01—Abstract
Summary
Summary of the 10-Q filed March 3, 2026. Cited figures are marked; the original filing is the authoritative source.
Copart's 10-Q for the quarter ended January 31, 2026 shows a company that remains highly profitable but with flat-to-slightly-down top-line trends.
Total service revenues and vehicle sales for the three months were $1,121.7 milliona, down 3.6% from $1,163.3 million a year earlier, driven by a $48.7 million decline in U.S. service revenue that management attributes mainly to one-time revenue from Hurricanes Helene and Milton recognized in fiscal 2025. Operating income fell 8.8% to $388.7 million and the operating margin contracted to 35% from 37%, while net income attributable to Copart fell to $350.7 million ($0.36 per diluted share) from $387.4 million. Interest income rose to $50.0 million, cushioning the decline in earnings, as management shifted cash into U.S. Treasury Bills and cash equivalents.
The balance sheet strengthened considerably. Cash, cash equivalents and restricted cash reached $5.10 billionb, up from $2.78 billion at July 31, 2025, after the held-to-maturity Treasury bills matured and were not reinvested in that category. Working capital rose to $5.56 billion.
Operating cash flow was $662.8 millionc for the six months, roughly flat year over year. Capital expenditures fell sharply to $177.7 million from $353.4 million, and the company repurchased 5.48 million shares for $218.2 million at a weighted average price of $39.82. Management also entered a new unsecured $1.25 billion revolving credit facility maturing in January 2031, replacing the prior facility that was due December 2026.
The main investor watch items are the continued U.S. revenue softness, the pending U.S. Department of Justice money-laundering investigation for which the company cannot estimate a loss range, and the shift toward consignment models in international markets that is reducing volumes there. Given the strong liquidity position, investors may focus on how management deploys its cash between buybacks, acquisitions, capacity expansion and possible dividends.
02—Key points
Key Highlights
- Total service revenues and vehicle sales fell 3.6% to $1,121.7 million in Q2 FY2026, with U.S. service revenue down $48.7 million largely due to prior-year hurricane-related one-time revenue.
- Operating income declined 8.8% to $388.7 million, and operating margin compressed to 35% from 37% in the prior-year quarter.
- Net income attributable to Copart was $350.7 million, or $0.36 per diluted share, versus $387.4 million or $0.40 a year earlier.
- Cash, cash equivalents and restricted cash rose to $5.10 billion from $2.78 billion at fiscal year-end, with working capital of $5.56 billion.
- Capital expenditures dropped to $177.7 million in the first six months from $353.4 million a year earlier, boosting free cash flow.
- The company repurchased 5.48 million shares for $218.2 million and has 320 million shares remaining under its authorization.
- A new unsecured $1.25 billion revolving credit facility was entered January 23, 2026, maturing in 2031; the company was in covenant compliance at quarter end.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed March 3, 2026Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $1.12B$1.16B | −3.6% |
| Operating Expenses | $732.96M$737.11M | −0.6% |
| Operating Income | $388.71M$426.21M | −8.8% |
| Net Income | $350.73M$387.40M | −9.5% |
| EPS (Basic) | $0.36$0.40 | −10.0% |
| EPS (Diluted) | $0.36$0.40 | −10.0% |
| Shares Outstanding (Basic) | 967.21M964.75M | +0.3% |
| Shares Outstanding (Diluted) | 975.09M977.91M | −0.3% |
05—Questions
Frequently Asked Questions
Why did Copart's revenue decline in the latest quarter?
Service revenues fell $39.2 million, or 4.0%, to $952.1 million. The U.S. decline of $48.7 million was primarily due to one-time revenue from Hurricanes Helene and Milton recognized in fiscal 2025. International service revenue grew $9.4 million, driven by higher revenue per car, partly offset by lower volume. Vehicle sales were down 1.4% for the quarter.
Is Copart's profitability weakening?
Operating income declined 8.8% to $388.7 million, and operating margin fell to 35% from 37%. Facility operations expenses fell 2.4%, but cost of vehicle sales and general and administrative expenses rose. Interest income of $50.0 million and higher other income partially offset the operating decline, leaving pre-tax income down 4.8%.
What is the company doing with its large cash balance?
Cash rose to $5.10 billion, and management says the cash is intended for stock repurchases, acquisitions, facility expansion and possibly dividends. In the first half the company bought back $218.2 million of stock and spent $177.7 million on capital expenditures. Management indicated the new $1.25 billion credit facility may be drawn to fund expansion.
What legal risks does Copart face?
The U.S. Department of Justice is investigating potential violations of money-laundering laws related to the company's auction platform member controls. Copart received a DOJ letter in October 2023 and is cooperating. The company says it cannot predict the duration, scope or outcome of any proceeding or estimate a range of possible loss, and no accrual has been disclosed for this matter.
Did the company change its debt arrangements?
Yes. On January 23, 2026, Copart replaced its secured revolving facility, which was due in December 2026, with a $1.25 billion unsecured facility maturing in January 2031 led by Wells Fargo. Borrowing costs are tied to the company's net leverage ratio, and the facility was fully undrawn and available at January 31, 2026.
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