01—Abstract
Summary
Summary of the 10-Q filed June 3, 2025. Cited figures are marked; the original filing is the authoritative source.
Copart's 10-Q for the third quarter of fiscal 2025 (three and nine months ended April 30, 2025) shows continued top-line growth and strong cash generation.
Service revenues rose 9.3% year over year to $1.035 billiona in the quarter and 12.9% to $3.01 billion over nine months, led by the U.S. (up 8.2% and 11.8%, respectively) and International (up 17.5% and 21.0%). Operating income grew 3.3% to $451.5 million in the quarter, but operating margin slipped to 37% from 38% as facility operations and G&A expenses grew faster than revenue. Net income attributable to Copart rose 6.4% to $406.6 million, and diluted EPS was $0.42 versus $0.39.
Nine-month diluted EPS was $1.18b versus $1.07, helped by higher interest income and a lower effective tax rate of 18.6% versus 20.4%. Cash flow and balance sheet strength stand out. Operating cash flow for the nine months rose 31.7% to $1.36 billion, and cash, cash equivalents, and restricted cash increased to $2.37 billion.
Combined with $2.0 billionc in held-to-maturity Treasury bills, Copart has roughly $4.4 billion of liquidity, and the company carries no borrowings under its $1.25 billion revolver. Capital expenditures of $482.6 million over nine months reflect continued investment in land, facilities, and software. The company did not repurchase any shares during the period and has not paid a cash dividend since 1994, though management says it is considering buybacks, acquisitions, and dividends.
The main risk for investors is the U.S. Department of Justice investigation into potential money laundering violations related to auction platform members. Copart cannot estimate the range of possible loss or penalties. Management also disclosed roughly $56 milliond in one-time costs tied to Hurricanes Helene and Milton, which pressured U.S. facility operations expenses, and the company began implementing a new financial system in stages, which is a material internal control change to monitor.
02—Key points
Key Highlights
- Nine-month service revenues grew 12.9% to $3.01 billion, with U.S. up 11.8% and International up 21.0%, while three-month service revenues rose 9.3% to $1.03 billion.
- Three-month operating income rose 3.3% to $451.5 million, but operating margin declined to 37% from 38% as facility operations and G&A expenses outpaced revenue growth.
- Diluted EPS was $0.42 for the quarter (vs. $0.39) and $1.18 for nine months (vs. $1.07), supported by higher interest income and a lower nine-month effective tax rate of 18.6% (vs. 20.4%).
- Nine-month operating cash flow increased 31.7% to $1.36 billion, and cash plus restricted cash reached $2.37 billion, with another $2.0 billion held in Treasury bills.
- The company has no outstanding borrowings on its $1.25 billion revolving credit facility and reported a net leverage ratio of (2.21):1, indicating a net cash position.
- Capital expenditures reached $482.6 million over nine months, and no shares were repurchased under the 326 million-share remaining authorization.
- The DOJ is investigating potential anti-money laundering violations tied to auction platform members, and Copart cannot predict the range of possible loss or penalties.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2025filed June 3, 2025Financial Statements
Q3 FY2025 against Q3 FY2024
| Line item | Q3 FY2025Q3 FY2024 | Change |
|---|---|---|
| Revenue | $1.21B$1.13B | +7.5% |
| Operating Expenses | $760.17M$690.06M | +10.2% |
| Operating Income | $451.55M$437.20M | +3.3% |
| Net Income | $406.61M$382.29M | +6.4% |
| EPS (Basic) | $0.42$0.40 | +5.0% |
| EPS (Diluted) | $0.42$0.39 | +7.7% |
| Shares Outstanding (Basic) | 966.23M961.81M | +0.5% |
| Shares Outstanding (Diluted) | 978.09M976.45M | +0.2% |
05—Questions
Frequently Asked Questions
How did Copart's core revenue and profitability trend in the quarter ended April 30, 2025?
Service revenues rose 9.3% to $1,034.8 million, driven by higher revenue per car in the U.S. and volume and pricing gains internationally. Vehicle sales were roughly flat at $176.9 million, down 2.1%, as International vehicle sales fell 25.3% due to a shift to consignment and lower auction prices. Operating income grew 3.3% to $451.5 million, but the operating margin declined from 38% to 37%, as facility operations expenses rose 11.6% and G&A rose 14.1%.
What is driving the increase in facility operations and G&A expenses?
In the nine months, U.S. facility operations expenses rose $192.5 million, which includes about $56 million in one-time costs from Hurricanes Helene and Milton, along with higher subhaul, labor, and security costs. U.S. G&A rose $65.5 million, mainly due to outside services including legal, compliance, and system implementations; labor from sales force expansion; and travel. Management ties part of this to investment in the business and its expansion.
How strong is Copart's liquidity and is the balance sheet at risk?
Liquidity is strong. Cash, cash equivalents, and restricted cash totaled $2.37 billion at April 30, 2025, up from $1.51 billion at July 31, 2024, and held-to-maturity Treasury bills totaled $2.02 billion. The company had no borrowings on its $1.25 billion revolver, and the net leverage ratio was (2.21):1. Management believes current cash and operating cash flow are sufficient for the foreseeable future. Total stockholders' equity was $8.78 billion, and total liabilities were $869.5 million.
What are the most significant legal or regulatory risks disclosed?
The main risk is an ongoing U.S. Department of Justice investigation, led by the Consumer Protection Branch, into possible violations of money laundering laws related to how Copart screens and monitors auction platform members. Copart received a letter from the DOJ in October 2023, is cooperating with the investigation, and cannot predict the timing, scope, outcome, or potential fines and penalties. No accrual has been recorded, and the company cannot estimate the range of possible loss. This matter could have a material effect on results if it leads to significant penalties.
What capital allocation options does Copart have, and why hasn't it repurchased shares recently?
Copart did not repurchase any shares in the nine months ended April 30, 2025 or 2024, though 326 million shares remain available under the authorization, which has no time limit. Management says it is considering additional buybacks, acquisitions, and dividends for its excess cash. Copart has not paid a cash dividend since going public in 1994. Its credit agreement permits unlimited dividends if net leverage stays below 3.25:1, which the company's current ratio of (2.21):1 comfortably satisfies, so the lack of buybacks reflects management's choice rather than a covenant constraint.
06—Continue