Copart 10-Q 2026-01-31

Filed 2026-03-03. 2 sections, 172K characters. Original on sec.gov · Markdown · JSON

Cover and table of contents

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 January 31**,** 2026


☐	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 March 2, 2026, 963,308,388 shares of the registrant’s common stock were outstanding.

Copart, Inc.

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

January 31, 2026


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		8
Notes to Consolidated Financial Statements		9

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations		16
Liquidity and Capital Resources		19
Critical Accounting Policies and Estimates		21
Recently Issued Accounting Standards		21
Contractual Obligations and Commitments		21

Item 3 - Quantitative and Qualitative Disclosures About Market Risk		22

Item 4 - Controls and Procedures
Evaluation of Disclosure Controls and Procedures		22
Changes in Internal Control Over Financial Reporting		22

PART II - Other Information
Item 1 - Legal Proceedings		22
Item 1A - Risk Factors		22
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds		35
Item 3 - Defaults Upon Senior Securities		35
Item 4 - Mine Safety Disclosures		35
Item 5 - Other Information		35
Item 6 - Exhibits		36
Signatures		37

Copart, Inc.

Consoli****dated Balance Sheets

(Unaudited)


(In thousands, except share amounts)	January 31, 2026			July 31, 2025
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash	$	5,101,821		$	2,780,531
Investment in held to maturity securities		-			2,008,539
Accounts receivable, net of allowance for credit losses of $14,916 and $12,945, respectively		861,630			762,811
Vehicle pooling costs		129,763			116,145
Inventories		41,870			39,661
Income taxes receivable		817			580
Prepaid expenses and other assets		40,279			46,361
Total current assets		6,176,180			5,754,628
Property and equipment, net		3,693,890			3,598,093
Operating lease right-of-use assets		91,454			99,708
Intangibles, net		57,292			62,832
Goodwill		523,473			517,779
Other assets		52,673			57,862
Total assets	$	10,594,962		$	10,090,902
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	549,171		$	591,831
Deferred revenue		31,383			30,440
Income taxes payable		16,627			41,141
Current portion of operating and finance lease liabilities		16,692			19,869
Total current liabilities		613,873			683,281
Deferred income taxes		87,625			80,625
Income taxes payable		6,786			35,635
Operating and finance lease liabilities, net of current portion		79,444			83,870
Total liabilities		787,728			883,411
Commitments and contingencies
Redeemable non-controlling interest		18,189			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; 963,290,932 and 967,478,690 shares issued and outstanding, respectively.		96			97
Additional paid-in capital		1,242,164			1,214,150
Accumulated other comprehensive loss		(87,291	)		(120,283	)
Retained earnings		8,634,076			8,093,069
Total stockholders’ equity		9,789,045			9,187,033
Total liabilities, redeemable noncontrolling interests and stockholders’ equity	$	10,594,962		$	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 January 31,						Six Months Ended January 31,
(In thousands, except per share amounts)	2026			2025			2026			2025
Service revenues and vehicle sales:
Service revenues	$	952,051		$	991,281		$	1,943,896		$	1,977,617
Vehicle sales		169,623			172,035			332,808			332,528
Total service revenues and vehicle sales		1,121,674			1,163,316			2,276,704			2,310,145
Operating expenses:
Facility operations		478,430			490,056			954,919			986,602
Cost of vehicle sales		150,432			147,707			291,975			285,885
General and administrative		104,102			99,342			210,406			205,080
Total operating expenses		732,964			737,105			1,457,300			1,477,567
Operating income		388,710			426,211			819,404			832,578
Other income (expense):
Interest income, net		49,987			40,747			103,492			86,294
Other income (expense), net		2,352			(3,907	)		5,276			(4,503	)
Total other income		52,339			36,840			108,768			81,791
Income before income taxes		441,049			463,051			928,172			914,369
Income tax expense		91,082			76,510			175,995			166,652
Net income		349,967			386,541			752,177			747,717
Less: Net loss attributable to redeemable noncontrolling interest		(765	)		(859	)		(2,269	)		(1,769	)
Net income attributable to Copart, Inc.	$	350,732		$	387,400		$	754,446		$	749,486

Basic net income per common share	$	0.36		$	0.40		$	0.78		$	0.78
Weighted average common shares outstanding		967,212			964,746			967,431			963,961

Diluted net income per common share	$	0.36		$	0.40		$	0.77		$	0.77
Diluted weighted average common shares outstanding		975,089			977,910			976,095			977,208

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

Copart, Inc.

