FULLTEXT DEL 2 AV 2
10-K – 2025-09-26 – cprt-20250731.htm
The following table shows certain data from our consolidated statements of income expressed as a percentage of total service revenues and vehicle sales for fiscal 2025, 2024 and 2023:
Year Ended July 31,
(In percentages) 2025 2024 2023
Service revenues and vehicle sales:
Service revenues 85 % 84 % 83 %
Vehicle sales 15 % 16 % 17 %
Total service revenues and vehicle sales 100 % 100 % 100 %
Operating expenses:
Facility operations 42 % 40 % 39 %
Cost of vehicle sales 13 % 15 % 15 %
General and administrative 9 % 8 % 7 %
Total operating expenses 64 % 63 % 61 %
Operating income 36 % 37 % 39 %
Total other income 4 % 3 % 3 %
Income before income taxes 40 % 40 % 42 %
Income tax expense 7 % 8 % 8 %
Net income 33 % 32 % 34 %
Comparison of Fiscal Years ended July 31, 2025, 2024 and 2023
The following table presents a comparison of service revenues for fiscal 2025, 2024 and 2023:
Year Ended July 31, 2025 vs. 2024 2024 vs. 2023
(In thousands) 2025 2024 2023 Change % Change Change % Change
Service revenues
United States $ 3,451,558 $ 3,126,102 $ 2,841,641 $ 325,456 10.4 % $ 284,461 10.0 %
International 517,104 434,900 356,487 82,204 18.9 % 78,413 22.0 %
Total service revenues $ 3,968,662 $ 3,561,002 $ 3,198,128 $ 407,660 11.4 % $ 362,874 11.3 %
Service Revenues. The increase in service revenues for fiscal 2025 of $407.7 million, or 11.4% as compared to fiscal 2024 came from (i) an increase in the U.S. of $325.5 million, and (ii) an increase in International of $82.2 million. The growth in the U.S. was driven primarily by an increase in revenue per car and an increase in volume. The growth in International, after excluding positive fluctuations in currency exchange rates of $2.7 million, was driven primarily by an increase in revenue per car and increase in volume.
34
Table of Contents
The following table presents a comparison of vehicle sales for fiscal 2025, 2024 and 2023:
Year Ended July 31, 2025 vs. 2024 2024 vs. 2023
(In thousands) 2025 2024 2023 Change % Change Change % Change
Vehicle sales
United States $ 403,546 $ 338,633 $ 348,007 $ 64,913 19.2 % $ (9,374) (2.7) %
International 274,750 337,188 323,383 (62,438) (18.5) % 13,805 4.3 %
Total vehicle sales $ 678,296 $ 675,821 $ 671,390 $ 2,475 0.4 % $ 4,431 0.7 %
Vehicle Sales. The increase in vehicle sales for fiscal 2025 of $2.5 million, or 0.4% as compared to fiscal 2024 came from (i) an increase in the U.S. of $64.9 million and (ii) a decrease in International of $62.4 million. The increase in the U.S. was primarily driven by an increase in volume and an increase in revenue per car due to higher auction selling prices. The decrease in International, after excluding positive fluctuations in currency exchanges rates of $5.7 million was primarily driven by a decrease in revenue per car due to lower auction selling prices, which we believe was due to change in mix of vehicles sold, and a decrease in volume related to sellers switching to a consignment model.
The following table presents a comparison of facility operations expense for fiscal 2025, 2024 and 2023:
Year Ended July 31, 2025 vs. 2024 2024 vs. 2023
(In thousands) 2025 2024 2023 Change % Change Change % Change
Facility operations expenses
United States $ 1,646,183 $ 1,440,707 $ 1,292,527 $ 205,476 14.3 % $ 148,180 11.5 %
International 298,135 269,377 225,502 28,758 10.7 % 43,875 19.5 %
Total facility operations expenses $ 1,944,318 $ 1,710,084 $ 1,518,029 $ 234,234 13.7 % $ 192,055 12.7 %
Facility operations expenses, excluding depreciation and amortization
United States $ 1,485,186 $ 1,297,102 $ 1,173,373 $ 188,084 14.5 % $ 123,729 10.5 %
International 267,357 242,332 202,559 25,025 10.3 % 39,773 19.6 %
Facility depreciation and amortization
United States $ 160,997 $ 143,605 $ 119,155 $ 17,392 12.1 % $ 24,450 20.5 %
International 30,778 27,045 22,942 3,733 13.8 % 4,103 17.9 %
Facility Operations Expenses. The increase in facility operations expenses for fiscal 2025 of $234.2 million, or 13.7% as compared to fiscal 2024 resulted from (i) an increase in the U.S. of $205.5 million, and (ii) an increase in International of $28.8 million. The increase in the U.S. compared to the same period last year related to an increase in volume and in non-CAT related subhaul, labor, and facility costs combined with one time CAT costs of $56 million associated with Hurricanes Helene and Milton. These costs are related to subhaul, labor costs incurred from overtime, increased security costs, and increased travel and lodging. The increase in International, after excluding negative fluctuations in currency exchange rates of $1.8 million, is the result of an increase in volume and an increase in costs to process a car. Included in facility operations expenses were depreciation and amortization expenses. The increase in facility operations depreciation and amortization expenses as compared to the same period last year resulted primarily from depreciating new and expanded facilities placed into service in the U.S. and International.
The following table presents a comparison of cost of vehicle sales for fiscal 2025, 2024 and 2023:
Year Ended July 31, 2025 vs. 2024 2024 vs. 2023
(In thousands) 2025 2024 2023 Change % Change Change % Change
Cost of vehicle sales
United States $ 378,100 $ 313,449 $ 326,764 $ 64,651 20.6 % $ (13,315) (4.1) %
International 224,897 306,038 287,734 (81,141) (26.5) % 18,304 6.4 %
Total cost of vehicle sales $ 602,997 $ 619,487 $ 614,498 $ (16,490) (2.7) % $ 4,989 0.8 %
Cost of Vehicle Sales . The decrease in cost of vehicle sales for fiscal 2025 of $16.5 million, or 2.7% as compared to fiscal 2024, was the result of (i) an increase in the U.S. of $64.7 million and (ii) a decrease in International of $81.1 million. The
35
Table of Contents
increase in the U.S. was primarily the result of an an increase average purchase price due to a change in the mix of vehicles sold and an increase in volume. The decrease in International, after excluding the negative fluctuations of currency exchange rates of $4.1 million, was primarily due to a lower average purchase price due to a change in the mix of vehicles sold, combined with a decrease in volume related to sellers switching to a consignment model.
