ASU to determine its impact on the Company's consolidated results of operations and financial position.

In September 2025, the FASB issued ASU 2025-06 Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which remove all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout Subtopic 350-40. ASU 2025-06 is effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted and may be applied prospectively, retrospectively, or modified transition approach that is based on the status of the project and whether software costs were capitalized before the date of adoption. Management is currently evaluating this ASU to determine its impact on the Company's consolidated results of operations and financial position.

NOTE 8 – Legal Proceedings

The Company is subject to threats of litigation and is involved in actual litigation and damage claims arising in the ordinary course of business, such as actions related to injuries, property damage, contract disputes, and handling or disposal of vehicles. In addition, from time to time, the Company receives communications from government or regulatory agencies concerning investigations or allegations of noncompliance with laws or regulations in jurisdictions in which the Company operates. Except as otherwise noted in this Note 8, there are no material pending legal proceedings to which the Company is a party, or with respect to which any of the Company’s property is subject.

The Company provides accruals for matters when a loss is probable and the amount can be reasonably estimated. The effect of the outcome of any such matters on the Company’s future consolidated results of operations and cash flows cannot be predicted because any such effect depends on future results of operations and the amount and timing of the resolution of any such matters. The Company believes that any ultimate liability regarding existing litigation and claims would not have a material effect on its consolidated results of operations, financial position, or cash flows. However, legal and regulatory proceedings are inherently unpredictable, and the amount of the liabilities associated with claims, if any, cannot be determined with certainty. If one or more matters were resolved against us for amounts in excess of the Company’s expectations, the impact on the Company’s consolidated results of operations, financial position, or cash flow could be material. The Company maintains insurance which may or may not provide coverage for claims made against the Company. There is no assurance that there will be insurance coverage available when and if needed. Additionally, the insurance that the Company carries requires that the Company pay for costs and/or claims exposure up to the amount of the insurance deductibles.

The U.S. Department of Justice, Consumer Protection Branch (DOJ) is conducting an ongoing investigation into potential violations by the Company of certain money laundering laws related to its practices and procedures for preventing and detecting money-laundering activity by its auction platform members. In connection with this investigation, the Company received a letter from the DOJ in October 2023 in which the DOJ indicated the Company may have exposure as a result of potential violations of such money laundering statutes and regulations. The Company is cooperating with the DOJ’s investigation. At this time, we are unable to predict the duration, scope, or result of any potential governmental, criminal, or civil proceeding that may result, the imposition of fines and penalties, and/or other remedies, and as a result, are unable to predict the range of possible loss.

NOTE 9 – Segments and Other Geographic Reporting

The Company’s U.S. and International regions are considered two separate operating segments and are disclosed as two reportable segments. The segments represent geographic areas and reflect how the chief operating decision maker "CODM", the Company's Chief Executive Officer, allocates resources and measures results. The primary financial measures used by the CODM for assessing performance and allocating resources are service revenue, vehicle sales and operating income.

The following table presents financial information by segment:

		Three Months Ended October 31, 2025												Three Months Ended October 31, 2024
(In thousands)		United States				International				Total				United States				International				Total
Service revenues		$	855,534			$	136,311			$	991,845			$	859,990			$	126,346			$	986,336
Vehicle sales			97,080				66,105				163,185				87,549				72,944				160,493
Total service revenues and vehicle sales			952,614				202,416				1,155,030				947,539				199,290				1,146,829
Facility operations			398,485				78,004				476,489				423,617				72,929				496,546
Cost of vehicle sales			89,959				51,584				141,543				76,286				61,892				138,178
General and administrative			89,198				17,106				106,304				92,577				13,161				105,738
Operating income		$	374,972			$	55,722			$	430,694			$	355,059			$	51,308			$	406,367
Depreciation and amortization, excluding debt costs		$	45,409			$	8,633			$	54,042			$	45,915			$	7,712			$	53,627
Interest Income			50,095				3,410				53,505				43,843				1,704				45,547
Capital expenditures and acquisitions			71,458				41,283				112,741				211,917				26,098				238,015

		October 31, 2025												July 31, 2025
(In thousands)		United States				International				Total				United States				International				Total
Total assets		$	9,314,233			$	1,266,781			$	10,581,014			$	8,834,063			$	1,256,839			$	10,090,902
Goodwill			390,422				128,334				518,756				390,422				127,357				517,779

This discussion, which presents Copart Inc.'s (“Copart,” the “Company,” “our,” "us” or “we”) results for periods occurring in the fiscal year ending July 31, 2026 and the fiscal year ended July 31, 2025, should be read in conjunction with our Consolidated Financial Statements as of and for the three months ended October 31, 2025, and the accompanying notes included in Part 1, Item 1 of this Quarterly Report on Form 10-Q, as well as our Consolidated Financial Statements as of and for the year ended July 31, 2025, the accompanying notes and the related Management's Discussion and Analysis of Financial Condition and Results of Operations, contained in our Annual Report on Form 10-K for the fiscal year ended July 31, 2025.

