Copart 10-Q 2026-04-30

Filed 2026-05-29. 2 sections, 173K 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 April 30**,** 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 May 27, 2026, 925,811,482 shares of the registrant’s common stock were outstanding.

Copart, Inc.

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

April 30, 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 Statements 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)	April 30, 2026			July 31, 2025
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash	$	3,354,142		$	2,780,531
Investment in held to maturity securities		845,570			2,008,539
Accounts receivable, net of allowance for credit losses of $14,636 and $12,945, respectively		794,472			762,811
Vehicle pooling costs		117,979			116,145
Inventories		49,632			39,661
Income taxes receivable		721			580
Prepaid expenses and other assets		54,157			46,361
Total current assets		5,216,673			5,754,628
Property and equipment, net		3,715,922			3,598,093
Operating lease right-of-use assets		88,066			99,708
Intangibles, net		53,943			62,832
Goodwill		522,703			517,779
Other assets		51,729			57,862
Total assets	$	9,649,036		$	10,090,902
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	598,290		$	591,831
Deferred revenue		33,494			30,440
Income taxes payable		37,650			41,141
Current portion of operating and finance lease liabilities		15,825			19,869
Total current liabilities		685,259			683,281
Deferred income taxes		89,733			80,625
Income taxes payable		5,308			35,635
Operating and finance lease liabilities, net of current portion		77,291			83,870
Total liabilities		857,591			883,411
Commitments and contingencies
Redeemable non controlling interest		17,181			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; 925,811,482 and 967,478,690 shares issued and outstanding, respectively.		93			97
Additional paid-in capital		1,207,201			1,214,150
Accumulated other comprehensive loss		(87,207	)		(120,283	)
Retained earnings		7,654,177			8,093,069
Total stockholders’ equity		8,774,264			9,187,033
Total liabilities, redeemable noncontrolling interests and stockholders’ equity	$	9,649,036		$	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 April 30,						Nine Months Ended April 30,
(In thousands, except per share amounts)	2026			2025			2026			2025
Service revenues and vehicle sales:
Service revenues	$	1,056,080		$	1,034,836		$	2,999,976		$	3,012,453
Vehicle sales		180,986			176,880			513,794			509,408
Total service revenues and vehicle sales		1,237,066			1,211,716			3,513,770			3,521,861
Operating expenses:
Facility operations		504,190			489,735			1,459,109			1,476,337
Cost of vehicle sales		160,277			169,714			452,252			455,599
General and administrative		108,317			100,722			318,723			305,802
Total operating expenses		772,784			760,171			2,230,084			2,237,738
Operating income		464,282			451,545			1,283,686			1,284,123
Other income (expense):
Interest income, net		38,813			42,776			142,305			129,070
Other (expense) income, net		(1,001	)		8,483			4,275			3,980
Total other income		37,812			51,259			146,580			133,050
Income before income taxes		502,094			502,804			1,430,266			1,417,173
Income tax expense		100,701			97,466			276,696			264,118
Net income		401,393			405,338			1,153,570			1,153,055
Less: Net loss attributable to redeemable noncontrolling interest		(1,008	)		(1,271	)		(3,277	)		(3,040	)
Net income attributable to Copart, Inc.	$	402,401		$	406,609		$	1,156,847		$	1,156,095

Basic net income per common share	$	0.43		$	0.42		$	1.21		$	1.20
Weighted average common shares outstanding		936,293			966,234			957,280			964,702

Diluted net income per common share	$	0.43		$	0.42		$	1.20		$	1.18
Diluted weighted average common shares outstanding		942,770			978,089			965,215			977,485

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

Copart, Inc.

Conso****lidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended April 30,						Nine Months Ended April 30,
(In thousands)	2026			2025			2026			2025
Comprehensive income, net of tax:
Net income	$	401,393		$	405,338		$	1,153,570		$	1,153,055
Other comprehensive income:
Foreign currency translation adjustments		84			58,260			33,076			29,672
Comprehensive income		401,477			463,598			1,186,646			1,182,727
Less: Comprehensive loss attributable to redeemable noncontrolling interest		(1,008	)		(1,271	)		(3,277	)		(3,040	)
Comprehensive income attributable to Copart, Inc.	$	402,485		$	464,869		$	1,189,923		$	1,185,767

