# How Copart makes money

CXProWealth Business Lens · Copart (CPRT) · FY2026

Read from the 10-K for the period 2025-08-01 to 2026-07-31, filed 2026-09-29 with the SEC (accession 0001193125-26-405731): https://www.sec.gov/Archives/edgar/data/900075/000119312526405731/

Business Lens explains how a company earns, spends and keeps its money, from its own filings. It is insight and context, never a view on the shares, a target, or advice. Figures are raw units as filed; percentages are percentage points.

## Headline figures

- Revenue: $4.7B (+0.4% on the year)
- Operating income: $1.7B (operating margin 35.4%)
- Net income: $1.5B (net margin 31.8%)
- Gross margin: not reported (the company reports expenses by nature: no cost of revenue or gross profit line exists)
- Free cash flow: $1.3B (27.2% of revenue)
- Cash conversion (operating cash flow / net income): 1.08x
- Capital expenditure: 7.2% of revenue

## Where the money goes (FY2026)

- Service → Total service revenues and vehicle sales: $4.0B
- Product → Total service revenues and vehicle sales: $696.7M
- Total service revenues and vehicle sales → Total operating expenses: $3.0B
- Total operating expenses → Facility operations: $2.0B
- Total operating expenses → Cost of vehicle sales: $616.5M
- Total operating expenses → General and administrative: $431.3M
- Total service revenues and vehicle sales → Operating income: $1.7B
- Operating income → Total income before taxes: $1.7B
- Total other income → Total income before taxes: $182.4M
- Total income before taxes → Income tax expense: $354.6M
- Total income before taxes → Net income: $1.5B
- Net income → Net income attributable to Copart, Inc.: $1.5B
- Less: Net loss attributable to redeemable noncontrolling interest → Net income attributable to Copart, Inc.: $3.9M

## Where the revenue comes from

### Products and services (CONSOLIDATED STATEMENTS OF INCOME)

| Member | Value | Share |
|---|---:|---:|
| Service | $4.0B | 85.1% |
| Product | $696.7M | 14.9% |

The members sum to total revenue.

## Income statement, as filed

| Line | FY2026 | Of revenue |
|---|---:|---:|
| Total service revenues and vehicle sales | $4.7B | 100% |
|   Service | $4.0B | 85.1% |
|   Product | $696.7M | 14.9% |
| Facility operations | $2.0B | 42.1% |
| Cost of vehicle sales | $616.5M | 13.2% |
| General and administrative | $431.3M | 9.2% |
| **Total operating expenses** | $3.0B | 64.6% |
| **Operating income** | $1.7B | 35.4% |
| Interest income | $181.9M | 3.9% |
| Other income (expense), net | $464.0K | 0.0% |
| **Total other income** | $182.4M | 3.9% |
| **Total income before taxes** | $1.8B | 39.3% |
| Income tax expense | $354.6M | 7.6% |
| **Net income** | $1.5B | 31.7% |
| Less: Net loss attributable to redeemable noncontrolling interest | -$3.9M | 0.1% |
| **Net income attributable to Copart, Inc.** | $1.5B | 31.8% |
| Basic net income per common share | $2 | 0.0% |
| Weighted average common shares outstanding | 949,640,000 |  |
| Diluted net income per common share | $2 | 0.0% |
| Diluted weighted average common shares outstanding | 956,860,000 |  |