The following table presents a comparison of general and administrative expenses for fiscal 2025, 2024 and 2023:
Year Ended July 31, 2025 vs. 2024 2024 vs. 2023
(In thousands) 2025 2024 2023 Change % Change Change % Change
General and administrative expenses
United States $ 349,935 $ 282,545 $ 202,260 $ 67,390 23.9 % $ 80,285 39.7 %
International 52,994 52,684 48,162 310 0.6 % 4,522 9.4 %
Total general and administrative expenses $ 402,929 $ 335,229 $ 250,422 $ 67,700 20.2 % $ 84,807 33.9 %
General and administrative expenses, excluding depreciation and amortization
United States $ 326,906 $ 264,465 $ 185,611 $ 62,441 23.6 % $ 78,854 42.5 %
International 51,949 51,653 47,430 296 0.6 % 4,223 8.9 %
General and administrative depreciation and amortization
United States $ 23,029 $ 18,080 $ 16,649 $ 4,949 27.4 % $ 1,431 8.6 %
International 1,045 1,031 732 14 1.4 % 299 40.8 %
General and Administrative Expenses. The increase in general and administrative expenses for fiscal 2025 of $67.7 million, or 20.2% as compared to fiscal 2024 came primarily from (i) an increase in the U.S. of $67.4 million, and (ii) an increase in International of $0.3 million. Excluding depreciation and amortization, the increase in the U.S. of $62.4 million resulted primarily from increases in third party outside services (including legal, compliance, and system implementations), labor costs (as a result of investment in the business and the expansion of our sales force), facility costs and travel. The increase in International, primarily from increases in labor costs, and computer software offset by a decrease in legal costs. The increase in depreciation and amortization expenses was the result of new intangibles and technology being placed in service in the U.S. and International.
The following table summarizes total other expenses and income taxes for fiscal 2025, 2024 and 2023:
Year Ended July 31, 2025 vs. 2024 2024 vs. 2023
(In thousands) 2025 2024 2023 Change % Change Change % Change
Total other income (expenses) $ 198,867 $ 142,578 $ 67,759 $ 56,289 39.5 % $ 74,819 110.4 %
Income taxes 347,218 352,254 316,587 (5,036) (1.4) % 35,667 11.3 %
Other Income (Expenses). The increase in total other income for fiscal 2025 of $56.3 million, or 39.5% as compared to fiscal 2024 was primarily due to higher interest income earned from U.S. Treasury Bills, gain on sale of fixed assets, and realized and unrealized foreign currency gains.
Income Taxes. Our effective income tax rates were 18.3% and 20.5%, for fiscal 2025 and 2024, respectively. The current and prior year’s effective tax rate was computed based on the U.S. federal statutory tax rate of 21.0%. The effective tax rate for the fiscal year ended July 31, 2025 was favorably impacted by a $55.0 million tax benefit related to the Foreign Derived Intangible Income “FDII” deduction and $36.7 million in excess tax benefits from the exercise of employee stock options and negatively impacted by $38.6 million related to state income taxes. The effective tax rate for the fiscal year ending July 31, 2024 was favorably impacted by a $47.7 million tax benefit related to the FDII deduction and $14.8 million in excess tax benefits from the exercise of employee stock options and negatively impacted by $40.6 million related to state income taxes.
Discussion of Fiscal Year ended July 31, 2024 compared to Fiscal Year ended July 31, 2023
36
Table of Contents
For a discussion of fiscal 2024 as compared to fiscal 2023, please refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K for the fiscal year ended July 31, 2024, filed with the SEC on September 27, 2024 .
Liquidity and Capital Resources
The following table presents a comparison of key components of our liquidity and capital resources for fiscal 2025, 2024 and 2023, excluding additional funds available to us through our Revolving Loan Facility:
July 31, 2025 vs. 2024 2024 vs. 2023
(In thousands) 2025 2024 2023 Change % Change Change % Change
Cash, cash equivalents, and restricted cash $ 2,780,531 $ 1,514,111 $ 957,395 $ 1,266,420 83.6 % $ 556,716 58.1 %
Working capital 5,071,347 3,789,617 2,769,835 1,281,730 33.8 % 1,019,782 36.8 %
Year Ended July 31, 2025 vs. 2024 2024 vs. 2023
(In thousands) 2025 2024 2023 Change % Change Change % Change
Operating cash flows $ 1,799,750 $ 1,472,564 $ 1,364,210 $ 327,186 22.2 % $ 108,354 7.9 %
Investing cash flows (587,448) (940,079) (1,892,049) 352,631 37.5 % 951,970 50.3 %
Financing cash flows 52,107 19,273 66,615 32,834 170.4 % (47,342) 71.1 %
Capital expenditures and acquisitions $ (570,213) $ (493,328) $ (516,636) $ (76,885) (15.6) % $ 23,308 4.5 %
Cash, cash equivalents, and restricted cash increased $1,266.4 million and working capital increased $1,281.7 million at July 31, 2025, as compared to July 31, 2024. Cash, cash equivalents, and restricted cash increased primarily due to cash generated from operations, proceeds from held to maturity securities, and proceeds from stock option exercises. Working capital increased primarily from cash generated from operations and timing of cash receipts and payments, partially offset by capital expenditures, investment in held to maturity securities and certain income tax benefits related to stock option exercises and timing of cash payments. Cash equivalents consisted of bank deposits, certificates of deposit, U.S. Treasury Bills, and funds invested in money market accounts, which bear interest at variable rates.
