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Copart Q2 FY2026 Earnings: 10 Key Takeaways on Insurance Trends, ASP Growth and Buybacks

Copart Q2 FY2026 Earnings: 10 Key Takeaways on Insurance Trends, ASP Growth and Buybacks

Copart’s Q2 fiscal 2026 results showed year-over-year declines in revenue and earnings. But the earnings call revealed deeper insights that don’t show up in the headline numbers. Here are the most important takeaways.

Q2 revenue declined 3.6% year over year to $1.12 billion. However, the prior-year quarter included roughly 49,000 catastrophe-related vehicles.

Excluding last year’s CAT impact, revenue actually increased modestly. The decline was more about normalization than structural weakness.

2. Insurance Unit Volumes Were Down — But Less So Ex-CAT

Global insurance units declined 9%, or 4% excluding CAT.

U.S. insurance units declined 10.7%, or 4.8% excluding CAT.

Management attributed this to:

  • Softer claims activity

  • Shifts in policies in force across carriers

  • Consumers raising deductibles or dropping collision coverage

They described these insurance behaviors as cyclical rather than structural.

3. Total Loss Frequency Continues to Climb

One of the most important long-term drivers remains intact.

U.S. total loss frequency reached 24.2% in calendar Q4 2025. In 2015, it was 15.6%.

Even though accident frequency slowly declines due to safer vehicles, the percentage of vehicles deemed total losses keeps rising due to repair cost inflation and vehicle complexity.

This is a structural tailwind for Copart.

4. U.S. Insurance ASPs Hit Record Levels

Despite normalization in used car values, Copart reported:

  • U.S. insurance ASPs up 6% year over year

  • Up 9% excluding CAT

Management emphasized that they are generating record selling prices for insurance consignors.

They attribute this to liquidity advantages, global buyer reach, and enhanced merchandising tools.

5. Copart Competes on Economics, Not Just Fees

On the call, management stressed that fee pricing is not the main battleground.

The real differentiator is delivered economic outcome:

  • Higher selling prices

  • Faster cycle times

  • Reduced storage costs

  • Improved policyholder satisfaction

They argue these factors dwarf small fee differences between competitors.

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6. Gross Margins Improved on an Adjusted Basis

The quarter included a $6.8 million one-time International VAT accrual.

After adjusting for CAT and this one-time item:

  • Gross profit increased slightly

  • Gross margin improved to 45%

This detail was not obvious from the press release alone.

7. The Balance Sheet Is Exceptionally Strong

Copart ended the quarter with:

  • Approximately $6.4 billion in liquidity

  • $5.1 billion in cash

  • No debt

Free cash flow increased 58% year to date.

This gives the company significant flexibility for land investment, buybacks, or acquisitions.

8. Share Repurchases Accelerated

During the quarter:

  • Over 13 million shares repurchased fiscal year to date

  • More than $500 million deployed

Management described the buybacks as opportunistic, based on valuation and capital allocation priorities.

9. AI Is Being Deployed Across the Enterprise

Copart has roughly 1,000 engineers globally and is deploying AI in:

  • Document processing

  • Driver dispatch

  • Business analytics

  • Image recognition

  • Total loss decision tools for insurers

Management described AI as materially improving productivity and enhancing long-term value delivery to customers.

10. Long-Term Capacity and Land Strategy Remains a Focus

Compared to a decade ago, Copart is in a much stronger land ownership position.

They now operate dedicated catastrophic facilities and maintain hundreds of acres reserved for storm activity.

Management emphasized that land development has long lead times, so they continue disciplined investment to ensure capacity remains ahead of demand over a 10-year horizon.

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The simple takeaway

While Q2 showed lower year-over-year revenue and earnings, the earnings call reinforced several structural strengths:

  • Rising total loss frequency

  • Strong pricing power

  • Durable competitive moats

  • Massive liquidity

  • Disciplined capital allocation

The quarter reflects insurance cycle headwinds more than business model deterioration. The long-term thesis remains centered on liquidity, scale, and structural total loss growth.

Thank you for reading this post. If you enjoy this post, please share it with your friends or family members. Let’s get life transformed together! Many thanks.

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