## History

| Period | Revenue | Operating income | Net income | Operating cash flow | Capital expenditure | Free cash flow |
|---|---:|---:|---:|---:|---:|---:|
| FY2009 | $743.1M | $225.3M | $141.1M | $203.3M | $78.9M | $124.4M |
| FY2010 | $772.9M | $239.1M | $151.6M | $199.4M | $75.8M | $123.6M |
| FY2011 | $872.2M | $265.3M | $166.4M | $242.9M | $70.2M | $172.8M |
| FY2012 | $924.2M | $286.4M | $182.1M | $229.7M | $54.8M | $174.8M |
| FY2013 | $1.0B | $283.0M | $180.0M | $199.3M | $130.3M | $69.1M |
| FY2014 | $1.2B | $274.9M | $178.7M | $262.6M | $81.5M | $181.1M |
| FY2015 | $1.1B | $344.4M | $219.8M | $265.1M | $79.2M | $185.9M |
| FY2016 | $1.3B | $406.5M | $270.4M | $332.5M | $173.9M | $158.6M |
| FY2017 | $1.4B | $461.3M | $394.2M | $492.1M | $172.2M | $319.9M |
| FY2018 | $1.8B | $584.3M | $417.9M | $535.1M | $287.9M | $247.2M |
| FY2019 | $2.0B | $716.5M | $591.7M | $646.6M | $373.9M | $272.8M |
| FY2020 | $2.2B | $816.1M | $699.9M | $917.9M | $592.0M | $325.9M |
| FY2021 | $2.7B | $1.1B | $936.5M | $990.9M | $463.0M | $527.9M |
| FY2022 | $3.5B | $1.4B | $1.1B | $1.2B | $337.4M | $839.2M |
| FY2023 | $3.9B | $1.5B | $1.2B | $1.4B | $516.6M | $847.6M |
| FY2024 | $4.2B | $1.6B | $1.4B | $1.5B | $511.0M | $961.6M |
| FY2025 | $4.6B | $1.7B | $1.6B | $1.8B | $569.0M | $1.2B |
| FY2026 | $4.7B | $1.7B | $1.5B | $1.6B | $337.4M | $1.3B |

Latest trend (the newest full year against the year before; a reading, not a forecast):

- Revenue: +0.4% (year before +9.7%): slowing
- Operating income: -2.6% (year before +7.9%): slowing
- Net income: -4.4% (year before +13.9%): slowing
- Free cash flow: +3.0% (year before +28.0%): slowing

## Key insights

### Operating margin has slipped five years in a row

Operating margin fell from 42.2% in FY2021 to 35.4% in FY2026, so revenue has grown faster than the profit it brings.

Revenue rose from $2.69B in FY2021 to $4.67B in FY2026, while operating income rose from $1.14B to $1.65B. The operating margin went from 42.2% in FY2021 to 39.3% in FY2022. In FY2023 operating income was $1.49B on revenue of $3.87B. The margin was then 37.1% in FY2024, 36.5% in FY2025 and 35.4% in FY2026. _(from the filing)_
In FY2026 costs grew faster than revenue. Revenue rose 0.41%, total operating expenses 2.15% and general and administrative expense 7.0%, to 9.24% of revenue from 8.67%. Operating income fell 2.6% to $1.65B. The filing attributes the flat service line to the prior year's one-time hurricane revenue and lower U.S. volume, offset by higher revenue per car. _(from the filing)_
The squeeze was sharpest at year end. Fourth-quarter operating income was $368.9M on $1.15B of revenue, a 32.0% margin, against $412.6M on $1.13B, or 36.7%, a year earlier. The fourth-quarter figures are derived as the annual total less the first nine months. _(from the filing)_
Part of the long slide may be mix rather than pricing: the purchased-car line keeps only a thin spread, so growth in it lowers the blended margin. The filing figures here give no fee or cost per car history, so mix and cost per car cannot be separated from them. _(analysis)_

### Fees carry the profit; owned cars mostly pass through

Vehicle sales were 14.9% of revenue, but their cost took 88.5% of that line, while yard costs took 49.5% of service fees.

Copart records its auction fees "as net revenue (not gross vehicle selling price)", so the price of the car never enters revenue. Service revenue was $3.97B, 85.1% of the $4.67B total. Facility operations, the cost of moving, storing and processing cars, were $1.97B, 49.5% of service revenue against 49.0% a year earlier. _(from the filing)_
Vehicle sales, the cars Copart buys and resells itself, mostly in the U.K., were $696.7M against a cost of vehicle sales of $616.5M, 88.5% of the line against 88.9% a year earlier. The line grew 2.71%, faster than service revenue at 0.02%, and its share of revenue rose 0.33 points to 14.9%. _(from the filing)_
Facility operations also serve the purchased cars, so the 49.5% overstates the fee line's own yard cost; it is not a segment margin. The point holds either way: a dollar of fees keeps far more than a dollar of vehicle sales, so the balance between the two lines moves the blended margin. _(analysis)_

### Free cash flow rose because land spending fell

Operating cash flow fell to $1.60B from $1.80B, yet free cash flow rose to $1.27B as capital spending dropped to $337.4M.