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
Net income (loss)		—			—			—			—			402,401			402,401			(1,008	)
Currency translation adjustment		—			—			—			84			—			84			—
Exercise of stock options, net of repurchased shares		441,392			—			5,084			—			(571	)		4,513			—
Stock-based compensation		32,131			—			8,893			—			—			8,893			—
Shares repurchased		(37,952,973	)		(3	)		(48,940	)		—			(1,381,729	)		(1,430,672	)		—
Balances at April 30, 2026		925,811,482		$	93		$	1,207,201		$	(87,207	)	$	7,654,177		$	8,774,264		$	17,181

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
Net income (loss)		—		—		—		—			406,609			406,609			(1,271	)
Currency translation adjustment		—		—		—		58,260			—			58,260			—
Exercise of stock options, net of repurchased shares		726,815		—		7,338		—			(874	)		6,464			—
Stock-based compensation		32,680		—		8,603		—			—			8,603			—
Balances at April 30, 2025		966,812,661	$	97	$	1,195,757	$	(113,300	)	$	7,698,639		$	8,781,193		$	21,504

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

Copart, Inc.

Consol****idated Statements of Cash Flows

(Unaudited)


	Nine Months Ended April 30,
(In thousands)	2026			2025
Cash flows from operating activities:
Net income	$	1,153,570		$	1,153,055
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including debt cost		168,799			163,642
Allowance for credit losses		1,634			153
Equity in (earnings) losses of unconsolidated affiliates		(390	)		(135	)
Stock-based compensation		29,013			28,905
Loss (gain) on sale of property and equipment		1,665			(1,041	)
Deferred income taxes		8,274			67
Changes in operating assets and liabilities:
Accounts receivable		(57,293	)		(1,916	)
Vehicle pooling costs		(1,182	)		14,944
Inventories		(9,442	)		(180	)
Prepaid expenses, other current and non-current assets		(11,519	)		(935	)
Operating lease right-of-use assets and lease liabilities		853			915
Accounts payable and accrued liabilities		(5,479	)		56,060
Deferred revenue		2,839			1,961
Income taxes receivable		(128	)		1
Income taxes payable		(34,263	)		(54,222	)
Net cash provided by operating activities		1,246,951			1,361,274
Cash flows from investing activities:
Purchases of property and equipment		(258,553	)		(481,349	)
Assets and liabilities acquired in connection with acquisition		(4,747	)		(1,213	)
Proceeds from sale of property and equipment		11,077			4,533
Purchases of held to maturity securities		(845,570	)		(2,017,843	)
Proceeds from held to maturity securities		2,035,000			1,940,000
Investment in unconsolidated affiliate		(3,737	)		(3,177	)
Net cash provided by (used in) investing activities		933,470			(559,049	)
Cash flows from financing activities:
Proceeds from the exercise of stock options		14,162			40,171
Proceeds from the issuance of Employee Stock Purchase Plan shares		7,460			7,404
Repurchases of common stock		(1,632,537	)		-
Payments for employee stock-based tax withholdings		(2,762	)		(3,358	)
Debt issuance costs		(1,534	)		-
Payments of finance lease obligations		(11	)		(44	)
Net cash (used in) provided by financing activities		(1,615,222	)		44,173
Effect of foreign currency translation		8,412			5,990
Net increase in cash, cash equivalents, and restricted cash		573,611			852,388
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	$	3,354,142		$	2,366,499
Supplemental disclosure of cash flow information:
Interest paid	$	1,628		$	1,972
Income taxes paid, net of refunds	$	315,537		$	318,989
Purchase of property and equipment through settlement of deposit	$	2,850		$	64,050

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

Copart, Inc.

Notes to Co****nsolidated Financial Statements

April 30, 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 April 30, 2026 and July 31, 2025, its consolidated statements of income, comprehensive income, changes in redeemable noncontrolling interests and stockholders’ equity for the three and nine months ended April 30, 2026 and 2025, and its cash flows for the nine months ended April 30, 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 April 30, 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 interest represents 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 April 30, 2026 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)	April 30, 2026
	Amortized Cost		Gross Unrealized Gains		Fair Value
Investment in held to maturity securities	$	845,570	$	878	$	846,448


(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 April 30, 2026, the unused capacity of $1,228 million was available to us.

