Copart, Inc. (NASDAQ: CPRT) announced financial results for its fiscal second quarter ended January 31, 2026, revealing a period of contraction in several key profitability metrics. The global automotive auction leader reported that although it maintained a strong financial position, it faced difficult conditions in revenue and operating income compared to the same period last year.
Financial Performance Overview
For the quarter, Copart generated net income of $1.12 billion, representing a 3.6% decrease from the prior year. The company’s net income fell 9.5% to $350.7 million, while diluted earnings per share (EPS) remained at $0.36, down from $0.40 in the second quarter of fiscal 2025.
The following table summarizes the significant year-over-year financial comparisons for the quarter:
| Metric (In thousands, excluding EPS) | Q2 FY2026 | Q2 FY2025 | % Change |
| Net Income | $1,121,674 | $1,163,316 | (3.6)% |
| Service Fee | $952,051 | $991,281 | (4.0)% |
| Car Sales | $169,623 | $172,035 | (1.4)% |
| Gross profit | $492,812 | $525,553 | (6.2)% |
| Performance Salary | $388,710 | $426,211 | (8.8)% |
| Net Income (Attributable to Copart) | $350,732 | $387,400 | (9.5)% |
| Diluted EPS | $0.36 | $0.40 | (10.0)% |
Performance Analysis and Component Data
The decrease in operating income was primarily due to a reduction in service income, which decreased by $39.2 million year over year. Operating expenses decreased slightly by 0.6% as the company managed facility operating expenses, which decreased by 2.7% to $427.5 million. However, general and administrative (G&A) expenses rose 3.2% to $89.4 million, putting further pressure on margins.
The segment data shows different trends between domestic and international markets:
United States: Operating income fell 9.2% to $341.5 million as service income in the US fell 5.6%.
International: While international service revenue grew 7.7% to $132.6 million, international operating revenue decreased 6.1% to $47.2 million, primarily due to higher G&A and operating costs in those regions.
Additional Six Month Results
Despite the quarterly dip, Copart’s performance in the first quarter of fiscal 2026 remained stable. For the six months ended January 31, 2026, Copart’s net income increased 0.7% to $754.4 million, and diluted EPS remained flat at $0.77 compared to the prior year. This resilience was supported by a 19.9% increase in net interest income, which reached $103.5 million during the half year.
Balance Sheet and Strategic Drivers of Growth
Copart ended the quarter with a strong balance sheet, reporting $5.1 billion in cash, cash equivalents, and cash equivalents, a significant increase from the $2.8 billion reported at the end of the previous fiscal year. Total assets grew to $10.6 billion.
The company continues to leverage its global reach, connecting shippers to nearly a million members in more than 185 countries. Operating in more than 250 locations in 11 countries, Copart sold more than 4 million units last year. During the first half of fiscal 2026, the company demonstrated its commitment to shareholder value by repurchasing $218.2 million of its common stock.
Market Situation
As a global leader in online auto auctions, Copart’s operations are often viewed as a bellwether for the broader auto remarketing industry. Current results suggest a period of adjustment as the company navigates volatility in the insurance and brokerage sectors, although its large reserves provide significant flexibility for future infrastructure investments and strategic acquisitions.
Reasons to Pass CPRT
- Decrease in income: Total revenue fell 3.6% year-on-year to $1.12 billion in Q2 FY2026.
- Service revenue pressure: Service revenue, the company’s primary revenue stream, fell 4.0% year over year, leading to a significant decline in the top line.
- Profit breakdown: Net profit was down 6.2% year-on-year. Operating income decreased by 8.8%. Net income generated by the company fell by 9.5%.
- Benefits decrease: Diluted EPS fell 10% year over year to $0.36.
- Weaknesses of the US sector: US operating income decreased 9.2%, domestic service income decreased 5.6%.
- International margin pressure: Despite a 7.7% increase in international service revenue, international operating income decreased by 6.1% due to general and higher administrative and operating costs.
- Increase in G&A expenses: General and administrative expenses increased 3.2% year over year, adding pressure to margins.
- Dependence on interest rates for stability: Revenue growth in the first quarter was partially supported by a 19.9% increase in net interest income, reflecting limited core operating momentum.
- Field volume adjustment: The results show a shift in volumes in the insurance and dealership sectors, suggesting the diversity of demand around the car remarketing market.
- Fluctuations in near-term benefits: The quarter shows a broad-based decline in all key profitability metrics despite a strong cash flow environment.