Conso****lidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended January 31,						Six Months Ended January 31,
(In thousands)	2026			2025			2026			2025
Comprehensive income, net of tax:
Net income	$	349,967		$	386,541		$	752,177		$	747,717
Other comprehensive income:
Foreign currency translation adjustments		32,785			(26,821	)		32,992			(28,588	)
Comprehensive income		382,752			359,720			785,169			719,129
Less: Comprehensive (loss) income attributable to redeemable noncontrolling interest		(765	)		(859	)		(2,269	)		(1,769	)
Comprehensive income attributable to Copart, Inc.	$	383,517		$	360,579		$	787,438		$	720,898

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 (loss)		—			—			—			—			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
Net income (loss)		—			—			—			—			350,732			350,732			(765	)
Currency translation adjustment		—			—			—			32,785			—			32,785			—
Exercise of stock options, net of repurchased shares		597,365			—			7,293			—			(861	)		6,432			—
Stock-based compensation		44,947			—			9,663			—			—			9,663			—
Shares issued for Employee Stock Purchase Plan		224,177			—			7,460			—			—			7,460			—
Shares repurchased		(5,480,191	)		(1	)		(6,935	)		—			(211,248	)		(218,184	)		—
Balances at January 31, 2026		963,290,932		$	96		$	1,242,164		$	(87,291	)	$	8,634,076		$	9,789,045		$	18,189

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

Copart, Inc.

Consolidated Statement of Changes in Redeemable Noncontrolling Interest and Stockholders’ Equity (Continued)

(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, 2024		962,967,011	$	96	$	1,120,985	$	(142,972	)	$	6,545,902		$	7,524,011		$	24,544
Net income (loss)		—		—		—		—			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
Net income (loss)		—		—		—		—			387,400			387,400			(859	)
Currency translation adjustment		—		—		—		(26,821	)		—			(26,821	)		—
Exercise of stock options, net of repurchased shares		2,296,400		1		29,976		—			(1,764	)		28,213			—
Stock-based compensation		69,085		—		8,749		—			—			8,749			—
Shares issued for Employee Stock Purchase Plan		163,279		—		7,404		—			—			7,404			—
Balances at January 31, 2025		966,053,166	$	97	$	1,179,816	$	(171,560	)	$	7,292,904		$	8,301,257		$	22,775

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

Copart, Inc.

Consol****idated Statements of Cash Flows

(Unaudited)


	Six Months Ended January 31,
(In thousands)	2026			2025
Cash flows from operating activities:
Net income	$	752,177		$	747,717
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including debt cost		109,713			109,122
Allowance for credit losses		2,103			1,056
Equity in (earnings) losses of unconsolidated affiliates		(368	)		(61	)
Stock-based compensation		19,550			19,732
Gain on sale of property and equipment		(214	)		(194	)
Deferred income taxes		6,002			47
Changes in operating assets and liabilities:
Accounts receivable		(124,815	)		(133,024	)
Vehicle pooling costs		(13,086	)		(10,675	)
Inventories		(1,583	)		(16,175	)
Prepaid expenses, other current and non-current assets		4,862			4,976
Operating lease right-of-use assets and lease liabilities		533			614
Accounts payable and accrued liabilities		(38,672	)		44,765
Deferred revenue		700			(1,066	)
Income taxes receivable		(227	)		(48,239	)
Income taxes payable		(53,922	)		(58,194	)
Net cash provided by operating activities		662,753			660,401
Cash flows from investing activities:
Purchases of property and equipment		(177,660	)		(353,399	)
Assets and liabilities acquired in connection with acquisition		(4,694	)		(1,213	)
Proceeds from sale of property and equipment		9,712			662
Purchases of held to maturity securities		-			(458,542	)
Proceeds from held to maturity securities		2,035,000			1,940,000
Investment in unconsolidated affiliate		(3,737	)		-
Net cash provided by investing activities		1,858,621			1,127,508
Cash flows from financing activities:
Proceeds from the exercise of stock options		9,078			32,833
Proceeds from the issuance of Employee Stock Purchase Plan shares		7,460			7,404
Repurchases of common stock		(218,184	)		-
Payments for employee stock-based tax withholdings		(2,190	)		(2,484	)
Debt issuance costs		(1,534	)		-
Payments of finance lease obligations		(6	)		(40	)
Net cash (used) provided by financing activities		(205,376	)		37,713
Effect of foreign currency translation		5,292			(824	)
Net increase in cash, cash equivalents, and restricted cash		2,321,290			1,824,798
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	$	5,101,821		$	3,338,909
Supplemental disclosure of cash flow information:
Interest paid	$	1,405		$	1,371
Income taxes paid, net of refunds	$	227,470		$	277,051
Purchase of property and equipment through settlement of deposit	$	2,411		$	57,453

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

Copart, Inc.