Capital expenditure was $337.4M against $569.0M a year earlier, 21.0% of operating cash flow against 31.6%. Free cash flow was $1.27B against $1.23B, a 27.2% margin on revenue. Operating cash flow was 108.1% of net income attributable to Copart, against 115.9% a year earlier. _(from the filing)_
The year stands out in the record. Capital expenditure was $592.0M in FY2020, 26.8% of that year's revenue, and $569.0M in FY2025, 12.2%. FY2026's 7.23% of revenue is the lowest share in the eight years from FY2019. _(from the filing)_
Yard land is what lets Copart take a storm's cars, and the filing says the prior year's hurricanes hurt results partly through facility capacity constraints. A year of lower spending lifts free cash flow, but it reads as a timing choice, not a change in what the business earns. Whether the spending pace returns is the thing to watch. _(analysis)_

### Interest on cash earns a tenth of pretax profit

Interest income of $181.9M was 9.9% of pretax income, so net profit leans on the cash balance as well as the auctions.

Interest income was $181.9M against $178.9M a year earlier, 11.0% of operating income and 9.9% of pretax income of $1.83B. Other income fell to $0.46M from $20.0M, and the tax rate rose to 19.3% from 18.3%. _(from the filing)_
That is why net income fell faster than operating income: net income attributable to Copart fell 4.39% to $1.48B, against a 2.6% fall in operating income. Diluted earnings per share were $1.55 against $1.59, on 956.9M diluted shares against 977.6M. _(from the filing)_
Interest income depends on the size of the cash balance and on rates. The year's share repurchases and the pending purchase of ACV Auctions both draw on that cash, so if both go ahead, more of the earnings would have to come from the operating line. _(analysis)_

### Competitive edge

- **One online auction reaches every registered buyer** Internet-only auctions put every yard's cars in front of every member, which the filing says widens the buyer pool and removes live-auction costs.
- **Yard land lets Copart absorb a storm** Owned and leased yards let Copart take a region's totaled cars at once, a capacity insurers judge in the worst seasons.
- **Fees arrive as cash and fund the expansion** Free cash flow rose from $272.8M in FY2019 to $1.27B in FY2026, paying for land, acquisitions and buybacks from inside the business.

### What to watch

- **A few large insurers supply most of the cars** Sellers are mainly insurers on contracts that can be non-exclusive and ended on limited notice, and named rivals compete for the same cars.
- **Weather, prices and safety tech set the volume** Salvage volume depends on storms, accident rates, used car prices and total loss frequency, none of which Copart controls.
- **A federal inquiry into controls over members** The filing discloses a Department of Justice investigation into potential money laundering violations concerning its member controls, and says the company is cooperating.

## Investor view

**Copart's service fees held flat against a hurricane-lifted prior year, and operating margin slipped to 35.4%**

### How it makes money

Copart sells vehicles mostly as an agent, for sellers that the filing says "consist primarily of insurance companies". It records its fees "as net revenue (not gross vehicle selling price)", so the price of the car itself never enters revenue. Service revenue was $3.97B in FY2026, 85.1% of the $4.67B total. _(from the filing)_
The fees cover listing, selling, transportation, title processing, storage, bidding and loading. Sellers choose a fixed consignment fee, a predetermined percentage of the sale price, or, mainly in the U.K., a sale to Copart at a formula price. Buyers are registered members: the filing names dismantlers, rebuilders, repair licensees, used vehicle dealers, exporters and the general public. _(from the filing)_
Vehicle sales are the cars Copart buys and resells itself, mostly in the U.K. and through purchases from individuals. That line brought in $696.7M, 14.9% of revenue, against a cost of vehicle sales of $616.5M, or 88.5% of it. Owning the car adds revenue but keeps only a thin spread. _(from the filing)_
The auctions run online in two steps: open preliminary bidding, then "an internet-only virtual auction". The filing says this "increases the pool of available buyers" and removes "the expense and capital requirements" of live auctions. The heavy cost sits in the yards instead: facility operations, which carry the cost of moving, storing and processing cars, were $1.97B, 42.1% of revenue. _(from the filing)_

