Copart (NASDAQ:CPRT) executives pointed to softer claims activity and shifting insurance market dynamics as key drivers of lower global insurance volumes during the company’s fiscal second quarter of 2026, while emphasizing continued strength in auction returns, ongoing investment in capacity and technology, and a new pace of share repurchases.
Insurance volumes fell as claims activity stayed soft
CEO Jeff Liaw said global insurance units declined 9% in the quarter, or 4% excluding the impact of catastrophic (“CAT”) units from a year ago. In the U.S., insurance units declined 10.7%, or 4.8% excluding CAT units.
At the same time, Copart reiterated that total loss frequency continues to rise over the long term. Liaw cited U.S. total loss frequency of 24.2% in the fourth quarter of calendar 2025, up 10 basis points from a year earlier despite the prior-year period including hurricanes Helene and Milton. He also contrasted total loss frequency in 2015 (15.6%) with calendar 2025 (23.1%).
Company highlighted returns, liquidity, and cycle-time advantages
Liaw said Copart’s focus remains on delivering long-term economic and service outcomes for insurance clients, emphasizing auction returns and speed. He noted that while industry vehicle values have normalized from peaks seen during 2021 and 2022, the company is generating record average selling prices (ASPs) for U.S. insurance consignors.
Copart’s U.S. insurance ASPs increased 6% year-over-year in the quarter excluding CAT impacts, and management said U.S. insurance ASPs grew 9% year-over-year on that same ex-CAT basis. Liaw attributed pricing performance to the “scale and diversity” of Copart’s global buyer network, rising international participation, data-driven merchandising, and the company’s ability to find each vehicle its “highest and best use globally.”
He also highlighted operational initiatives aimed at cycle times, including the company’s tow network and its Title Express platform, which he said is “by a factor of 5x or more” the largest such platform in the industry and can, in many cases, deliver cycle times 10 days better than insurers can achieve on their own.
Second-quarter results: revenue down on lower units, partially offset by ASPs
CFO Leah Stearns said consolidated revenue declined 3.6% year-over-year to $1.12 billion, noting the prior year included revenue from more than 49,000 CAT-related vehicles. Excluding CAT, consolidated revenue increased 1.3%.
Service revenue declined 4% and purchased vehicle sales decreased 1.4%. Stearns said higher ASPs—up 6% on a reported basis and 7.1% excluding CAT—were offset by lower unit volumes, which declined 8% globally (down 3.6% excluding CAT). Global insurance units fell 9.3% (down 4.1% excluding CAT), while global non-insurance units decreased 2.7%.
Gross profit decreased 6.2% to $492.8 million. Stearns said the quarter included a $6.8 million one-time expense accrual related to international VAT. Adjusting for CAT and that VAT item, she said gross profit increased 0.4% and gross margin increased 178 basis points to 45%.
Operating income declined 8.8% to $388.7 million. Net income was $350.7 million, down 9.5%, and earnings per diluted share decreased 9.2% to $0.36.
Segment performance: U.S. pressured; international revenue grew
In the U.S. segment, Stearns said total units declined 9.5%, or 4.5% excluding CAT and direct buy. Insurance volumes decreased 10.7% (down 4.8% excluding CAT). Dealer services unit growth was 5%, while commercial consignment units marketed through Copart’s Blue Car channel declined 11.8%, which Stearns said reflected higher repair activity among rental customers. She added that fleet and bank and finance seller volume continued to grow at a “healthy double-digit pace.”
U.S. revenue declined 5.5% but was flat excluding prior-year CAT events. U.S. gross profit decreased 7.2% to $430 million (down 1.6% excluding CAT), with gross margin of 46.6%. Operating income was $341.5 million, down 9.2% year-over-year (down 2.3% excluding CAT), and operating margin was 37.1%.
Internationally, units declined less than 1% and grew 1% excluding CAT impacts. Insurance units decreased 2.6% (down 1% excluding CAT), while non-insurance units increased 9.1%. Stearns cited strong non-insurance growth across a diversified footprint, including the U.K. and Canada.
International revenue increased 6.1% (up 7.7% excluding CAT) to $200 million, including a $13.4 million favorable FX impact. International insurance ASPs rose 9%, gross profit grew 0.9%, and operating income was $47.2 million, representing a 23.6% operating margin.
Capital allocation: large cash position and stepped-up buybacks
Copart ended the quarter with approximately $6.4 billion of liquidity, including $5.1 billion in cash and cash equivalents and no debt, according to Stearns. She said free cash flow increased 58% year to date.
Stearns also said the company began repurchasing shares during the second quarter and continued repurchases under a 10b5-1 plan through February. Fiscal year to date, Copart repurchased over 13 million shares for an aggregate amount of over $500 million. Liaw said the company has used a range of repurchase tools over time and described the recent activity as driven by an “ordinary calculus” including valuation and interest rates, characterizing the decision as an opportunistic time to return capital.
On the Q&A, management also addressed capacity and technology topics. Executives said Copart is in a stronger land and capacity position than a decade ago, referencing the company’s prior “20-20-20 initiative” to acquire and expand facilities, while noting land investment remains a long-lead-time, dynamic planning process. Liaw also said Copart has deployed artificial intelligence across engineering and operations, and he cited moats including physical storage capacity, a global buyer base, an established online auction platform, and regulatory knowledge across geographies.
About Copart (NASDAQ:CPRT)
Copart (NASDAQ: CPRT) is a global provider of online vehicle auction and remarketing services, focused primarily on the sale of salvage and clean-title vehicles. The company operates a technology-driven auction platform that connects sellers — including insurance companies, vehicle finance firms, rental car companies, dealerships and fleet owners — with a broad buyer base consisting of vehicle dismantlers, recyclers, rebuilders and retail buyers. Copart’s business model centers on efficient vehicle disposition using digital bidding and logistics services to maximize recovery value for its clients.
Core services include hosting live and timed online auctions, vehicle listing and inspection support, title processing, and transportation and storage solutions.