Notes to Co****nsolidated Financial Statements

January 31, 2026

(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 January 31, 2026 and July 31, 2025, its consolidated statements of income, comprehensive income, changes in redeemable noncontrolling interests and stockholders’ equity for the three and six months ended January 31, 2026 and 2025, and its cash flows for the six months ended January 31, 2026 and 2025. 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 "2025 Form 10-K"). 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 the 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 January 31, 2026 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 acquisition 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 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)	January 31, 2026
	Amortized Cost		Gross Unrealized Gains		Fair Value
Investment in held to maturity securities	$	—	$	—	$	—


(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 January 23, 2026, the Company entered into a Senior Revolving Credit Agreement (the “2026 Credit Agreement”) by and among the Company, certain subsidiaries of the Company party thereto, the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent. The 2026 Credit Agreement provides for an unsecured revolving credit facility in an aggregate principal amount of up to $1,250 million, including subfacilities for standby letters of credit and swingline loans. The 2026 Credit Agreement matures on January 23, 2031. The 2026 Credit Agreement replaced the previous secured revolving credit facility under the credit agreement dated December 21, 2021 by and among the Company, certain subsidiaries of the Company party thereto, the lenders party thereto, and Bank of America, N.A., as the administrative agent (the “Second Amended and Restated Credit Agreement”), which was scheduled to mature on December 21, 2026.

Borrowings under the 2026 Credit Agreement bear interest based on the Company’s option, either (1) the applicable fixed rate plus 0.75% to 1.125% or (2) the daily rate plus 0.0% to 0.125%, in each case, depending on the Company’s consolidated total net leverage ratio. Additionally, the unused revolving commitments under the 2026 Credit Agreement are subject to the payment of a customary commitment fee at a range of 0.05% to 0.125%, depending on the Company’s consolidated total net leverage ratio. As of January 31, 2026, the unused capacity of $1,250 million was fully available to us.

The 2026 Credit Agreement contains representations and warranties, conditions, and covenants. As of January 31, 2026, we were in compliance with these financial covenants.

In connection with the 2026 Credit Agreement, the Company incurred $1.5 million in costs, which were capitalized as debt issuance fees. The debt issuance cost is amortized to interest expense over the term of the debt instrument 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:


	January 31, 2026				July 31, 2025
(In thousands)	Carrying Value Total		Fair Value Total		Carrying Value Total		Fair Value Total
Assets
Cash equivalents	$	4,389,083	$	4,394,687	$	2,196,593	$	2,204,512
Investment in held to maturity securities		—		—		2,008,539		2,024,114
Total Assets	$	4,389,083	$	4,394,687	$	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 six months ended January 31, 2026, 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 January 31,				Six Months Ended January 31,
(In thousands)	2026		2025		2026		2025
Weighted average common shares outstanding		967,212		964,746		967,431		963,961
Effect of dilutive securities		7,877		13,164		8,664		13,247
Weighted average common and dilutive potential common shares outstanding		975,089		977,910		976,095		977,208

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 2,664,176 and 1,131,328 options to purchase the Company’s common stock and restricted stock for the three months ended January 31, 2026 and 2025, respectively, and 4,742,689 and 2,158,733 options to purchase the Company’s common stock and restricted stock for the six months ended January 31, 2026 and 2025, 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 2025 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 January 31,				Six Months Ended January 31,
(In thousands)	2026		2025		2026		2025
General and administrative	$	7,849	$	7,498	$	15,233	$	16,089
Facility operations		2,382		1,819		4,317		3,643
Total stock-based compensation	$	10,231	$	9,317	$	19,550	$	19,732

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 $1.0 million in compensation expense related to these awards for the three months ended January 31, 2026 and 2025, and $1.2 million and $2.3 million in compensation expense related to these awards for the six months ended January 31, 2026 and 2025, respectively.

