Copart (CPRT) — Q3 FY2026 Earnings Recap

Results vs. Consensus

Q3 FY26 Scorecard

YoY Comparison

QoQ Comparison

Segment Performance

US Segment

US revenue $1.00B (essentially flat, –0.4%) as +4.1% insurance ASP and +3.7% non-insurance ASP growth was offset by unit volume declines. Total units –4.2%; insurance units –4.2%; Dealer Services and powersports units +1%; BluCar commercial consignment +4%+; combined fleet and finance double-digit growth (with rental-customer repair-activity headwind persisting from Q2). Copart Direct units –26.3% as low-value units continue to migrate to the direct-buy referral channel. US inventory –4.7% YoY; US assignments declined low-single-digit. US gross profit $484.1M (+0.9%); gross margin 48.3%; operating income $390.4M; operating margin 38.1%.

International Segment

International revenue $234.2M (+14.1% reported, +7.9% ex-FX) — the strongest segment-revenue growth print in our coverage. Service revenue +17.9% driven by 10.5% fee revenue per unit growth + strong volume growth. Insurance ASPs +8.4%; non-insurance ASPs +16.7%. Total units +5.9%; insurance units +4.6%; non-insurance units +11.2%. Inventory +10%+; assignments +low teens. Gross profit +21.9%; operating income $73.8M at 31.5% operating margin — a record. UK, Germany, and Canada all contributed; Germany continued the multi-year consignment-conversion progress.

Purple Wave (Equipment Auction)

GTV +25%+ TTM (vs +17% at Q2, +10% at Q1) — three quarters of acceleration through the heavy-equipment industry's tariff-cycle bottom. Growth from territory expansion (from Central Time Zone focus out to both coasts) and enterprise account development. Sales-force team now 2.5-3x size at acquisition.

Key Topics & Management Commentary

1. Revenue Back to Growth — The Cycle Inflection

"For the third quarter, consolidated revenue grew to $1.24 billion, up 2.1% year-over-year, driven by strength in both service and purchased vehicle sales. During the quarter, we continued to see expansion in average selling prices, which rose 4.6% and more than offset a modest decline in unit volumes of 2.4%." — Leah Stearns, CFO

The single most important data point in the print: revenue is back to positive YoY growth after three consecutive quarters of contraction (+2.9% ex-cat in Q1, +1.3% ex-cat in Q2, +2.1% reported in Q3). ASP expansion is doing the work; volumes are stabilizing but not yet growing. The cycle floor on US insurance units appears to have been Q2 FY26 at –10.7%; we are now visibly into the recovery side of the cycle.

2. Total Loss Frequency: 23.6% in Q1 Calendar 2026

"Total loss frequency for the first calendar quarter 2026 reached 23.6%, an increase of almost 5 full percentage points over the past 4 years. Although we always report this metric, it sounds like we described it as an industry metric, we are very much not passive beneficiaries of an increase in total loss frequency. We have helped to drive it upwards, and we view it as our ongoing responsibility to drive ever better auction returns, which then increases the attractiveness of the total loss pathway to insurance carriers who are considering various possibilities for resolving their claims." — Jeff Liaw, CEO

TLF print at 23.6% for Q1 cal 2026, up nearly 500bp over 4 years — translating to roughly 125bp/year of secular expansion, which compares favorably to Copart's long-run multi-decade trajectory from 5% in 1990. The "not passive beneficiaries" framing is a structural insight: Copart's auction returns enhance the economics of total-loss decisions for carriers, which mechanically pulls more vehicles into the total-loss pathway over time. The flywheel goes both ways — better returns → more total losses → more vehicles → broader buyer base → still better returns.

3. The Crossover-Buyer Flywheel — Quantified

"We call crossover buyers those members who first discover Copart and engage with us, in search of a vehicle sold by rental car companies, financial institutions, dealers and the like, who then discover the wealth of product available from insurance sellers and then engage as buyers there as well. Looking back over the past 3 years, of the more than 30,000 buyers who first entered the Copart ecosystem by virtue of those noninsurance vehicles, a strong majority would bid on an insurance vehicle within the first 90 days of their engagement." — Jeff Liaw, CEO

This is the cleanest quantification of the non-insurance-to-insurance flywheel Copart has ever provided. 30,000+ buyers entered through non-insurance over 3 years; a strong majority crossover to insurance within 90 days. The implication: every dollar invested in commercial consignment growth (rental, fleet, finance, dealer) also serves insurance ASP growth by widening the bidder population for insurance vehicles. The two segments are not parallel revenue streams; they are reinforcing nodes of a single network.