Historically, we have financed our growth through cash generated from operations, public offerings of common stock, equity issued in conjunction with certain acquisitions, and debt financing. Our primary source of cash generated by operations is from the collection of service fees and reimbursable advances from the proceeds of vehicle sales. We expect to continue to use cash flows from operations to finance our working capital needs and to develop and grow our business. In addition to our stock repurchase program, we are considering a variety of alternative potential uses for our remaining cash balances and our cash flows from operations. For further detail, see Notes to Consolidated Financial Statements, Note 9 – Long-Term Debt and Note 12 — Stockholders’ Equity and under the subheading “ Credit Agreement ” below.
Our business is seasonal as inclement weather during the winter months increases the frequency of accidents and consequently, the number of cars involved in accidents which the insurance companies salvage rather than repair. During the winter months, most of our facilities process 5% to 20% more vehicles than at other times of the year. Severe weather events, including but not limited to tornadoes, floods, hurricanes, and hailstorms, can also impact our volumes. These increased volumes require the increased use of our cash to pay out advances and handling costs of the additional business.
We believe that our currently available cash and cash equivalents and cash generated from operations will be sufficient to satisfy our operating and working capital requirements in the foreseeable future. We expect to acquire or develop additional locations and expand some of our current facilities in the foreseeable future. We may raise additional cash through drawdowns on our Revolving Loan Facility or issuance of additional equity to fund this expansion. Although the timing and magnitude of growth through expansion and acquisitions are not predictable, the opening of new greenfield facilities is contingent upon our ability to locate property that (i) is in an area in which we have a need for more capacity; (ii) has adequate size given the capacity needs; (iii) has the appropriate shape and topography for our operations; (iv) is reasonably close to a major road or highway; and (v) most importantly, has the appropriate zoning for our business.
37
Table of Contents
As of July 31, 2025, $314.9 million of the $2.8 billion of cash, cash equivalents, and restricted cash was held by our foreign subsidiaries. If these funds are needed for our operations in the U.S., the repatriation of these funds could still be subject to the foreign withholding tax following the U.S. Tax Reform. However, our intent is to permanently reinvest these funds outside of the U.S. and our current plans do not require repatriation to fund our U.S. operations.
Net cash provided by operating activities increased for fiscal 2025 as compared to fiscal 2024 due to improved cash operating results primarily from an increase in service and vehicle sales revenues, partially offset by an increase in facility operations and general and administrative expenses, and changes in operating assets and liabilities. The change in operating assets and liabilities was primarily the result of a decrease in accounts receivable of $111.4 million, vehicle pooling costs of $26.4 million, prepaid expenses and other current and non-current assets of $78.8 million, partially offset by an increase in income tax receivable of $7.1 million and decrease in income tax payable of $90.8 million.
Net cash used in investing activities decreased for fiscal 2025 as compared to fiscal 2024 due primarily to an increase in proceeds from the sale of held to maturity securities, a reduction in the purchase of held to maturity securities and an increase in capital expenditures. Our capital expenditures are primarily related to acquiring land, opening and improving facilities, capitalized software development costs for new software for internal use and major software enhancements, acquiring facility equipment, and lease buyouts of certain facilities. We continue to develop, expand, and invest in new and existing facilities and standardize the appearance of existing locations. As of July 31, 2025, we had no material non-cancelable commitments for future capital expenditures.
Net cash provided by financing activities increased in fiscal 2025 as compared to fiscal 2024 due primarily to an increase in proceeds from the exercise of stock options and a reduction in revolver facility payments.
For a discussion of fiscal 2024 as compared to fiscal 2023, please refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K for the fiscal year ended July 31, 2024, filed with the SEC on September 27, 2024 .
Credit Agreement
On December 21, 2021, we entered into a Second Amended and Restated Credit Agreement by and among Copart, certain subsidiaries of Copart party thereto, the lenders party thereto, and Bank of America, N.A., as administrative agent (the “Second Amended and Restated Credit Agreement”). The Second Amended and Restated Credit Agreement provides for a revolving loan facility of $1,250.0 million maturing on December 21, 2026 (including up to $550.0 million equivalent of borrowings in Pounds Sterling, European Union Euro and Canadian dollars) with a $150.0 million equivalent sub-facility available to CPRT GmbH, a $150.0 million equivalent sub-facility available to Copart Autos España, S.L.U. and a $250.0 million sub-facility available to Copart UK Limited. The proceeds may be used for general corporate purposes, including working capital, capital expenditures, potential share repurchases, acquisition, or other investments relating to the Company’s expansion strategies in domestic and international markets.
We had no outstanding borrowings under the Revolving Loan Facility as of July 31, 2025 and July 31, 2024. The Second Amended and Restated Credit Agreement contains customary affirmative and negative covenants and we were in compliance with all covenants related to the Second Amended and Restated Credit Agreement as of July 31, 2025.
For further detail on the Second Amended and Restated Credit Agreement, see Notes to Consolidated Financial Statements, Note 9 – Long-Term Debt .
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities as of the date of the financial statements. Actual results may differ from these estimates under different assumptions or conditions.
We consider the following policies to be the most critical to understanding the judgments that are involved and the uncertainties that could impact our results of operations, financial condition, and cash flows. For additional information, see Note 1 — Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements.
38
Table of Contents
The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements and related Notes.
Revenue Recognition
Our primary performance obligation is the auctioning of consigned vehicles through an online auction process. Service revenue and vehicle sales revenue are recognized at the date the vehicles are sold at auction, excluding annual registration fees. Costs to prepare the vehicles for auction, including inbound transportation costs and titling fees, are deferred and recognized at the time of revenue recognition at auction.
Our disaggregation between service revenues and vehicle sales at the segment level reflects how the nature, timing, amount, and uncertainty of our revenues and cash flows are impacted by economic factors. We report sales taxes on relevant transactions on a net basis in our consolidated results of operations, and therefore do not include sales taxes in revenues or costs.
