tapebrief
CPRT · Q2 2026
Preliminary brief— based on press release only. Full analysis including management tone and Q&A will be added when the transcript is available.

CPRT · Q3 2026 Earnings

Copart

Reported May 21, 2026

30-second summary

Copart's April-quarter revenue grew 2.1% YoY to $1.24B — a reversal from Q2's headline -3.6% and Q1's +0.7% — with GAAP EPS of $0.43 up 2.4% YoY. Importantly, net income attributable to Copart actually declined 1.0% YoY ($402.4M vs. $406.6M); EPS growth was driven by a 3.6% reduction in diluted share count from ongoing buybacks. The print is carried entirely by international (+14.1%, or +7.9% ex-FX) while the U.S. business shrank 0.4%, and management's tonal pivot from "structural advantages" (Q2) back to "these trends tend to be cyclical, not secular" (Q3) — paired with a fresh TLF print of 23.6% (+~500bps over four years) — tells you the cyclical-vs-secular debate is being re-argued in real time.

Headline numbers

EPS

Q3 FY2026

$0.43

+4.9% vs est.

Revenue

Q3 FY2026

$1.24B

+2.1% YoY

+3.1% vs est.

Gross margin

Q3 FY2026

46.3%

Operating margin

Q3 FY2026

37.5%

Key financials

Q3 FY2026
MetricQ3 FY2026Q3 FY2025YoYQ2 FY2026QoQ
Revenue$1.24B$1.20B+3.1%$1.12B+10.3%
EPS$0.43$0.42+2.4%$0.36+19.4%
Gross margin46.3%45.6%+70bps44.0%+235bps
Operating margin37.5%37.3%+20bps34.7%+284bps

Guidance

No forward guidance provided this quarter; company delivered Q3 beats on revenue and EPS with strong international growth of 14.1% offset by U.S. revenue decline of 0.4%.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
RevenueQ3 FY2026—$1.237B+3.1% above estimateBeat
EPSQ3 FY2026—$0.43+4.9% above estimateBeat
Operating MarginQ3 FY2026—37.5%in-lineMet

Segment KPIs

Q3 FY2026
SegmentQ3 FY2026Q3 FY2025YoY
United States$1.003B—-0.4%
International$0.234B—+14.1%
International Operating Income Growth25.1%——

Other KPIs

Q3 FY2026
SegmentQ3 FY2026Q3 FY2025YoY
Units Sold (Last Twelve Months)4.0 million——
Global Members~1.0 million——
Operating Income Margin37.5%——
Service Revenues Growth2.1%——

Management tone

Q4 FY25: Cyclical headwinds owned → Q1 FY26: Capital discipline replaces growth investment → Q2 FY26: Structural moat plus buyback pivot → Q3 FY26: Cyclical framing returns, international leaned on harder.

The "cyclical, not secular" framing returned to the foreground after a one-quarter absence. Q2 leaned into "structural advantages of our marketplace" and "liquidity begets liquidity" as the dominant narrative; this quarter management reverted to "these trends tend to be cyclical, not secular" — language closer to Q4 FY25 than Q2 FY26. The pendulum swing matters because management is using the cyclical frame to absorb continued U.S. softness (revenue -0.4%) while reasserting that the long-term algorithm is intact. When the framing oscillates this much across quarters, the read is that management itself doesn't have high conviction on which interpretation is right.

Total loss frequency disclosure pattern shifted from rising-trend to multi-year arc. Q2 disclosed Q4 CY25 at 24.2% with the 10-year arc (15.6% → 23.1%). This quarter discloses Q1 CY26 at 23.6% with a four-year arc (+~5 points). The sequential decline from 24.2% to 23.6% is not addressed in the release, and the pivot to a four-year framing (vs. last quarter's 10-year) reads as a chosen window that makes the optics work. The watch-list question on durable trailing-quarter TLF disclosure was answered positively in disclosure but the underlying number went the wrong way.

International buyer dependence was elevated to a headline metric, not a footnote. Quantifying that international buyers drive >1/3 of U.S. volume and ~1/2 of U.S. auction proceeds is the most explicit version of this disclosure to date. Paired with the international segment doing all of the consolidated growth, the implicit message is that Copart's U.S. earnings power increasingly depends on cross-border bidder demand — which is a different (and more fragile) story than the "deep domestic marketplace" framing of prior years.

The insurance algorithm language was hedged from claim to belief. Last quarter: "auction returns continue to reflect structural advantages." This quarter: "we believe the long-term growth algorithm... remains very much intact." The shift from assertion to belief is small but consistent with a management team navigating a fourth consecutive quarter of pressured U.S. volumes.