### What shifted

Revenue was $4.67B against $4.65B, up 0.41%, and service revenue was flat at $3.97B. The filing says U.S. service revenue fell because of "the one-time revenue associated with hurricanes Helene and Milton" in the prior year and lower volume, offset by higher revenue per car. International service revenue rose on revenue per car and volume. _(from the filing)_
Costs grew faster than revenue. Total operating expenses rose 2.15% to $3.01B. Facility operations rose 1.1% to $1.97B: the U.S. no longer carried the prior year's hurricane costs, but subhaul, freight and postage rose, and abroad the cost to process a car went up. General and administrative expense grew 7.0% to $431.3M, 9.24% of revenue, up 0.57 points. _(from the filing)_
Operating income fell 2.6% to $1.65B from $1.70B, and the operating margin moved to 35.4% from 36.5%. The fourth quarter of FY2026 shows it most clearly: operating income of $368.9M on $1.15B of revenue, a 32.0% margin, against $412.6M on $1.13B, or 36.7%, a year earlier. _(from the filing)_
Below the operating line, other income fell to $0.46M from $20.0M, while interest income was $181.9M, 9.9% of pretax income. The tax rate rose to 19.3% from 18.3%. Net income attributable to Copart fell 4.4% to $1.48B. Diluted earnings per share were $1.55 against $1.59, on 956.9M diluted shares against 977.6M, after share repurchases during the year. _(from the filing)_
Cash flow moved the other way. Capital expenditure fell to $337.4M from $569.0M, so free cash flow rose to $1.27B from $1.23B even though operating cash flow fell to $1.60B from $1.80B. _(from the filing)_

### Risks in the filing

Copart depends on a limited number of large sellers, mainly insurers. Some contracts are non-exclusive and can be ended on limited notice. Dismantlers can bypass it by buying directly from insurers, and the filing names RB Global, through Insurance Auto Auctions, Carvana, Openlane, Manheim and ACV Auctions as competitors, some with greater resources. _(from the filing)_
Volume depends on things Copart does not control: weather, accident rates, used car prices and total loss frequency. Mild weather means fewer salvage cars; large storms bring more cars than the yards can hold. Sharp rises in used car prices can make it "less economical" for insurers to total a car, and driver-assistance or autonomous technology could mean fewer accidents. _(from the filing)_
Growth needs land, and zoning makes it "more challenging and expensive to identify, acquire and develop new facilities". Growth also leans on acquisitions, including the pending ACV deal and its antitrust review, and on expansion abroad, which brings currency, tariff, compliance and political risk. Tariffs and export rules could reduce demand from the international members who buy U.S. cars. _(from the filing)_
The filing discloses a Department of Justice investigation into "potential violations by the Company of certain money laundering laws", concerning its controls over members, and says the company is cooperating. It also names cyberattacks, data privacy law, environmental liability at its yards, variable-rate debt and inventory risk on the cars it buys outright. _(from the filing)_
Two of these risks already show in the numbers. Weather: the flat service line is a comparison against a year of storm volume and storm costs. Inventory: the purchased-car line keeps only a thin spread over its cost. Seller concentration and the investigation do not show in this year's figures; if they mattered, the first signs would be lower volume or higher general and administrative cost. _(analysis)_

## Founder view: mechanisms

### Earn the fee, not the car

Copart takes a damaged car from the insurer, moves it, stores it, clears its title and sells it, then keeps a fee. In most of its markets the car never becomes Copart's inventory, so revenue is the fee stream and the margin is the fee less the yard cost. The insurer gets speed and a price set by a wide auction. Copart is paid per car, either a fixed fee or a share of the sale price. _(analysis)_

### One online auction, every buyer

Moving the auction online turns every car in every yard into stock for every registered member, wherever they are. More bidders per car raise the sale price, a better price gives insurers a better recovery, and that wins more cars, which draws more bidders. Paid by fixed or percentage fees, Copart gains from both the volume and the price. _(analysis)_

### Land as surge capacity

Salvage arrives in surges: a large storm can total a region's cars at once, and insurers need somewhere to put them fast. Copart owns or leases yards across the countries it serves and lists a prompt response to catastrophes as a competitive advantage. The land is partly idle in normal years and pays for itself in the bad ones, when insurers see who had room. _(analysis)_

### Fees that fund the expansion

Copart's fees arrive as cash, and outside the purchased-car line the business carries little inventory. Cash from operations has paid for land, acquisitions and buybacks, and the unspent balance earns interest that adds to pretax income. Growth is funded from inside the business rather than from new capital. _(analysis)_

## Member research

Signed-in members read, on the page: what Copart's numbers depend on from here, and the playbook behind each mechanism (what needs scale, what transfers, how to test it, the metric that would show it).

## Sources

- Copart 10-K for the period to 2026-07-31: https://www.sec.gov/Archives/edgar/data/900075/000119312526405731/ (2026-09-29)

Methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-02 · as of 2026-11-02