Service revenues
Our service revenues consist of auction and auction-related sales transaction fees charged for vehicle remarketing services. Within this revenue category, our primary performance obligation is the auctioning of consigned vehicles through an online auction process. These auction and auction-related services may include a combination of vehicle purchasing fees, vehicle listing fees, and vehicle selling fees that can be based on a predetermined percentage of the vehicle sales price, tiered vehicle sales price driven fees, or at a fixed fee based on the sale of each vehicle regardless of the selling price of the vehicle; transportation fees for the cost of transporting the vehicle to or from our facility; title processing and preparation fees; vehicle storage fees; bidding fees; and vehicle loading fees. These services are not distinct within the context of the contract. Accordingly, revenue for these services is recognized when the single performance obligation is satisfied at the completion of the auction process. We do not take ownership of these consigned vehicles which are stored at our facilities located throughout the U.S. and international locations. These fees are recognized as net revenue (not gross vehicle selling price) at the time of auction in the amount of such fees charged.
We have a separate performance obligation related to providing access to our online auction platform. We charge members an annual registration fee for the right to participate in our online auctions and access our bidding platform. This fee is recognized ratably over the term of the arrangement, generally one year, as each day of access to the online auction platform represents the best depiction of the transfer of the service.
No provision for returns has been established, as all sales are final with no right of return or warranty, except for separately identified vehicles subject to an arbitration policy, although we provide for expected credit losses in the case of non-performance by our buyers or sellers.
Year Ended July 31,
(In thousands) 2025 2024 2023
Service revenues
United States $ 3,451,558 $ 3,126,102 $ 2,841,641
International 517,104 434,900 356,487
Total service revenues $ 3,968,662 $ 3,561,002 $ 3,198,128
Vehicle sales
Certain vehicles are purchased and remarketed on our own behalf. We have a single performance obligation related to the sale of these vehicles, which is the completion of the online auction process. Vehicle sales revenue is recognized on the auction date. As we act as a principal in vehicle sales transactions, the gross sales price at auction is recorded as revenue.
Year Ended July 31,
(In thousands) 2025 2024 2023
Vehicle sales
United States $ 403,546 $ 338,633 $ 348,007
International 274,750 337,188 323,383
Total vehicle sales $ 678,296 $ 675,821 $ 671,390
39
Table of Contents
Contract assets
We capitalize certain contract assets related to obtaining a contract, where the amortization period for the related asset is greater than one year. These assets are amortized over the expected life of the customer relationship. Contract assets are classified as current or long-term other assets, based on the timing of when we expect to recognize the related revenues and are amortized as an offset to the associated revenues on a straight-line basis. We assess these costs for impairment at least quarterly and as “triggering” events occur that indicate it is more likely than not that an impairment exists. The contract asset costs where the amortization period for the related asset is one year or less are expensed as incurred and recorded within general and administrative expenses in the accompanying consolidated statements of income.
Income Taxes
In determining net income for financial statement purposes, we must make certain estimates and judgments in the calculation of tax provisions and the resultant tax liabilities.
Deferred income tax assets and liabilities are recognized based on differences between the financial reporting and income tax basis of assets and liabilities and are measured using the tax rates and laws enacted at the time of such determination. We regularly review our deferred tax assets for recoverability, and a valuation allowance is provided when it is more likely than not that some portion of a deferred tax asset will not be realized. In assessing the need for a valuation allowance, we make estimates and assumptions regarding projected future taxable income, the reversal of deferred tax liabilities and implementation of tax planning strategies. Changes in our assumptions could cause an increase or decrease to the valuation allowance resulting in an increase or decrease in our effective tax rate.
We recognize liabilities when we determine a tax position is not more likely than not to be sustained upon examination by the tax authorities. We use judgment in determining whether a tax position's technical merits are more likely than not to be sustained and in measuring the amount of tax benefit that qualifies for recognition. We recognize penalties and interest accrued related to income taxes as a component of the provision for income taxes. Although we believe the estimates are reasonable, no assurance can be given that the final outcome of these matters will not be different from what is reflected in the historical income tax provisions and accruals.
We recognize liabilities, if any, related to global low-taxed intangible income in the year in which the liability arises and not as a deferred tax liability.
Recently Issued Accounting Standards
For a description of the new accounting standards that affect us, refer to the Notes to Consolidated Financial Statements, Note 1 — Summary of Significant Accounting Policies.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Our principal exposures to financial market risk are interest rate risk and foreign currency exchange rate and translation risk. We do not hold or issue financial instruments for trading purposes.
Interest Income Risk
The primary objective of our investment activities is to preserve principal while secondarily maximizing yields without significantly increasing risk. To achieve this objective in the current uncertain global financial markets, all cash and cash equivalents were held in bank deposits, U.S. Treasury Bills, and money market funds as of July 31, 2025. As the interest rates on a material portion of our cash and cash equivalents are variable, a change in interest rates earned on our investment portfolio would impact interest income along with cash flows, but would not materially impact the fair market value of the related underlying instruments. As of July 31, 2025, we held no direct investments in auction rate securities, collateralized debt obligations, structured investment vehicles or mortgaged-backed securities. Based on the average cash balance held for fiscal 2025, a hypothetical 10% adverse change in our interest yield would not have materially affected our operating results.
40
Table of Contents
Interest Expense Risk
There where no borrowings under the Revolving Loan Facility under the Second Amended and Restated Credit Agreement as of July 31, 2025. The Revolving Loan Facility under the Second Amended and Restated Credit Agreement bears interest, at our election, at either (a) the Base Rate, which is defined as a fluctuating rate per annum equal to the greatest of (i) the Federal Funds Rate, which is defined as a fluctuating rate per annum to the greatest of (A) the Federal Funds Rate in effect on such date plus 0.50% or (B) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate;” and (ii) SOFR for a one-month interest period for such date plus 1.0%, plus an applicable margin ranging from 0.00% to 0.75% based on our consolidated total net leverage ratio during the preceding fiscal quarter; or (b) the SOFR plus an applicable margin ranging from 1.00% to 1.75% depending on our consolidated total net leverage ratio during the preceding fiscal quarter. Interest is due and payable, arrears, at the end of each calendar quarter for loans bearing interest at the Base Rate, and at the end of an interest period (or at each three-month interval in the case of loans with interest periods greater than three months) in the case of SOFR Loans. If interest rates were to increase by 10% it would not materially affect our operating results.
