Copart (CPRT) Q2 2026: U.S. Insurance ASPs Rise 9% as Volumes Contract, Underscoring Marketplace Liquidity Edge
Copart’s Q2 2026 revealed a sharp divergence: robust average selling price growth for U.S. insurance units offset by persistent volume headwinds, as industry-wide accident and claims activity remain subdued. Management’s focus on marketplace liquidity, AI-driven productivity, and disciplined capital deployment—evidenced by $500 million in share repurchases—signals confidence in Copart’s long-term economic moat despite cyclical pressures. Investors should monitor the pace of insurance unit recovery and the durability of Copart’s competitive advantages as market dynamics evolve.
Summary
- Marketplace Liquidity Drives Pricing Power: Copart’s global buyer network continues to deliver superior auction returns for insurance clients.
- Volume Headwinds Persist: Insurance unit declines reflect cyclical consumer pullback and muted claims activity across the industry.
- Capital Allocation Shifts: Initiation of share buybacks reflects confidence in long-term value creation amid near-term volume softness.
Performance Analysis
Copart’s financials for Q2 2026 reflect a complex interplay between pricing strength and volume contraction. Consolidated revenue declined as lower unit volumes—both insurance and non-insurance—outweighed higher average selling prices (ASPs). On a normalized basis excluding last year’s catastrophic (CAT) events, revenue grew modestly, highlighting the underlying resilience of Copart’s auction platform.
U.S. insurance units fell sharply, but ASPs increased 9% excluding CAT impact, outpacing broader industry trends and supporting Copart’s thesis that marketplace liquidity and global buyer diversity drive premium outcomes. International operations provided a partial offset, with non-insurance unit growth and fee-per-unit improvements, especially in the UK and Canada. Gross margin expanded by 178 basis points to 45% (adjusted), aided by disciplined cost management and operational leverage, though a one-time $6.8 million VAT accrual in international weighed on profit. Free cash flow surged 58% year-to-date, supporting $500 million in share repurchases as part of a flexible capital deployment strategy.
- Insurance Volume Drag: Global insurance units declined 9%, with U.S. insurance units down 10.7%—a reflection of muted claims and consumer insurance coverage pullbacks.
- Marketplace Economics: Record U.S. insurance ASPs, up 9% ex-CAT, demonstrate the pricing power of Copart’s platform even as industry vehicle values normalize.
- International Diversification: Non-insurance units and fee-per-unit growth in international markets provided resilience, with international insurance ASPs up 9%.
While top-line growth remains challenged by cyclical industry factors, Copart’s profitability and capital efficiency underscore the durability of its marketplace model.
Executive Commentary
"Our auction returns continue to reflect structural advantages of our marketplace and recent account wins for which we have empirical before and after returns data validates that position. We are nevertheless generating record average selling prices for our U.S. insurance consignors."
Jeff Liao, CEO
"Copart remains in an exceptionally strong position. We ended the quarter with liquidity of approximately 6.4 billion, including cash and cash equivalents of 5.1 billion and no debt. We continue to generate robust free cash flow, which has increased 58% year to date."
Leah, CFO
Strategic Positioning
1. Marketplace Liquidity as Core Moat
Copart’s two-decade head start in online-only auctions, combined with a global buyer base, underpins its ability to consistently deliver superior auction results. Management highlights metrics such as bidders per auction and watchlist additions as evidence of growing platform engagement, reinforcing the “liquidity begets liquidity” dynamic that attracts both sellers and buyers.
2. AI and Technology-Driven Productivity
Artificial intelligence (AI) is now deeply embedded in Copart’s operations, from business analytics and document processing to a total loss decision tool for insurance carriers. With approximately 1,000 engineers and exponential growth in internal AI utilization, Copart is leveraging technology to drive faster cycle times, reduce administrative friction, and enhance customer experience—further widening its operational moat.
3. Disciplined Capital Allocation and Land Strategy
Copart’s capital allocation remains methodical, balancing ongoing investments in land and facility capacity with opportunistic share repurchases. The company’s long-term approach to land acquisition—anticipating future demand and catastrophic events—positions it to capture share as industry volumes recover. The recent $500 million buyback signals management’s confidence in intrinsic value and capital return discipline.