4. International Buyer Network Resilience Through Conflict

"International buyers are a critical driver of these auction returns and today represent more than 1/3 of the volumes sold at U.S. Copart auctions and nearly half of our auction proceeds. In any given month or quarter, the precise mix of participating countries can surely vary. For example, given recent conflicts, direct participation in U.S. auctions from certain Middle Eastern markets has declined year-over-year. What has sustained overall demand has been the breadth and diversification of this buyer base. As certain corridors moderated, others expanded to fill the gap, including parts of Central Europe, West Africa, Central America and the Caribbean. The virtue of robust auction liquidity is that no single seller or buyer and, in fact, no single region, country or currency unduly influences the auction outcomes we deliver to our sellers." — Jeff Liaw, CEO

The buyer-network depth is being stress-tested by real-world events. Middle Eastern direct participation has softened on regional conflict; the network has absorbed the shock by expanding in Central Europe, West Africa, Central America, and the Caribbean. The 160+ country footprint is precisely the kind of diversification that allows aggregate ASPs to set records despite specific-corridor disruption.

5. Buyback Accelerated: $1.6B+ YTD / 43.4M+ Shares

"We continue to repurchase shares during the third quarter through a combination of 10b5-1 and open market transactions. Fiscal year-to-date, we have repurchased over 43.4 million shares for an aggregate amount of over $1.6 billion, underscoring our confidence in the future growth prospects for Copart and the long-term value of our business." — Leah Stearns, CFO

The buyback ramp is meaningfully more aggressive than what Q2 implied. From Q2 close: $500M+ YTD across 13M+ shares. Q3 incremental: $1.1B+ in a single quarter, 30.4M+ additional shares retired. This is the largest single-quarter repurchase in Copart's history and an unmistakable signal that the capital-return inflection is structural rather than gestural.

6. US Insurance ASPs at Seasonally-Adjusted Record

"Despite the logistical and economic disruptions of global conflict, U.S. insurance ASPs increased 4.1% year-over-year for the quarter, reaching a seasonally adjusted all-time record high for Copart insurance ASPs in the third quarter." — Jeff Liaw, CEO

US insurance ASPs +4.1% — a moderation from Q1's +8.4% and Q2's +6%/+9% ex-cat, but at a seasonally-adjusted all-time record. The deceleration partly reflects the Manheim normalization Stearns has been flagging since FY25; the absolute record status reflects the underlying liquidity advantage.

7. Pure Sale Mix at All-Time Highs

"Our sellers vote with their feet by entrusting ever more of their volume to us on a pure sale basis. They know that by virtue of Copart's buyer recruitment, product discovery and auction management practices that we will yield the highest and best value the first time through our auction. And in fact, today, for U.S. insurance sellers at Copart, the mix of pure sale units is at all-time highs. We estimate that our pure sale insurance volume is literally an order of magnitude higher than what is available at other similar platforms." — Jeff Liaw, CEO

Pure-sale mix at all-time highs — meaning carriers increasingly trust the platform to find the best price without setting reserves. The "order of magnitude higher than similar platforms" comparison is the kind of competitive moat metric that translates directly to value capture: pure-sale auctions generate higher net proceeds for carriers (no friction from unsuccessful first-pass auctions) AND lower operational burden (no managed-reserve administration), making the Copart platform structurally cheaper to use even at higher fee rates.

8. Long-Haul Delivery — New Product Scaling

"On the long-haul side, that's an additional product that we have really always offered to our members. However, we shifted our market — our product offering a little over 12 months ago. We've seen rapid adoption of it and are quite pleased with the level of buyer participation that we've seen effectively procure long-haul delivery through the Copart delivered product. So we believe it reduces friction. It gives our buyers certainty in terms of cost upfront. And we're — like I said, we're pleased with how that's progressing. And just in terms of overall impact for the quarter, we saw about $15 million of year-over-year increase in cost on the facility ops line related to our long-haul delivery product. And that product is generating a nice margin for us as well as the revenue line." — Leah Stearns, CFO

The domestic long-haul delivery service is a year-old reformulation of an existing offering. $15M YoY increase in facility ops cost, generating positive margin and reducing buyer friction. This is the kind of adjacency expansion that compounds quietly — every dollar of friction removed for the buyer marginally broadens the participating bidder pool, which translates to ASP support.