Foreign Currency and Translation Exposure
Fluctuations in foreign currencies create volatility in our reported results of operations because we are required to consolidate the results of operations of our foreign currency denominated subsidiaries. International net revenues are typically denominated in the local currency of each country and result from transactions by our operations in Canada, the U.K., Brazil, the Republic of Ireland, Germany, Finland, the U.A.E., Oman, Bahrain, and Spain. These operations also incur a majority of their expenses in the following local currencies, the Pounds Sterling, Canadian dollar, Brazilian real, European Union euro, U.A.E. dirham, Omani rial, and Bahraini dinar. Our international operations are subject to risks associated with foreign exchange rate volatility, which could have a material and adverse impact on our future results of operations. A hypothetical 10% adverse change in the value of the U.S. dollar relative to Pounds Sterling, Canadian dollar, Brazilian real, European Union euro, U.A.E. dirham, Omani rial, and Bahraini dinar would not materially affect our operating results for fiscal 2025.
Fluctuations in foreign currencies also create volatility in our consolidated financial position because we are required to remeasure substantially all assets and liabilities held by our foreign subsidiaries at the current exchange rate at the close of the accounting period. At July 31, 2025, the cumulative effect of foreign exchange rate fluctuations on our consolidated financial position was a net translation loss of $120.3 million. This loss was recognized as an adjustment to stockholders’ equity through accumulated other comprehensive income. A hypothetical 10% adverse change in the value of the U.S. dollar relative to Pounds Sterling, Canadian dollar, Brazilian real, European Union euro, U.A.E. dirham, Omani rial, and Bahraini dinar. would not have materially affected our consolidated financial position. We do not hedge our exposure to translation risks arising from fluctuations in foreign currency exchange rates.
Item 8. Financial Statements and Supplementary Data
The response to this item is submitted as a separate section of this Annual Report on Form 10-K in Item 15. See Part IV, Item 15(a) for an index to the consolidated financial statements and supplementary financial information.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We conducted an evaluation of the effectiveness of our “disclosure controls and procedures” (“Disclosure Controls”), as defined by Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of July 31, 2025, the end of the period covered by this Annual Report on Form 10-K. The Disclosure Controls evaluation was done under the supervision and with the participation of management, including our CEO and CFO. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.
Based upon this evaluations, our CEO and CFO have concluded that, our Disclosure Controls were effective at the reasonable assurance level as of July 31, 2025.
41
Table of Contents
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements for external reporting purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with policies or procedures may deteriorate over time.
Management, including our CEO and CFO, assessed the effectiveness of the Company’s internal control over financial reporting as of July 31, 2025. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013). Based on its assessment and those criteria, management has concluded that the Company maintained effective internal control over financial reporting as of July 31, 2025. Ernst & Young LLP, the independent registered public accounting firm that audited our Consolidated Financial Statements included in this Annual Report on Form 10-K, has issued an attestation report on our internal control over financial reporting, which is included herein.
Changes in Internal Control over Financial Reporting
In the ordinary course of business, we make changes to our systems and processes to improve controls and increase efficiency while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems and automating manual processes. In the first quarter of fiscal 2025, we began implementing a new financial system, which will be completed in stages. The first stage of the system implementation included our member billing in the United States. This new financial system is a significant component of our internal control over financial reporting. We will continue to implement our new financial system, in stages, and each implementation will become a significant component of our internal control over financial reporting.
Except for the new financial system implementation noted above, there have been no changes in our internal control over financial reporting during the most recent fiscal quarter that materially affected, or are reasonably like to materially affect, our internal control over financial reporting.
42
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Copart, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Copart, Inc.’s internal control over financial reporting as of July 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Copart, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of July 31, 2025, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2025 consolidated financial statements of the Company, and our report dated September 26, 2025, expressed an unqualified opinion thereon.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Dallas, Texas
September 26, 2025
43
Table of Contents
Item 9B. Other Information
During the three months ended July 31, 2025, no director or officer of the Company adopted or terminated any “Rule 10b5-1 trading arrangement,” or any “non-Rule 10b5-1 trading arrangement,” as such terms are defined in Item 408(a) of Regulation S-K.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
44
Table of Contents
PART III
Certain information required by Part III is omitted from this Annual Report on Form 10-K because we intend to file a definitive proxy statement for our 2025 Annual Meeting of Stockholders (“the Proxy Statement”) not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, and certain information to be included therein is incorporated herein by reference.
Item 10. Directors, Executive Officers and Corporate Governance
Information required by this item is incorporated by reference to the proposal captioned “Election of Directors,” and the sections titled “Corporate Governance and Board of Directors” and “Related Person Transactions” in our Proxy Statement.
Delinquent Section 16(a) Reports
There were no delinquent Section 16(a) Reports during fiscal 2025.
Code of Ethics
We have adopted the Copart, Inc. Code of Ethics for Principal Executive and Senior Financial Officers (“Code of Ethics”). The Code of Ethics applies to our principal executive officer, our principal financial officer, our principal accounting officer or controller, and persons performing similar functions and responsibilities who shall be identified by our Audit Committee from time to time.
The Code of Ethics is available on the Investor Relations page at our website, located at http://www.copart.com .
We intend to satisfy disclosure requirements under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of the Code of Ethics by posting such information on our website, at the address and location specified above, or as otherwise required by the NASDAQ Global Select Market.
Insider Trading Arrangements and Policies
We have adopted insider trading policies and procedures governing the purchase, sale, and/or other dispositions of the Company’s securities by directors, officers and employees, or the Company itself, that are reasonably designed to promote compliance with insider trading laws, rules and regulations, and any listing standards applicable to the Company. A copy of the Company’s insider trading policy has been filed as Exhibit 19.1 to this Annual Report on Form 10-K.
Item 11. Executive Compensation
The information required by this item is incorporated herein by reference from the Proxy Statement under the headings “Executive Compensation Tables,” “Compensation of Directors and Chairman of the Board,” and “Corporate Governance and Board of Directors.”
