Copart Inc’s Q4 Call: U.S. Insurance Volume Slump Meets Pricing and International Offsets

Date of Call: Sep 10, 2026

Financials Results

• Revenue: Q4 FY2026 revenue was approximately $1.15 billion, up 2.4% year over year from $1.13 billion.
• EPS: Fully diluted EPS was $0.35, down from $0.41 in the prior-year quarter, a 14.6% decline.
• Gross Margin: Gross profit was $481.4 million, down 5.5% year over year from $509.7 million; gross margin was approximately 41.9% versus approximately 45.1% in Q4 FY2025.
• Operating Margin: Operating income was $368.9 million, down 10.6% year over year from $412.6 million; operating margin was approximately 32.1% versus approximately 36.5% in Q4 FY2025.
• Operating drivers: Global units sold declined 2.9%, including a 5.7% domestic decline, while international units increased 10%. Operating expenses per car increased 12.7%.

Guidance

• Quantitative outlook: Management did not provide a specific revenue, EPS, margin, or unit-volume range for the next reporting period.
• Strategic outlook: Management emphasized international insurance expansion, domestic whole-car growth, and technology and services as the principal growth pillars.
• ACV transaction: Copart expects the acquisition of ACV to close by calendar year-end 2026. ACV is expected to operate initially near breakeven and become accretive in fiscal 2028.
• Cost outlook: Management said it is focused on expense control and improving operating efficiency after the increase in operating expenses per car.

Business Commentary:

Operating Performance

• Q4 FY2026 revenue increased 2.4% year over year to approximately $1.15 billion, despite a 2.9% decline in global units sold.
• Profitability weakened: gross profit declined 5.5% to $481.4 million, operating income declined 10.6% to $368.9 million, and EPS declined 14.6% to $0.35.
• Operating expenses per car increased 12.7%, prompting management to emphasize expense control and operational efficiency.

Volume and Pricing Drivers

• Domestic units sold declined 5.7%, reflecting weaker domestic insurance volumes.
• International units sold increased 10%, making international operations an important source of growth.
• Higher revenue per unit and selling prices helped offset lower unit volumes and supported the year-over-year increase in revenue.

Growth Strategy

• Management identified three primary growth pillars: international insurance expansion, domestic whole-car expansion, and investment in technology and services.
• International revenue and gross profit increased approximately 12%, highlighting the contribution of overseas operations.
• Management continues to emphasize auction liquidity, operational speed, and customer-focused technology as competitive advantages.

ACV Acquisition

• Copart announced an agreement to acquire ACV, a digital automotive marketplace, in an all-cash transaction at $10.50 per share.
• The transaction is expected to close by calendar year-end 2026, subject to customary conditions.
• ACV is expected to remain an independent subsidiary under its existing leadership team, initially operating near breakeven and becoming accretive in fiscal 2028.

Demand and Management Commentary

• Management acknowledged that domestic insurance demand remains pressured, while international demand and whole-car opportunities provide avenues for expansion.
• The company did not provide quantitative guidance for the next reporting period, instead highlighting long-term strategic priorities and ongoing cost-management actions.

Sentiment Analysis

Overall Tone: Constructive but measured.

Management remained optimistic about Copart's long-term growth opportunities, particularly international expansion, domestic whole-car sales, technology, and services, and expressed enthusiasm about the ACV acquisition and its cultural and strategic fit. However, the tone also acknowledged near-term pressure: global and domestic unit volumes declined, operating expenses per car rose 12.7%, and gross profit, operating income, and EPS all fell year over year. The absence of quantitative guidance and the emphasis on expense control indicate confidence in the strategy but caution regarding near-term profitability.

Q&A

Question from Josh Potwith (J.P. Morgan): Asked about additional revenue opportunities and the potential role of products and services such as loan-payoff offerings for carrier customers following the ACV transaction.

Response: Management said loan-payoff products and other customer offerings could create additional fee opportunities, but it did not provide specific details on the eventual product mix or pricing strategy.