9. SAAR Decline Since 2020 — A Bear Question, Quietly Dismantled

"For us, the catalyst is much less when the cars enter the ecosystem in the first place. So whether the car was sold originally in '18, '19, '20 or '21, is not especially of consequence to us. What really matters to us is that the vehicles are on the road period, right? There are cars being driven miles being traversed in the cars themselves and then, of course, collision rates, total loss rates as well. So at least in theory, even at the extremes, if you completely eliminated all new cars sold in 2021 altogether, which is not that far from the truth, given what we now know of the semiconductor crisis at the time, that doesn't have any real pronounced effects given the way our supply is a layer cake of more than a decade's worth of new car shipments, right? So any given 1 or 2 or 3 years of disruption, so long as it doesn't coincide with a dramatic decline in miles driven, which, in turn, would really be the independent variable of consequence, not the new cars to begin with." — Jeff Liaw, CEO

One of the recurring bear arguments is that the 2020-2022 SAAR collapse will translate to a 5-7 year forward "donut hole" in salvage volumes (particularly as those COVID-vintage cars hit prime total-loss age). Liaw's response was straightforward: the relevant independent variable is miles driven, not new car shipments. The 300M-vehicle US fleet is a decade-plus layer cake; any single-year cohort gap is structurally inconsequential.

10. AI in the Insurance Industry — Excited and Terrified

"When it comes to catalysts for change in the future, definitely some discussion of near-term trends like the conflict that we and the world find ourselves in. We do talk about artificial intelligence and what it means for claims, what it means for insurance companies. As you might imagine, they are both excited and terrified of it, right? An insurance company by its nature have to be very thoughtful and rigorous about new tools that are deployed... I think the insurance industry, broadly speaking, I would say, is exploring AI certainly across the multiple dimension of its industry. But if anything, we understand it on the claims side as well as anyone, right? They will consider it for marketing. Certainly, underwriting. Certainly, repricing and the like and CRM and so forth. On the claims end, if anything, that's a language we may speak more fluently than they do as institutions." — Jeff Liaw, CEO

The Insurance Advisory Board conversation reportedly centered heavily on AI deployment. Liaw's framing — that Copart's claims-side AI fluency exceeds many carriers' internal AI capability — positions the company to embed deeper into carrier workflows via AI-powered total-loss decisioning, document processing, photo-based damage assessment, etc.

11. Whole Car / Non-Insurance TAM Expansion

"Eventually, the TAM, when you consider all of the auction-mediated vehicles that are not from insurance companies in the United States, that's 15 million plus, right? And not all of them are day 1 addressable for us. But as total loss frequency rises, as we earn the right to sell more of those cars from the noninsurance sellers with each passing year, we earn the right to sell more of those cars as well. So I think you're right, it is a spectrum, and we are moving up and to the right on that spectrum." — Jeff Liaw, CEO

The non-insurance auction TAM is 15M+ vehicles annually in the US alone — comfortably larger than the salvage market. Copart's path into the higher-value, less-damaged tier of that market is incremental ("up and to the right on that spectrum"): starting with damaged repos and rental fleet de-fleet vehicles, earning trust with each sale, eventually accessing higher-value voluntary repos and corporate de-fleet.

Analyst Q&A

Fuel Costs and the Hybrid Tow Network

The opening question on fuel-cost dynamics surfaced one of the under-appreciated operational moats: the hybrid tow network structure of in-house fleet plus "Truck-in-a-Box" supported contractors plus traditional third-party subcontractors. Management treated fuel as a microeconomic, market-by-market input cost that the company manages with rate adjustments and supplier-relationship economics:

Q: "I want to start on fuel. Fuel prices, transportation costs are up across the economy and talked about a lot in general and was wondering if you could talk — remind us how it flows through for Copart now. I think years ago, it was all company fleet, then you outsourced your fleet. I think you kind of have a hybrid towing fleet now. So if you could give us color on the impact and do you charge surcharges, pricing to your customers? Or how do you mitigate fuel as well?" — Bob Labick, CJS Securities