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item is incorporated herein by reference from the Proxy Statement under the headings “Security Ownership” and “Executive Compensation Tables,” subheading “Equity Compensation Plan Information.”
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item is incorporated herein by reference from the Proxy Statement under the headings “Related Person Transactions,” “Corporate Governance and Board of Directors,” and under the proposal captioned “Election of Directors.”
Item 14. Principal Accounting Fees and Services
The information required by this item is incorporated herein by reference from the proposal captioned “Ratification of Appointment of Independent Registered Public Accounting Firm” in the Proxy Statement.
45
Table of Contents
PART IV
Item 15. Exhibits, Financial Statement Schedules
The following documents are filed as part of this Form 10-K:
(a) Financial statements:
Our consolidated financial statements at July 31, 2025 and 2024 and for each of the three years in the period ended July 31, 2025 and the notes thereto, together with the report of the independent registered public accounting firm on those consolidated financial statements are hereby filed as part of this Annual Report on Form 10-K.
(b) Financial statement schedules:
No financial statement schedules are presented since the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto.
(c) Exhibits:
Exhibits required to be filed by this Item 15 are set forth in the Exhibit Index accompanying this Annual Report on Form 10-K.
Item 16. Form 10-K Summary
None.
46
Table of Contents
EXHIBIT INDEX
The following Exhibits are filed as part of, or incorporated by reference into this report.
Incorporated by reference herein
Exhibit
Number Description Form Date
3.1 Amended and Restated Certificate of Incorporation of Copart, Inc.
Current Report on Form 8-K (File No. 000-23255), Exhibit No. 3.1 November 2, 2022
3.2 Amended and Restated Bylaws of Copart, Inc.
Current Report on Form 8-K (File No. 000-23255), Exhibit No. 3.1 March 12, 2024
4.1 Description of Capital Stock
Annual Report on Form 10-K (File No. 000-23255), Exhibit No. 4.1 September 30, 2019
10.1 * Copart Inc. 2007 Equity Incentive Plan, as Amended and Restated (2007 EIP)
— Filed herewith
10.2 * Form of Performance Share Award Agreement for use with 2007 EIP
Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.1 December 12, 2007
10.3 * Form of Restricted Stock Unit Award Agreement for use with 2007 EIP
Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.3 December 12, 2007
10.4 * Form of Stock Option Award Agreement for use with 2007 EIP
Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.5 December 12, 2007
10.5 * Form of Restricted Stock Award Agreement for use with 2007 EIP
Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.4 December 12, 2007
10.6 * Copart, Inc. Executive Bonus Plan
Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.1 March 5, 2021
10.7 * Form of Indemnification Agreement signed by executive officers and directors
Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.1 May 26, 2023
10.8 * Copart, Inc. 2014 Employee Stock Purchase Plan
Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.1 December 5, 2014
10.9 * Executive Officer Employment Agreement, effective January 4, 2016, between the Registrant and Jeffrey Liaw.
Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.26 November 23, 2015
10.10 Second Amended and Restated Credit Agreement, dated as of December 21, 2021, by and among Copart, certain subsidiaries of Copart. the lenders party thereto, and Bank of America,N.A., as administrative agent.
Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.1 December 27, 2021
10.11 Executive Officer Employment Agreement, effective December 5, 2022, between the registrant and Leah Stearns
Quarterly Report on Form 10-Q (File No. 000-23255), Exhibit No. 10 February 24, 2023
47
Table of Contents
Incorporated by reference herein
Exhibit
Number Description Form Date
10.12 * Outside Director Compensation Program
Annual Report on Form 10-K (File No. 000-23255), Exhibit 10.12 September 30, 2024
10.13 Corporate Aircraft Personal Use Policy
Current Report on Form 8-K (File No. 000-23255), Exhibit 10.1 March 12, 2024
19.1 Insider Trading Policy
— Filed herewith
21.1 List of subsidiaries of Registrant
— Filed herewith
23.1 Consent of Independent Registered Public Accounting Firm
— Filed herewith
24.1 Power of Attorney (included on signature page) — Filed herewith
31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
— Filed herewith
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
— Filed herewith
32.1 (1) Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
— Filed herewith
32.2 (1) Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
— Filed herewith
97.1 Compensation Recovery Policy
Annual Report on Form 10-K (File No. 000-23255), Exhibit 97.1 September 30, 2024
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Extension Definition
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File, formatted in Inline Extensible Business Reporting Language (iXBRL).
(1) In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 33-8238 and 34-47986, Final Rule: Management’s Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Form 10-K and will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.
* Management contract, plan or arrangement
48
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
C OPART, I NC.
By: /s/ JEFFREY LIAW
Jeffrey Liaw
Chief Executive Officer
(Principal Executive Officer)
Date: September 26, 2025
C OPART, I NC.
By: /s/ LEAH STEARNS
Leah Stearns
Chief Financial Officer
(Principal Financial and Accounting Officer and duly Authorized Officer)
Date: September 26, 2025
49
Table of Contents
POWER OF ATTORNEY
KNOWN ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jeffrey Liaw and Leah Stearns, and each of them, as his or her true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
50
Table of Contents
Signature Capacity in Which Signed Date
/s/ JEFFREY LIAW Chief Executive Officer (Principal Executive Officer) September 26, 2025
Jeffrey Liaw
/s/ LEAH STEARNS Chief Financial Officer (Principal Financial and Accounting Officer) September 26, 2025
Leah Stearns
/s/ A. JAYSON ADAIR Executive Chairman September 26, 2025
A. Jayson Adair
/s/ WILLIS J. JOHNSON
Chairman of the Board September 26, 2025
Willis J. Johnson
/s/ MATT BLUNT
Director September 26, 2025
Matt Blunt
/s/ STEVEN D. COHAN
Director September 26, 2025
Steven D. Cohan
/s/ DANIEL ENGLANDER
Director September 26, 2025
Daniel Englander
/s/ STEPHEN FISHER
Director September 26, 2025
Stephen Fisher
/s/ CHERYLYN HARLEY LEBON
Director September 26, 2025
Cherylyn Harley LeBon
/s/ JAMES E. MEEKS
Director September 26, 2025
James E. Meeks
/s/ DIANE M. MOREFIELD
Director September 26, 2025
Diane M. Morefield
/s/ CARL SPARKS
Director September 26, 2025
Carl Sparks
/s/ THOMAS N. TRYFOROS
Director September 26, 2025
Thomas N. Tryforos
51
Table of Contents
Copart, Inc.