The following is a summary of activity for the Company’s stock options for the six months ended January 31, 2026:


	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		746			44.56		75		46.57
Exercises		(903	)		10.15		—		—
Forfeitures or expirations		(111	)		50.00		—		—
Outstanding as of January 31, 2026		12,219		$	23.60		6,070	$	24.97
Exercisable as of January 31, 2026		10,599		$	20.65		5,502	$	23.92

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 appears 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 six months ended January 31, 2026:


(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		530			45.29
Vested		(160	)	$	40.19
Forfeitures or expirations		(120	)		46.83
Outstanding as of January 31, 2026		2,028		$	48.37

NOTE 6 – Stock Repurchases

On September 22, 2011, the Company’s Board of Directors approved a 320 million share increase in the stock repurchase program, bringing the total current authorization to 784 million shares. The repurchases may be effected through solicited or unsolicited transactions in privately negotiated transactions or in the open market, including under plans complying with Rule 10b5-1 under the Securities Exchange act of 1934, as amended. No time limit has been placed on the duration of the stock repurchase program. Subject to applicable securities laws, such repurchases will be made at such times and in such amounts as the Company deems appropriate and may be discontinued at any time. The Company repurchased 5,480,191 shares of its common stock during the six months ended January 31, 2026 at a weighted average price of $39.82 per share totaling $218.2 million. The Company did not repurchase any common stock under the program during the six months ended January 31, 2025. As of January 31, 2026, the total number of shares repurchased under the program was 464 million, and subject to applicable limitations under Delaware law, 320 million shares were available for repurchase under the program.

NOTE 7 – Income Taxes

The Company’s effective income tax rates were 19.0% and 18.2% for the six months ended January 31, 2026 and 2025, 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 $3.0 million and $23.7 million for the three months ended January 31, 2026 and 2025, respectively, and $5.9 million and $28.3 million for the six months ended January 31, 2026 and 2025, respectively.

NOTE 8 – 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 9 – 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 (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 10 – 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 January 31, 2026						Three Months Ended January 31, 2025
(In thousands)	United States		International		Total		United States		International		Total
Service revenues	$	819,467	$	132,584	$	952,051	$	868,130	$	123,151	$	991,281
Vehicle sales		102,153		67,470		169,623		106,715		65,320		172,035
Total service revenues and vehicle sales		921,620		200,054		1,121,674		974,845		188,471		1,163,316
Facility operations		395,350		83,080		478,430		418,824		71,232		490,056
Cost of vehicle sales		96,375		54,057		150,432		92,807		54,900		147,707
General and administrative		88,423		15,679		104,102		87,321		12,021		99,342
Operating income	$	341,472	$	47,238	$	388,710	$	375,893	$	50,318	$	426,211

Depreciation and amortization, excluding debt costs	$	46,829	$	8,558	$	55,387	$	46,455	$	7,744	$	54,199
Interest income		46,958		3,029		49,987		39,149		1,598		40,747
Capital expenditures and acquisitions		58,875		10,738		69,613		153,212		20,868		174,080


	Six Months Ended January 31, 2026						Six Months Ended January 31, 2025
(In thousands)	United States		International		Total		United States		International		Total
Service revenues	$	1,675,001	$	268,895	$	1,943,896	$	1,728,120	$	249,497	$	1,977,617
Vehicle sales		199,233		133,575		332,808		194,265		138,263		332,528
Total service revenues and vehicle sales		1,874,234		402,470		2,276,704		1,922,385		387,760		2,310,145
Facility operations		793,835		161,084		954,919		842,441		144,161		986,602
Cost of vehicle sales		186,334		105,641		291,975		169,093		116,792		285,885
General and administrative		177,621		32,785		210,406		179,898		25,182		205,080
Operating income	$	716,444	$	102,960	$	819,404	$	730,953	$	101,625	$	832,578

Depreciation and amortization, excluding debt costs	$	92,238	$	17,191	$	109,429	$	92,370	$	15,456	$	107,826
Interest income		97,053		6,439		103,492		82,992		3,302		86,294
Capital expenditures and acquisitions		130,333		52,021		182,354		365,129		46,966		412,095


	January 31, 2026						July 31, 2025
(In thousands)	United States		International		Total		United States		International		Total
Total assets	$	9,220,373	$	1,374,589	$	10,594,962	$	8,834,063	$	1,256,839	$	10,090,902
Goodwill		390,422		133,051		523,473		390,422		127,357		517,779

NOTE 11 – Subsequent Events

Recent Share Repurchases:

Subsequent to the end of the second quarter ended January 31, 2026, through March 2, 2026, the Company repurchased 24,262,025 shares of its common stock at a weighted average price of $37.11 per share totaling $898.7 million.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 six months ended January 31, 2026, 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 (the "2025 Form 10-K").