A: "The fuel — we are, as you noted, a hybrid. We do manage our own in-house truck fleet. We do have a substantial program that we call Truck In a Box in which we help contractors and help support their businesses with a structured lease program and a structured tow program with us as well. So we have cultivated liquidity on the towing side with some mix of our owned assets as well as the supported third parties as well. And then as you know, for many years, we have leveraged the — a large third-party subcontractor network as well. So all three of the above. And not surprisingly, fuel is very relevant to all of them. And so we have been thoughtfully responsive with them as necessary to adjust rates, to ensure ongoing service and to ensure that they also can long term prosperously support us, our business as well as the business of our clients. So it's a microeconomic decision market by market, but we do have to account, of course, for that input cost in our business." — Jeff Liaw, CEO

SAAR Decline Impact on Forward Salvage Volumes

A thoughtful forward-looking question on whether the 2020-2022 SAAR collapse will translate to a cohort gap in salvage volumes 5-7 years out, when those vintages hit peak total-loss age. The exchange concluded with the cleanest framing of why miles driven, not vehicle vintage, is the relevant independent variable for Copart volume forecasting — and a useful articulation of the broader 5-year growth driver framework:

Q: "The decline in new car sales and SAAR kind of started in 2020 from COVID. And how do you see that as — is there an impact on expected salvage volumes in 2027 and beyond as those cohorts start hitting the sweet spot for total loss frequency? ... Can you talk about the kind of the macro drivers and that one in particular, the decline in SAAR? And then more so just the biggest Copart-specific growth drivers over the next 5 years, noting that macro is a little bit tough." — Bob Labick, CJS Securities

A: "For us, the catalyst is much less when the cars enter the ecosystem in the first place. So whether the car was sold originally in '18, '19, '20 or '21, is not especially of consequence to us. What really matters to us is that the vehicles are on the road period, right?... at least in theory, even at the extremes, if you completely eliminated all new cars sold in 2021 altogether, which is not that far from the truth, given what we now know of the semiconductor crisis at the time, that doesn't have any real pronounced effects given the way our supply is a layer cake of more than a decade's worth of new car shipments... [On 5-year growth] insurance business part 1 in all the markets in which we already do business today. Lever #2... the liquidity that we are pursuing and succeeding in obtaining in noninsurance markets. These are the rental car companies, dealers, corporate fleets and financial institutions... We have expanded globally, as you know, perhaps most notably in 2007... So international expansion has historically been part of our playbook as well... the total loss frequency... we view it as our responsibility to help drive total loss frequency upwards..." — Jeff Liaw, CEO

Insurance Advisory Board: Outlook and AI Catalysts

A question on what insurance partners are saying about claims outlook for 2026-2027, paired with what catalysts of change came up at Copart's annual Insurance Advisory Board meeting. The exchange surfaced two important themes: (a) carriers themselves are seeing the same 1-in-6-policyholder coverage-reduction data and view it as cyclical, and (b) AI is the single most discussed forward catalyst — with carriers "both excited and terrified" — and Copart's claims-side AI fluency may exceed many carriers' internal capability:

Q: "It sounds like you hosted a forum for your insurance partners. I'm just curious, first, what are those insurance partners saying about the outlook for claims in 2026, 2027? And then you had also mentioned some catalysts for change in the industry. And I wondered if you would elaborate on some of those catalysts." — Craig Kennison, Baird

A: "I think everyone recognizes that, yes, many consumers, we've seen some research that indicates as many as 1 in every 6 policyholders in the auto space has pulled back on their insurance coverage in one way or the other, meaning they've moved from collision to liability only or they have increased their deductibles, et cetera, et cetera... I think they also recognize these trends tend to be cyclical, not secular that eventually folks are rational about the coverage they need and want to pay for and folks who ultimately pay for the insurance they need. And that has proven true over a multiple decade-long horizon. When it comes to catalysts for change in the future... we do talk about artificial intelligence and what it means for claims, what it means for insurance companies. As you might imagine, they are both excited and terrified of it... On the claims end, if anything, that's a language we may speak more fluently than they do as institutions." — Jeff Liaw, CEO

International Service Revenue +18%: Mechanics and Germany

A focused question on the +18% international service revenue growth — particularly Germany's continuing flip from purchase contracts to consignment. The response confirmed broad-based contribution from UK, Germany, and Canada across both insurance and non-insurance lines, and emphasized that Germany has continued to deliver meaningful unit-volume and profitability progress as carriers there embrace the Copart-style remarketing model:

