8-K: Copart Reports Q2 FY2026 Earnings Decline

Copart, Inc. announced a decrease in revenue, gross profit, and net income for the second quarter of fiscal year 2026, with diluted earnings per share falling 10%.

Summary

• For the three months ended January 31, 2026, revenue decreased by 3.6% or $41.6 million, to $1.1 billion.
• Gross profit for the quarter decreased by 6.2% or $32.7 million, to $492.8 million.
• Net income attributable to Copart, Inc. for the quarter fell by 9.5% or $36.7 million, to $350.7 million.
• Fully diluted earnings per share for the quarter was $0.36, a 10.0% decrease from $0.40 in the prior year.
• For the six months ended January 31, 2026, revenue decreased by 1.4% or $33.4 million, to $2.3 billion.
• Gross profit for the six months decreased by 0.8% or $7.8 million, to $1 billion.
• Net income attributable to Copart, Inc. for the six months increased slightly by 0.7% or $5.0 million, to $754.4 million.
• Fully diluted earnings per share for the six months remained flat at $0.77 compared to the prior year.
• Cash, cash equivalents, and restricted cash significantly increased to $5.101 billion as of January 31, 2026, from $2.780 billion at July 31, 2025.
• The company repurchased $218.184 million of common stock during the six-month period.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a moderately negative report for the quarter, given the declines in key financial metrics like revenue, gross profit, and net income, although the year-to-date performance shows some resilience in net income and strong cash generation.

Positives

• Net income attributable to Copart, Inc. for the six months ended January 31, 2026, increased by 0.7% to $754.4 million.
• Fully diluted earnings per share for the six months remained stable at $0.77.
• Interest income, net, for the three months increased by 22.7% to $49.987 million.
• Other income (expense), net, for the three months improved significantly from a loss of $(3.907) million in the prior year to a gain of $2.352 million.
• Cash, cash equivalents, and restricted cash saw a substantial increase to $5.101 billion as of January 31, 2026, from $2.780 billion at July 31, 2025.
• International service revenues increased by $9.433 million (7.6%) for the three months and $19.398 million (7.8%) for the six months.

Negatives

• Revenue for the three months ended January 31, 2026, decreased by 3.6% or $(41.6) million.
• Gross profit for the three months decreased by 6.2% or $(32.7) million.
• Net income attributable to Copart, Inc. for the three months decreased by 9.5% or $(36.7) million.
• Fully diluted earnings per share for the three months decreased by 10.0% from $0.40 to $0.36.
• Operating income for the three months decreased by 8.8% to $388.710 million.
• Income tax expense for the three months increased by 19.0% to $91.082 million.
• United States service revenues decreased by $48.663 million (5.6%) for the three months and $53.119 million (3.1%) for the six months.

Risks

• The press release contains forward-looking statements subject to substantial risks and uncertainties.
• A more complete discussion of risks affecting the business can be found in Copart's latest Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, as filed with the Securities and Exchange Commission.

Future Outlook

The filing includes a standard cautionary note regarding forward-looking statements, indicating that actual results could differ materially due to various risks and uncertainties. No specific financial guidance or future outlook was provided in this press release.

Industry Context

StockSavvy.ai notes that the vehicle auction and remarketing industry, particularly for salvage vehicles, can be influenced by factors such as accident rates, insurance claim volumes, and used car market dynamics. While Copart's international segment showed growth, the decline in U.S. service revenues suggests potential headwinds in its primary market, which could be due to lower accident frequency, changes in total loss thresholds, or increased competition. The overall revenue and profit declines for the quarter, despite year-to-date net income growth, warrant closer examination of these underlying market conditions.

Comparison to Industry Standards

• StockSavvy.ai observes that a 3.6% decline in quarterly revenue and a 9.5% drop in net income for a market leader like Copart could signal broader industry challenges or specific operational issues. For instance, competitors like IAA, Inc. (now part of Ritchie Bros. Auctioneers) or smaller regional players might be experiencing similar pressures or, conversely, gaining market share.
• Without specific competitor data for the same period, a direct comparison is difficult, but these declines contrast with a generally robust used vehicle market in recent years.
• The significant increase in cash reserves, however, positions Copart strongly for potential strategic investments or continued share repurchases, which could be a differentiator against peers with tighter liquidity.

Stakeholder Impact

• Shareholders: Potential negative impact due to decreased quarterly earnings and EPS, though share repurchases and strong cash position might offer some support.
• Employees: No direct impact mentioned, but financial performance can indirectly affect future hiring or compensation decisions.
• Customers/Consignors: No direct impact mentioned, but operational efficiency and service quality remain key to retaining consignors (insurance companies, financial institutions) and members (buyers).
• Creditors: Strong cash position and stable year-to-date net income suggest continued financial health, posing no immediate concerns for creditors.

Next Steps

• Conduct a conference call on February 19, 2026, at 5:30 p.m. ET to discuss the results.
• Make a replay of the conference call available through May 2026 via www.copart.com/investorrelations.

Key Dates

Recommendation

While the quarterly results show declines in key metrics, the year-to-date performance is more stable, and the company maintains a very strong cash position. The declines could be cyclical or market-specific rather than indicative of fundamental weakness. Investors should hold to assess management's commentary during the conference call and monitor future trends, especially in the U.S. market, before making further decisions.

Keywords

Copart, CPRT, Earnings, Financial Results, Q2 2026, Vehicle Auctions, Online Auctions, Salvage Vehicles, Auto Remarketing, SEC Filing