The 2026 Credit Agreement contains representations and warranties, conditions, and covenants. As of April 30, 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:


	April 30, 2026				July 31, 2025
(In thousands)	Carrying Value Total		Fair Value Total		Carrying Value Total		Fair Value Total
Assets
Cash equivalents	$	2,667,594	$	2,672,268	$	2,196,593	$	2,204,512
Investment in held to maturity securities		845,570		846,448		2,008,539		2,024,114
Total Assets	$	3,513,164	$	3,518,716	$	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 nine months ended April 30, 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 April 30,				Nine Months Ended April 30,
(In thousands)	2026		2025		2026		2025
Weighted average common shares outstanding		936,293		966,234		957,280		964,702
Effect of dilutive securities		6,477		11,855		7,935		12,783
Weighted average common and dilutive potential common shares outstanding		942,770		978,089		965,215		977,485

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 3,461,086 and 1,125,915 options to purchase the Company’s common stock and restricted stock for the three months ended April 30, 2026 and 2025, respectively, and 8,203,775 and 3,366,467 options to purchase the Company’s common stock and restricted stock for the nine months ended April 30, 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 our 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 April 30,				Nine Months Ended April 30,
(In thousands)	2026		2025		2026		2025
General and administrative	$	7,583	$	7,018	$	22,816	$	23,107
Facility operations		1,880		2,155		6,197		5,798
Total stock-based compensation	$	9,463	$	9,173	$	29,013	$	28,905

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 $0.8 million in compensation expense related to these awards for the three months ended April 30, 2026 and 2025, and $1.8 million and $3.1 million in compensation expense related to these awards for the nine months ended April 30, 2026 and 2025, respectively.

The following is a summary of activity for the Company’s stock options for the nine months ended April 30, 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		(1,345	)		10.53		—		—
Forfeitures or expirations		(476	)		47.95		—		—
Outstanding as of April 30, 2026		11,412		$	23.32		6,070	$	24.97
Exercisable as of April 30, 2026		10,354		$	21.32		5,596	$	24.06

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 nine months ended April 30, 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		596			45.05
Vested		(208	)		40.15
Forfeitures or expirations		(245	)		49.84
Outstanding as of April 30, 2026		1,921		$	47.77

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 43,433,164 shares of its common stock during the nine months ended April 30, 2026 at a weighted average price of $37.63 per share totaling $1,632.5 million. The Company did not repurchase any common stock under the program during the nine months ended April 30, 2025. As of April 30, 2026, the total number of shares repurchased under the program was 502 million, and subject to applicable limitations under Delaware law, 282 million shares were available for repurchase under the program.

NOTE 7 – Income Taxes

The Company’s effective income tax rates were 19.4% and 18.6% for the nine months ended April 30, 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 $1.7 million and $6.3 million for the three months ended April 30, 2026 and 2025, respectively, and $7.5 million and $34.8 million for the nine months ended April 30, 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 9, 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, or "CODM", the Company's Chief Executive Officer, allocates resources and measures results. The Company's CODM evaluates the performance of its reportable segments and allocates resources based on segment Operating Income. This measure is used to assess profitability, guide decisions regarding capital investment, and evaluate the performance of segment leadership.

The following table presents financial information by segment. The specific line items in the tables represent the significant segment expenses reviewed by the CODM:


	Three Months Ended April 30, 2026						Three Months Ended April 30, 2025
(In thousands)	United States		International		Total		United States		International		Total
Service revenues	$	895,464	$	160,616	$	1,056,080	$	898,625	$	136,211	$	1,034,836
Vehicle sales		107,398		73,588		180,986		107,832		69,048		176,880
Total service revenues and vehicle sales		1,002,862		234,204		1,237,066		1,006,457		205,259		1,211,716
Facility operations		419,714		84,476		504,190		412,895		76,840		489,735
Cost of vehicle sales		99,024		61,253		160,277		113,853		55,861		169,714
General and administrative		93,679		14,638		108,317		87,244		13,478		100,722
Operating income	$	390,445	$	73,837	$	464,282	$	392,465	$	59,080	$	451,545

Depreciation and amortization, excluding debt issuance costs	$	50,259	$	8,724	$	58,983	$	46,461	$	7,955	$	54,416
Interest income, net		35,439		3,374		38,813		39,262		3,514		42,776
Capital expenditures and acquisitions		75,213		5,733		80,946		62,906		7,561		70,467


	Nine Months Ended April 30, 2026						Nine Months Ended April 30, 2025
(In thousands)	United States		International		Total		United States		International		Total
Service revenues	$	2,570,465	$	429,511	$	2,999,976	$	2,626,745	$	385,708	$	3,012,453
Vehicle sales		306,631		207,163		513,794		302,097		207,311		509,408
Total service revenues and vehicle sales		2,877,096		636,674		3,513,770		2,928,842		593,019		3,521,861
Facility operations		1,213,549		245,560		1,459,109		1,255,336		221,001		1,476,337
Cost of vehicle sales		285,356		166,896		452,252		282,946		172,653		455,599
General and administrative		271,301		47,422		318,723		267,142		38,660		305,802
Operating income	$	1,106,890	$	176,796	$	1,283,686	$	1,123,418	$	160,705	$	1,284,123