Q: "I'm just looking at that international service revenue line up, I think, 18%. Maybe could you get some light on what exactly is driving that? To what extent is the market performing, the underlying markets in which you participate? Is that performing well? And to what extent is that a representation of traction you're getting, especially I'm curious about in Germany, as I know you're flipping that market towards the Copart-style remarketing service." — Craig Kennison, Baird

A: "The growth internationally that we saw on the revenue side was, as I mentioned in my prepared remarks, there is contribution across many markets. The U.K. was particularly strong in the quarter. Germany followed it up as well as Canada. And so we've seen really strong demand across all 3 markets, both on the insurance side as well as the noninsurance business. Germany continues to perform incredibly well on a relative basis to where it was several years ago. We continue to see carriers be open-minded about how they're approaching the total loss process, and that's a market where we've seen some meaningful progress from a unit volume as well as a profitability perspective." — Leah Stearns, CFO

Crossover Buyer Profile and the Pure-Sale Mix

A multi-part deep dive into the buyer flywheel and pure-sale mechanics. Management offered a vivid example of the typical crossover-buyer journey (Google search → first damaged purchase → theft-recovery insurance vehicle → hail-damaged adjacency → broader inventory exploration) and confirmed that pure-sale mix is not contractual but discretionary at the carrier level — with effectively zero carriers moving from pure sale toward managed sale and many moving the opposite direction:

Q: "Could you just give us an update on the size of the noninsurance or whole car business? And it would be really helpful to get a sense of the typical profile of a crossover buyer. How does their wallet share with Copart tend to evolve over time? ... Just as a follow-up, could we double-click on the pure sale mix with U.S. insurance sellers? I just wanted to understand if this is more contractual in nature or something more dynamic that can be toggled up or down and whether a higher mix of PR sale units has positive implications for Copart's earnings profile?" — Jash Patwa, JPMorgan

A: "On the nature of the crossover buyer, these are both domestic buyers and international buyers as well, who will first discover Copart through some mix of SEM or SEO... Then when they begin bidding, when they begin engaging on the platform, they discover that there's an insurance vehicle that was a theft recovery, right?... they'll discover that there's a vehicle with light flood damage or rear-end damage, and it's just a camera that's knocked out the car is otherwise intact and the drivetrain is fine, right? So you can imagine that a given buyer comes for one type of car. And then once he or she realizes the breadth of inventory available to him or her, they migrate outward in concentric circles... [On pure sale] It's not contractual. So our insurance carrier maintained the discretion to manage the auctions as they see fit. So in comparison to say where we were even 7 or 8 years ago, many more insurance carriers have moved to effectively a nearly 100% pure sale approach and a handful of carriers have moved from 100% down very meaningfully as well. Effectively, nobody has increased their portion of managed sale auctions at Copart." — Jeff Liaw, CEO

RPU Growth Drivers — Title Express, ASP Mechanics, and Mix

A direct question on revenue-per-unit growth drivers as prior pricing actions lap. Management broke RPU growth into four contributors: (1) Title Express penetration (Copart processes 6-8x next-largest competitor), (2) ASP-revenue-share mechanism (Copart shares in a small portion of incremental sale proceeds), (3) volume growth in higher-ASP non-insurance categories, and (4) mix shift toward services like long-haul delivery. The breakdown clarifies how Copart can continue generating fee-per-unit growth even when industry-wide ASP inflation moderates:

Q: "On RPU, continued strong growth here despite having fully lapped prior pricing actions. Could you maybe unpack the drivers of the strength, maybe break it down between contribution from pure ASP expansion versus other vectors like mix and initiatives like Title Express?" — Jash Patwa, JPMorgan

A: "Just directionally speaking, we definitely, as I noted, have provided more services of the Title Express offering. Here at Copart, we would estimate we are processing volume 6, 7, 8x more than anyone else in the industry. So that particular product has penetrated more accounts. So that's a portion of it. As you noted, a portion is simply by virtue of the higher selling prices we're sharing — we're generating an auction. The mechanism of our economics are such that as we deliver higher sale prices to our sellers, we also share in a very small portion of that incremental proceeds as well. Those are the big drivers. Certainly, volume growth. Certainly, growth among those noninsurance sellers that we noted earlier. Those cars tend to sell for even more still than the average insurance car as well. Those are all the underlying drivers." — Jeff Liaw, CEO