Index to Consolidated Financial Statements
and Financial Statement Schedule
Consolidated Financial Statements Page Number
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 )
53
Consolidated Balance Sheets as of July 31, 202 5 and 20 24
54
Consolidated Statements of Income for the years ended July 31, 202 5 , 202 4 and 202 3
55
Consolidated Statements of Comprehensive Income for the years ended July 31, 202 5 , 202 4 and 202 3
56
Consolidated Statements of Changes in Redeemable Noncontrolling Interest and Stockholders' Equity for the years ended July 31, 202 5 , 202 4 and 202 3
57
Consolidated Statements of Cash Flows for the years ended July 31, 202 5 , 202 4 and 202 3
58
Notes to Consolidated Financial Statements
59
52
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Copart, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Copart, Inc. (the Company) as of July 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in redeemable noncontrolling interest and stockholders’ equity, and cash flows for each of the three years in the period ended July 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at July 31, 2025 and 2024 and the results of its operations and its cash flows for each of the three years in the period ended July 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of July 31, 2025, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated September 26, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2006.
Dallas, Texas
September 26, 2025
53
Table of Contents
COPART, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
July 31,
2025 2024
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash $ 2,780,531 $ 1,514,111
Investment in held to maturity securities
2,008,539 1,908,047
Accounts receivable, net 762,811 785,877
Vehicle pooling costs 116,145 132,638
Inventories 39,661 43,639
Income taxes receivable 580 —
Prepaid expenses and other assets 46,361 33,872
Total current assets 5,754,628 4,418,184
Property and equipment, net 3,598,093 3,175,838
Operating lease right-of-use assets 99,708 116,301
Intangibles, net 62,832 74,088
Goodwill 517,779 513,909
Other assets 57,862 129,444
Total assets $ 10,090,902 $ 8,427,764
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 591,831 $ 518,148
Deferred revenue 30,440 28,121
Income taxes payable 41,141 60,994
Current portion of operating and finance lease liabilities 19,869 21,304
Total current liabilities 683,281 628,567
Deferred income taxes 80,625 93,653
Income taxes payable 35,635 59,560
Operating and finance lease liabilities, net of current portion 83,870 97,429
Total liabilities 883,411 879,209
Commitments and contingencies
Redeemable non-controlling interest 20,458 24,544
Stockholders’ equity:
Preferred stock: $ 0.0001 par value— 5,000,000 shares authorized; none issued
— —
Common stock: $ 0.0001 par value— 1,600,000,000 shares authorized; 967,478,690 and 962,967,011 shares issued and outstanding, respectively
97 96
Additional paid-in capital 1,214,150 1,120,985
Accumulated other comprehensive loss ( 120,283 ) ( 142,972 )
Retained earnings 8,093,069 6,545,902
Total stockholders’ equity 9,187,033 7,524,011
Total liabilities, redeemable noncontrolling interests and stockholders’ equity $ 10,090,902 $ 8,427,764
The accompanying notes are an integral part of these consolidated financial statements.
54
Table of Contents
COPART, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
Year Ended July 31,
2025 2024 2023
Service revenues and vehicle sales:
Service revenues $ 3,968,662 $ 3,561,002 $ 3,198,128
Vehicle sales 678,296 675,821 671,390
Total service revenues and vehicle sales 4,646,958 4,236,823 3,869,518
Operating expenses:
Facility operations 1,944,318 1,710,084 1,518,029
Cost of vehicle sales 602,997 619,487 614,498
General and administrative 402,929 335,229 250,422
Total operating expenses 2,950,244 2,664,800 2,382,949
Operating income 1,696,714 1,572,023 1,486,569
Other income (expense):
Interest income (expense), net 178,909 145,673 65,928
Other income (expense), net 19,958 ( 3,095 ) 1,831
Total other income 198,867 142,578 67,759
Income before income taxes 1,895,581 1,714,601 1,554,328
Income tax expense 347,218 352,254 316,587
Net income 1,548,363 1,362,347 1,237,741
Less: Net income (loss) attributable to redeemable
noncontrolling interest ( 4,086 ) ( 673 ) —
Net income attributable to Copart, Inc. $ 1,552,449 $ 1,363,020 $ 1,237,741
Basic net income per common share $ 1.61 $ 1.42 $ 1.30
Weighted average common shares outstanding 965,306 960,739 953,574
Diluted net income per common share $ 1.59 $ 1.40 $ 1.28
Diluted weighted average common shares outstanding 977,563 974,798 966,647
The accompanying notes are an integral part of these consolidated financial statements.
55
Table of Contents
COPART, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Year Ended July 31,
2025 2024 2023
Comprehensive income, net of tax:
Net income $ 1,548,363 $ 1,362,347 $ 1,237,741
Other comprehensive income:
Foreign currency translation adjustments 22,689 ( 1,966 ) 28,359
Comprehensive income $ 1,571,052 $ 1,360,381 $ 1,266,100
Less: Comprehensive income/(loss) attributable to
redeemable noncontrolling interest $ ( 4,086 ) $ ( 673 ) $ —
Comprehensive income attributable to Copart, Inc. $ 1,575,138 $ 1,361,054 $ 1,266,100
The accompanying notes are an integral part of these consolidated financial statements.
56
Table of Contents
COPART, INC.