Depreciation and amortization, excluding debt issuance costs	$	142,497	$	25,915	$	168,412	$	138,831	$	23,411	$	162,242
Interest income, net		132,492		9,813		142,305		122,254		6,816		129,070
Capital expenditures and acquisitions		205,546		57,754		263,300		428,035		54,527		482,562


	April 30, 2026						July 31, 2025
(In thousands)	United States		International		Total		United States		International		Total
Total assets	$	8,227,203	$	1,421,833	$	9,649,036	$	8,834,063	$	1,256,839	$	10,090,902
Goodwill		390,422		132,281		522,703		390,422		127,357		517,779

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 nine months ended April 30, 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 nine months ended April 30, 2026 and 2025:


	Three Months Ended April 30,						Nine Months Ended April 30,
(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		40	%		41	%		41	%		42	%
Cost of vehicle sales		13	%		14	%		13	%		13	%
General and administrative		9	%		8	%		9	%		9	%
Total operating expenses		62	%		63	%		63	%		64	%
Operating income		38	%		37	%		37	%		36	%
Other income (expense)		3	%		4	%		4	%		4	%
Income before income taxes		41	%		41	%		41	%		40	%
Income taxes		8	%		8	%		8	%		7	%
Net income		33	%		33	%		33	%		33	%

Comparison of the three and nine months ended April 30, 2026 and 2025

The following table presents a comparison of service revenues for the three and nine months ended April 30, 2026 and 2025:


	Three Months Ended April 30,										Nine Months Ended April 30,
(In thousands)	2026		2025		Change			% Change			2026		2025		Change			% Change
Service revenues
United States	$	895,464	$	898,625	$	(3,161	)		(0.4	)%	$	2,570,465	$	2,626,745	$	(56,280	)		(2.1	)%
International		160,616		136,211	$	24,405			17.9	%		429,511		385,708	$	43,803			11.4	%
Total service revenues	$	1,056,080	$	1,034,836	$	21,244			2.1	%	$	2,999,976	$	3,012,453	$	(12,477	)		(0.4	)%

Service Revenues. The increase in service revenues during the three months ended April 30, 2026 of $21.2 million, or 2.1 %, as compared to the same period last year resulted from (i) a decrease in the U.S. of $(3.2) million and (ii) an increase in International of $24.4 million. The decrease in the U.S. compared to the same period last year was primarily driven by a decrease in volume, partially offset by an increase in revenue per car. The growth in International, after excluding positive fluctuations in currency exchange rates of $8.7 million, was driven primarily by an increase in volume and an increase in revenue per car.

The decrease in service revenues during the nine months ended April 30, 2026 of $(12.5) million, or (0.4)%, as compared to the same period last year resulted from (i) a decrease in the U.S. of $(56.3) million and (ii) an increase in International of $43.8 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 $20.9 million, was driven primarily by an increase in revenue per car and an increase in volume.

The following table presents a comparison of vehicle sales for the three and nine months ended April 30, 2026 and 2025:


	Three Months Ended April 30,										Nine Months Ended April 30,
(In thousands)	2026		2025		Change			% Change			2026		2025		Change			% Change
Vehicle sales
United States	$	107,398	$	107,832	$	(434	)		(0.4	)%	$	306,631	$	302,097	$	4,534			1.5	%
International		73,588		69,048	$	4,540			6.6	%	$	207,163		207,311	$	(148	)		(0.1	)%
Total vehicle sales	$	180,986	$	176,880	$	4,106			2.3	%	$	513,794	$	509,408	$	4,386			0.9	%

Vehicle Sales. The increase in vehicle sales for the three months ended April 30, 2026 of $4.1 million, or 2.3 %, as compared to the same period last year, resulted from (i) a decrease in the U.S. of $(0.4) million and (ii) an increase in International of $4.5 million. The decrease in the U.S. was primarily driven by a decrease in volume, offset by an increase in revenue per car, which was due to a change in mix of vehicles sold. The increase in International, after excluding positive fluctuations in currency exchange rates of $4.4 million, was primarily driven by an increase in revenue per car, which was due to a change in mix of vehicles sold.

The increase in vehicle sales for the nine months ended April 30, 2026 of $4.4 million, or 0.9%, as compared to the same period last year, resulted from (i) an increase in the U.S. of $4.5 million and (ii) a decrease in International of $(0.1) million. The increase in the U.S. was primarily driven by an increase in revenue pe

Showing the first 8K of 116K characters. Open the full section