Whole Car / BluCar Strategy and Brand Question

An important strategic question on whether the Copart brand is sufficient for the whole-car expansion or whether a separate dealer-facing brand might be necessary. The exchange surfaced the spectrum framing — that every vehicle falls somewhere between "total burn" and "brand-new Bentley" and Copart is methodically moving up-and-to-the-right by earning the right to handle progressively better-condition vehicles. The branding question itself was somewhat sidestepped, with the emphasis on the gradual proof-of-trust trajectory rather than a brand reformulation:

Q: "I appreciate the comments on the whole car side... When I talk to people in the industry, they seem to tell me that you guys are selling a lot of hail damage type vehicles. So would love to know from a consignor standpoint... where those whole car units are coming from? And are they largely attached to some sort of, what I would say, damaged vehicle, not necessarily a complete salvage? But would just kind of love for you to kind of dive into help us think about your definition of whole car. And secondly, as you think about growing that business and aspirations to be more on the dealer side, I know you've had Copart Dealer Services for a number of years, is that a strong enough presence brand to do what you want to accomplish there? And I know you've kind of toyed around with BluCar for the last couple of years, but what's your level of satisfaction with BluCar? And do you think you maybe need a different tool, a different platform or maybe just a brand that doesn't say Copart to be a successful there as you want it to be?" — John Healy, Northcoast Research

A: "It's a very fair question. And I think underlying it, John, you've got the intuition that every car is somewhere on a spectrum from a total burn that's almost unrecognizable as a vehicle at all the way to a brand-new Bentley that is just off the dealer lot, and there's a spectrum of vehicles in between... For sure, we are an obvious marketplace for a damaged rental car or a heavily beaten up repo vehicle. From there, we earn the right to sell the 3-year-old car that is being de-fleeted by one of the major rental car companies. We earn the right to sell a repo vehicle that is actually an excellent condition... So I think you're right, it is a spectrum, and we are moving up and to the right on that spectrum." — Jeff Liaw, CEO

Purple Wave Progress and Investment Strategy

A direct question on Purple Wave performance, sizing, and growth strategy. Stearns provided the cleanest disclosure to date: GTV +25%+ TTM (accelerating from prior quarters), sales-force team 2.5-3x size at acquisition, majority of growth from territory expansion (originally Central Time Zone focus, now expanded to both coasts), supplemented by enterprise-account development. The investment is principally headcount-led; the runway to full nationwide coverage remains material:

Q: "Maybe talk a little bit about the industrial side of the business? Maybe where you're at as you think about investments there. Maybe I don't know if you mentioned how the GTV performed. Any call-outs for us to think about how Purple Wave is performing?" — John Healy, Northcoast Research

A: "Just in terms of GTV, we look at it on an LTM basis, and GTV has grown over 25% year-over-year. And so we're very pleased with that. The majority of the growth is coming from territory expansion. We started out the business with a principally Central Time zone focused territory sales force and have expanded out to the coast. The majority of our investment in Purple Wave has been in headcount in that territory sales force as well as some very focused enterprise-level accounts that are focused on building relationships with large nationwide sellers... I'd say we're probably about, in terms of overall size, the team is about 2.5 to 3x the size it was when we acquired Purple Wave. And we still have some ways to go in terms of achieving full nationwide coverage, but we certainly hit the top areas that are most important for Copart to penetrate from a territory presence perspective, and we're pleased with the progress we're seeing so far." — Leah Stearns, CFO

What They're NOT Saying

Three observations on what was absent or under-discussed:

1. No explicit forward buyback authorization or pace guidance. $1.6B+ executed YTD but no forward authorization-size disclosure or pace guidance for Q4 FY26. With the cash position now meaningfully reduced ($4.2B vs $5.2B Q1), forward buyback pace will likely moderate from the Q3 burst-pace of $1.1B+ unless management commits to drawing the cash position further down. We model Q4 FY26 at $500-700M continuation, finishing FY26 at $2.1-2.3B aggregate.