Recurring themes management leaned on this quarter:

Active ownership of total loss frequency escalation as strategic driverNon-insurance whole car TAM expansion through crossover buyer ecosystemBuyer network diversification as insulation against geopolitical/currency shocksAI deployment as core competitive advantage with insurance partnersInternational segment acceleration with UK, Germany, Canada leadingPure sale mix at all-time highs reflecting seller confidence in auction liquidity

Risks management surfaced:

Consumer insurance coverage pullback and affordability pressure continuingClaims frequency softness from policyholders managing deductibles and avoiding rate increasesMiddle Eastern buyer participation declining due to geopolitical conflictsRental car customer higher repair activity offsetting gains elsewhereMacroeconomic sensitivity of non-insurance sellers (dealers, financial institutions, rental companies)

Answers to last quarter's watch list

Whether XCAT revenue growth holds positive. Reported revenue grew 2.1% on a clean comp (Q3 FY25 had no material CAT distortion). The acceleration from Q2's +1.3% XCAT is real but modest, and the U.S. segment specifically went backward at -0.4%. The "structural re-rating" risk is not confirmed at the consolidated level but is visible in the U.S. line.
Continue monitoring
Operating margin YoY trajectory. Q3 FY26 operating margin of 37.5% vs. Q3 FY25's 37.3% — +27bps YoY, fully closing the Q2 YoY gap of -190bps. The Q2 VAT one-timer was clearly non-recurring and seasonality reversed cleanly.
Resolved positively
Q1 CY26 total loss frequency print. Management disclosed 23.6% for Q1 CY26, confirming the trailing-quarter disclosure cadence is durable — but the QoQ step-down from 24.2% (Q4 CY25) is unfavorable and unaddressed. Disclosure pattern held; the number itself disappointed. Status: Mixed — disclosure resolved positively, level resolved negatively
US insurance ASP growth rate. Management disclosed U.S. insurance ASPs +4.1% YoY, characterized as a seasonally adjusted all-time record; non-insurance ASPs +3.7%, purchase unit ASPs +23%.
Resolved positively
Pace and structure of buybacks. Management disclosed fiscal-YTD repurchases of 43.4M shares for over $1.6B (cash flow statement: $1,632.5M for the nine months). Buybacks continued in Q3 via a mix of 10b5-1 and open-market transactions; no new sized authorization or Dutch tender was announced. Diluted share count fell 3.6% YoY. Status: Resolved positively (pace sustained)
CDS volume growth. Disclosed: Copart Direct unit volume -26.3%, characterized as a strategic shift of lower-value units into the direct buy channel rather than organic weakness. Status: Resolved (strategic decline, not demand)
Commercial consignment (BlueCar) recovery. Disclosed: BlueCar commercial consignment channel expanded over 4% YoY. Dealer services and power sports also +1%; fleet and finance seller volume grew at a healthy double-digit pace.
Resolved positively

What to watch into next quarter

Whether U.S. revenue returns to growth. Q3 FY26 U.S. revenue -0.4% on a clean comp, after Q2's flat XCAT print and Q1's +0.5%. A third consecutive sub-1% U.S. growth print in Q4 would convert "cyclical headwind" into "structural reset" regardless of what international does.

Whether net income resumes YoY growth. Q3 attributable net income -1.0% YoY despite revenue +2.1%; EPS growth was buyback-funded. A second consecutive quarter of declining net income would shift the durability conversation.

Q2 CY26 total loss frequency print. Management has disclosed Q4 CY25 (24.2%) and now Q1 CY26 (23.6%). A second consecutive QoQ decline would force management to address the trajectory directly rather than reach for multi-year framing windows.

International concentration risk disclosure. Now that international buyers are quantified as >1/3 of U.S. volume and ~1/2 of proceeds, watch whether management quantifies regional concentration — Middle Eastern participation has been disclosed as declining, offset by Central Europe, West Africa, Central America, and the Caribbean.

Buyback cadence into Q4. $1.6B / 43.4M shares repurchased fiscal YTD with $5.5B of liquidity remaining and no debt. Watch whether the pace sustains, accelerates, or moderates into year-end.

International segment margin trajectory. International operating margin of 31.5% on revenue +14.1% (and units +5.9%) implies meaningful operating leverage. Watch whether this is sustainable or front-loaded by FX (FX contributed ~620bps of the 14.1% reported growth) and mix.

Long-haul delivery economics. ~$50M/year of incremental facility ops cost is now in the run rate. Watch whether the offsetting revenue/margin contribution scales as adoption broadens.

Sources

  1. Copart Q3 FY2026 press release (filed May 21, 2026): https://www.sec.gov/Archives/edgar/data/900075/000119312526234447/cprt-ex99_1.htm
  2. Copart Q3 FY2026 earnings call transcript (May 21, 2026)
  3. Tapebrief Q2 FY2026, Q1 FY2026, Q4 FY2025, and Q3 FY2025 CPRT briefs (prior-quarter trend context and watch list)

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