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 and six months ended January 31, 2026 and 2025:


	Three Months Ended January 31,						Six Months Ended January 31,
(In percentages)	2026			2025			2026			2025
Service revenues and vehicle sales:
Service revenues		85	%		85	%		85	%		86	%
Vehicle sales		15	%		15	%		15	%		14	%
Total service revenues and vehicle sales		100	%		100	%		100	%		100	%

Operating expenses:
Facility operations		43	%		42	%		42	%		43	%
Cost of vehicle sales		13	%		13	%		13	%		12	%
General and administrative		9	%		9	%		9	%		9	%
Total operating expenses		65	%		64	%		64	%		64	%
Operating income		35	%		36	%		36	%		36	%
Other income (expense)		5	%		3	%		5	%		4	%
Income before income taxes		40	%		39	%		41	%		40	%
Income taxes		8	%		6	%		8	%		7	%
Net income		32	%		33	%		33	%		33	%

Comparison of the three and six months ended January 31, 2026 and 2025

The following table presents a comparison of service revenues for the three and six months ended January 31, 2026 and 2025:


	Three Months Ended January 31,										Six Months Ended January 31,
(In thousands)	2026		2025		Change			% Change			2026		2025		Change			% Change
Service revenues
United States	$	819,467	$	868,130	$	(48,663	)		(5.6	)%	$	1,675,001	$	1,728,120	$	(53,119	)		(3.1	)%
International		132,584		123,151	$	9,433			7.7	%		268,895		249,497	$	19,398			7.8	%
Total service revenues	$	952,051	$	991,281	$	(39,230	)		(4.0	)%	$	1,943,896	$	1,977,617	$	(33,721	)		(1.7	)%

Service Revenues. The decrease in service revenues during the three months ended January 31, 2026 of $(39.2) million, or (4.0)%, as compared to the same period last year resulted from (i) a decrease in the U.S. of $(48.7) million and (ii) an increase in International of $9.4 million. The decrease in the U.S. compared to the same period last year was primarily related to the one time revenue associated with hurricanes Helene and Milton recognized in fiscal year 2025. The growth in International, after excluding positive fluctuations in currency exchange rates of $8.4 million, was driven primarily by an increase in revenue per car, offset by a decrease in volume.

The decrease in service revenues during the six months ended January 31, 2026 of $(33.7) million, or (1.7)%, as compared to the same period last year resulted from (i) a decrease in the U.S. of $(53.1) million and (ii) an increase in International of $19.4 million. The decrease in the U.S. compared to the same period last year was primarily 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 $12.2 million, was driven primarily by an increase in revenue per car, offset by a decrease in volume.

The following table presents a comparison of vehicle sales for the three and six months ended January 31, 2026 and 2025:


	Three Months Ended January 31,										Six Months Ended January 31,
(In thousands)	2026		2025		Change			% Change			2026		2025		Change			% Change
Vehicle sales
United States	$	102,153	$	106,715	$	(4,562	)		(4.3	)%	$	199,233	$	194,265	$	4,968			2.6	%
International		67,470		65,320	$	2,150			3.3	%	$	133,575		138,263	$	(4,688	)		(3.4	)%
Total vehicle sales	$	169,623	$	172,035	$	(2,412	)		(1.4	)%	$	332,808	$	332,528	$	280			0.1	%

Vehicle Sales. The decrease in vehicle sales for the three months ended January 31, 2026 of $(2.4) million, or (1.4)%, as compared to the same period last year, resulted from (i) a decrease in the U.S. of $(4.6) million and (ii) an increase in International of $2.2 million. The decrease in the U.S. was primarily driven by a decrease in volume, offset by an increase in revenue per car, which we believe was due to a change in mix of vehicles sold. The decrease in International, after excluding positive fluctuations in currency exchange rates of $5.1 million, was primarily driven by a decrease in volume related to sellers switching to a consignment model, offset by an increase in revenue per car, which we believe was due to a change in mix of vehicles sold.

The increase in vehicle sales for the six months ended January 31, 2026 of $0.3 million, or 0.1%, as compared to the same period last year, resulted from (

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