2. Limited Insurance Advisory Board content. Liaw discussed the existence and AI-focus of the 2026 Insurance Advisory Board meeting but provided minimal specific carrier feedback on near-term volume outlook, share posture, or rate-cycle timing. We suspect carrier-specific commentary is being held back for confidentiality but more directional industry color would be useful.

3. No quantification of crossover buyer revenue contribution. The 30,000+ crossover-buyer disclosure is structurally illuminating but management did not quantify the dollar or unit-volume contribution of crossover buyers to insurance ASPs. Our suspicion is that crossover buyers are a meaningful contributor to the international-segment-style ASP premium dynamic; we'd value an explicit disclosure of crossover-buyer revenue contribution in future quarters.

Market Reaction

• Pre-print: CPRT closed May 20, 2026 at approximately $58.40, having traded steadily upward from the Q2 buyback-announcement reaction. Buyside positioning skewed long ahead of the print on expectations of buyback continuation.
• Day-of (after-hours): Stock opened up 4-5% in after-hours trading as the buyback-continuation magnitude ($1.6B+ YTD vs Q2 close at $500M+, implying $1.1B+ executed in Q3 alone) materially exceeded street expectations. Recovery in revenue growth (+2.1%) added incremental positive momentum.
• Next-day (today, May 21): Stock opened up 5-6% on heavy volume; closed up approximately 5.8% on ~2.1x average volume — the strongest single-day move in our coverage period.
• Peer reaction: RBA traded slightly higher in sympathy; insurance carrier stocks mostly flat — consistent with a Copart-specific positive print rather than industry-wide rotation.

The market reaction reflects three distinct positive surprises: (1) revenue growth inflection; (2) buyback magnitude meaningfully exceeding modeled pace; (3) international segment outperformance. The price move puts CPRT at the upper end of its 52-week range and back to within ~10% of all-time highs. We view current positioning as appropriately reflecting the improved fundamental setup, with further upside dependent on Q4 FY26 / FY27 unit-volume re-acceleration.

Street Perspective

Model Implications & Thesis Scorecard

Model updates off the print:

• FY26 revenue: Raised by 1-2% on the Q3 inflection and Q4 setup.
• FY26 gross margin: Raised by 25-50bp on durable fee-per-unit growth.
• FY26 EPS: Raised by 3-5% on the combination of revenue inflection, margin expansion, and buyback share-count benefit.
• FY27 EPS: Raised by 5-7% on full-year share-count benefit + cyclical unit recovery + continued international acceleration.
• Cash forecast: Revised — FY26 ending cash now $4.5-5.0B reflecting accelerated buyback consumption; FY27 cash rebuild dependent on buyback pace.
• Fair value range: RAISED to $58-$70 (from $52-$62). The expanded range reflects (a) demonstrated capital-return execution, (b) accelerating international growth, (c) moderating insurance unit pullback, (d) reinforced moat indicators on pure-sale mix and pricing power.

Thesis Scorecard

Rating & Action

Maintaining Outperform; raising fair value range to $58-$70 (from $52-$62). Three quarters into our coverage arc, the thesis is playing out as anticipated and in several respects ahead of pace:

• Revenue growth restored — +2.1% YoY, the first positive print since Q4 FY25, validating our Q1 modeled inflection earlier than the bear case.
• Buyback executing at scale — $1.6B+ YTD, 43.4M+ shares retired, materially exceeding the pace we modeled at Q1 and Q2.
• International compounding — segment revenue +14.1%, gross profit +21.9%, operating margin 31.5% (record); the leverage point of the next decade firing on all cylinders.
• Auction moat reinforcing — pure-sale mix at all-time highs at order-of-magnitude differential vs competitors; US insurance ASPs at seasonally-adjusted records despite global conflict-driven international buyer mix shifts.
• Insurance cycle inflecting — US insurance unit decline halved sequentially (–10.7% → –4.2%); FY27 setup constructive.
• Total loss frequency confirmed — 23.6% in Q1 cal 2026, +500bp over 4 years; multi-decade trajectory intact and confirmed by management's active-driver framing.

The expanded $58-$70 fair value range reflects the structurally strengthened setup: a moderating cyclical headwind, an accelerating international growth engine, demonstrated capital-return discipline, and a moat that gets stronger every quarter we examine it. We remain Outperform and would add to the position on any near-term price softness, particularly if Q4 FY26 results disappoint on cat-comp dynamics or buyback-pace moderation.