4. Resilient Non-Insurance and International Growth
Non-insurance businesses, including dealer services and international units, continue to grow, mitigating some of the insurance segment’s cyclical softness. Purple Wave, Copart’s heavy equipment platform, outperformed industry growth rates, though management remains focused on organic expansion rather than aggressive M&A.
Key Considerations
This quarter’s results highlight the tension between Copart’s marketplace strengths and the cyclical headwinds facing the auto insurance and salvage ecosystem. Investors should weigh the durability of Copart’s structural advantages against near-term volume risks and evolving competitive dynamics.
Key Considerations:
- Claims Activity Remains Muted: Lower accident and claims frequency, driven by consumer insurance cutbacks and safer vehicles, is temporarily suppressing insurance unit volumes.
- Total Loss Frequency Uptrend: Total loss frequency continues to rise, supporting Copart’s long-term volume thesis despite short-term accident frequency declines.
- Operational Leverage and Cost Discipline: Margin expansion reflects ongoing efficiency gains, though one-time international tax accruals can introduce volatility.
- Capital Return Flexibility: The initiation of share buybacks reflects confidence in long-term value, with management emphasizing a pragmatic, economics-driven approach to capital deployment.
- AI-Driven Differentiation: Copart’s early and broad adoption of AI is driving measurable productivity gains and is likely to be a key differentiator as the industry digitizes further.
Risks
Copart faces persistent volume headwinds from subdued claims activity, consumer insurance coverage reductions, and gradual declines in accident frequency due to advanced driver-assistance systems (ADAS). Competitive pricing pressure remains a constant, and the fragmented nature of non-insurance vehicle disposition channels could limit Copart’s ability to capture uninsured volume. Regulatory, macroeconomic, and technology-driven disruptions—while not acute—require ongoing vigilance, especially as the industry digitizes and new entrants emerge.
Forward Outlook
For Q3 2026, Copart expects:
- Continued muted insurance claim volumes, with potential for gradual recovery as insurance carriers reinvest in growth and consumer coverage stabilizes.
- Ongoing investment in land and technology to prepare for long-term industry growth and evolving customer needs.
For full-year 2026, management maintained a cautious but constructive outlook:
- Focus remains on maximizing auction returns, expanding the buyer base, and driving productivity through AI and operational excellence.
Management highlighted several factors that could shape results:
- Potential cyclical upturn in insurance policy growth as carrier profitability improves.
- Further AI-driven efficiency gains and cycle time reductions across the business.
Takeaways
Copart’s Q2 2026 underscores the company’s ability to deliver pricing outperformance and margin expansion despite cyclical volume pressure.
- Marketplace Advantage: Copart’s global liquidity and technology investments are translating into superior outcomes for insurance clients, even as volumes remain challenged.
- Resilience in Diversification: Growth in non-insurance and international segments provides a buffer against insurance cycle volatility, while capital discipline supports long-term positioning.
- Watch for Volume Inflection: Investors should monitor signs of stabilization in insurance claims activity and policyholder behavior, as well as continued progress in AI-driven productivity and capital deployment.
Conclusion
Copart’s Q2 2026 results highlight a business navigating cyclical headwinds with structural strengths in marketplace liquidity, technology, and disciplined capital allocation. While volume softness persists, the company’s long-term positioning and operational resilience remain intact, positioning Copart to capitalize when industry volumes recover.
Industry Read-Through
Copart’s results offer a window into broader auto salvage and insurance industry dynamics: muted claims activity and consumer insurance cutbacks are weighing on volumes industry-wide, while the gradual increase in total loss frequency and normalization of vehicle values are reshaping auction economics. The outperformance of digital-first, globally liquid auction platforms signals an accelerating shift toward technology-enabled, data-driven marketplace models. Competitors and adjacent players should note Copart’s success with AI integration and marketplace liquidity as key levers for future differentiation and margin protection in an increasingly competitive, cyclical industry.