Re****sults of Operations

The following table shows certain data from our consolidated statements of income expressed as a percentage of total service revenues and vehicle sales for the three months ended October 31, 2025 and 2024:

		Three Months Ended October 31,
(In percentages)		2025				2024
Service revenues and vehicle sales:
Service revenues			86	%			86	%
Vehicle sales			14	%			14	%
Total service revenues and vehicle sales			100	%			100	%
Operating expenses:
Facility operations			41	%			43	%
Cost of vehicle sales			12	%			12	%
General and administrative			9	%			9	%
Total operating expenses			62	%			64	%
Operating income			38	%			36	%
Other income (expense)			4	%			3	%
Income before income taxes			42	%			39	%
Income taxes			7	%			8	%
Net income			35	%			31	%

Comparison of the Three Months Ended October 31, 2025 and 2024

The following table presents a comparison of service revenues for the three months ended October 31, 2025 and 2024:

		Three Months Ended October 31,
(In thousands)		2025				2024				Change				% Change
Service revenues
United States		$	855,534			$	859,990			$	(4,456	)			(0.5	)%
International			136,311				126,346			$	9,965				7.9	%
Total service revenues		$	991,845			$	986,336			$	5,509				0.6	%

Service Revenues. The increase in service revenues during the three months ended October 31, 2025 of $5.5 million, or 0.6%, as compared to the same period last year resulted from (i) a decrease in the U.S. of $4.5 million and (ii) an increase in International of $10.0 million. The decrease in the U.S. compared to the same period last year is the related to the one time revenue associated with hurricanes Helene and Milton recognized in fiscal year 2025 offset by an increase in revenue per car. The growth in International, after excluding positive fluctuations in currency exchange rates of $3.7 million, was driven primarily by an increase in revenue per car, offset by decrease in volume.

The following table presents a comparison of vehicle sales for the three months ended October 31, 2025 and 2024:

		Three Months Ended October 31,
(In thousands)		2025				2024				Change				% Change
Vehicle sales
United States		$	97,080			$	87,549			$	9,531				10.9	%
International		$	66,105				72,944			$	(6,839	)			(9.4	)%
Total vehicle sales		$	163,185			$	160,493			$	2,692				1.7	%

Vehicle Sales. The increase in vehicle sales for the three months ended October 31, 2025 of $2.7 million, or 1.7%, as compared to the same period last year, resulted from (i) an increase in the U.S. of $9.5 million and (ii) a decrease in International of $6.8 million. The increase in the U.S. was primarily driven by an increase in revenue per car, which we believe was due to a change in mix of vehicles

sold, offset by a decrease in volume. The decrease in International, after excluding positive fluctuations in currency exchange rates of $2.7 million, was primarily driven by a decrease in volume related to sellers switching to a consignment model and decrease in revenue per car, which we believe was due to a change in mix of vehicles sold.

The following table presents a comparison of facility operations expenses for the three months ended October 31, 2025 and 2024:

		Three Months Ended October 31,
(In thousands)		2025				2024				Change				% Change
Facility operations expenses
United States		$	398,485			$	423,617			$	(25,132	)			(5.9	)%
International			78,004				72,929				5,075				7.0	%
Total facility operations expenses		$	476,489			$	496,546			$	(20,057	)			(4.0	)%
Facility operations expenses, excluding depreciation and amortization
United States		$	359,452			$	383,597			$	(24,145	)			(6.3	)%
International			69,647				65,472				4,175				6.4	%
Facility depreciation and amortization
United States		$	39,033			$	40,020			$	(987	)			(2.5	)%
International			8,357				7,457				900				12.1	%

Facility Operations Expenses. The decrease in facility operations expense for the three months ended October 31, 2025 of $20.1 million, or 4.0%, as compared to the same period last year resulted from (i) a decrease in the U.S. of $25.1 million, and (ii) an increase in International of $5.1 million. The decrease in the U.S. compared to the same period last year is related to one time costs associated with hurricanes Helene and Milton recognized in fiscal year 2025 offset by increase in subhaul, insurance, and bank charges. The increase in International, after excluding negative fluctuations in currency exchange rate of $1.9 million, was the result of an increase in cost to process a car. Included in facility operations expenses were depreciation and amortization expenses. The increase in facility operations depreciation and amortization expenses during the three months ended October 31, 2025 as compared to the same period last year resulted primarily from depreciating new and expanded facilities placed into service in International. The decrease in the United States is the result of a customer relationship being fully amortized.

The following table presents a comparison of cost of vehicle sales

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