CONSOLIDATED STATEMENT OF CHANGES IN REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
(in thousands, except share amounts)
Common Stock Accumulated
Other
Comprehensive
Income (Loss)
Additional
Paid-in
Capital
Outstanding
Shares Amount Retained
Earnings Total Stockholders’
Equity Redeemable Noncontrolling Interest
Balances at July 31, 2022 952,163,896 $ 96 $ 838,460 $ ( 169,365 ) $ 3,956,408 $ 4,625,599 $ —
Net income — — — — 1,237,741 1,237,741 —
Currency translation adjustment — — — 28,359 — 28,359 —
Exercise of stock options, net of repurchased shares 4,473,888 — 49,679 — ( 4,709 ) 44,970 —
Employee stock-based compensation 257,700 — 39,673 — — 39,673 —
Shares issued for Employee Stock Purchase Plan 448,678 — 11,098 — — 11,098 —
Balances at July 31, 2023 957,344,162 96 938,910 ( 141,006 ) 5,189,440 5,987,440 —
Net income — — — — 1,363,020 1,363,020 ( 673 )
Currency translation adjustment — — — ( 1,966 ) — ( 1,966 ) —
Acquisition of controlling interest 2,499,993 — 112,075 — — 112,075 25,217
Exercise of stock options, net of repurchased shares 2,560,852 — 24,260 — ( 6,558 ) 17,702 —
Employee stock-based compensation 246,962 — 33,334 — — 33,334 —
Shares issued for Employee Stock Purchase Plan 315,042 — 12,406 — — 12,406 —
Balances at July 31, 2024 962,967,011 96 1,120,985 ( 142,972 ) 6,545,902 7,524,011 24,544
Net income — — — — 1,552,449 1,552,449 ( 4,086 )
Currency translation adjustment — — — 22,689 — 22,689 —
Acquisition of controlling interest — — — — — — —
Exercise of stock options, net of repurchased shares 3,961,105 1 42,759 — ( 5,282 ) 37,478 —
Employee stock-based compensation 212,867 — 35,727 — — 35,727 —
Shares issued for Employee Stock Purchase Plan 337,707 — 14,679 — — 14,679 —
Balances at July 31, 2025 967,478,690 $ 97 $ 1,214,150 $ ( 120,283 ) $ 8,093,069 $ 9,187,033 $ 20,458
The accompanying notes are an integral part of these consolidated financial statements.
57
Table of Contents
COPART, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended July 31,
2025 2024 2023
Cash flows from operating activities:
Net income $ 1,548,363 $ 1,362,347 $ 1,237,741
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including debt cost 217,784 190,256 159,684
Allowance for credit losses 354 3,914 1,946
Gain on extinguishment of liabilities — ( 4,058 ) —
Equity in (income) losses of unconsolidated affiliates ( 149 ) 2,241 5,347
Stock-based compensation 38,004 35,234 39,673
Gain on sale of property and equipment ( 13,726 ) ( 2,386 ) ( 1,846 )
Deferred income (benefits) taxes ( 13,440 ) ( 847 ) 9,946
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable ( 33,950 ) ( 145,385 ) ( 123,207 )
Vehicle pooling costs 16,705 ( 9,542 ) ( 10,989 )
Inventories 4,655 ( 3,698 ) 26,549
Prepaid expenses and other current and non-current assets 7,748 ( 71,067 ) ( 59,949 )
Operating lease right-of-use assets and lease liabilities 478 1,064 350
Accounts payable and accrued liabilities 69,599 59,528 18,010
Deferred revenue 2,159 1,867 5,896
Income taxes receivable ( 575 ) 6,561 33,193
Income taxes payable ( 44,259 ) 46,535 21,866
Net cash provided by operating activities 1,799,750 1,472,564 1,364,210
Cash flows from investing activities:
Purchases of property and equipment ( 568,990 ) ( 510,990 ) ( 516,636 )
Assets and liabilities acquired in connection with acquisition ( 1,223 ) 17,662 —
Proceeds from sale of property and equipment 31,831 4,166 33,919
Investment in held to maturity securities ( 4,001,918 ) ( 4,087,162 ) ( 1,406,588 )
Proceeds from held to maturity securities 3,960,000 3,645,000 —
Investment in unconsolidated affiliate ( 7,148 ) ( 8,755 ) ( 2,744 )
Net cash used in investing activities ( 587,448 ) ( 940,079 ) ( 1,892,049 )
Cash flows from financing activities:
Proceeds from the exercise of stock options 42,759 24,260 49,679
Proceeds from the issuance of Employee Stock Purchase Plan shares 14,679 12,406 11,098
Payments for employee stock-based tax withholdings ( 5,282 ) ( 6,558 ) ( 4,709 )
Issuance of principal on revolver facility — — 44,494
Principal payments on revolver facility — ( 10,821 ) ( 33,924 )
Payments of finance lease obligations ( 49 ) ( 14 ) ( 23 )
Net cash provided by financing activities 52,107 19,273 66,615
Effect of foreign currency translation 2,011 4,958 34,383
Net increase (decrease) in cash, cash equivalents, and restricted cash 1,266,420 556,716 ( 426,841 )
Cash, cash equivalents, and restricted cash at beginning of period 1,514,111 957,395 1,384,236
Cash, cash equivalents, and restricted cash at end of period $ 2,780,531 $ 1,514,111 $ 957,395
Supplemental disclosure of cash flow information:
Interest paid $ 2,019 $ 3,127 $ 2,614
Income taxes paid, net of refunds $ 409,003 $ 285,891 $ 257,514
Purchase of property and equipment through settlement of deposit $ 64,050 $ — $ —
The accompanying notes are an integral part of these consolidated financial statements.
58
Table of Contents
COPART, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2025
NOTE 1 — Summary of Significant Accounting Policies
Basis of Presentation and Description of Business
Copart, Inc. (“the Company”) provides vehicle sellers with a full range of services to process and sell vehicles over the internet through the Company’s Virtual Bidding Third Generation (“VB3”) internet auction-style sales technology. Vehicle sellers consist primarily of insurance companies, but also include dealers, individuals, charities, rental car companies, banks, finance companies, and fleet operators. The Company sells principally to licensed vehicle dismantlers, rebuilders, repair licensees, used vehicle dealers, exporters, and directly to the general public. The majority of vehicles sold on behalf of insurance companies are either damaged vehicles deemed a total loss or not economically repairable by the insurance companies or are recovered stolen vehicles for which an insurance settlement with the vehicle owner has already been made. The Company offers vehicle sellers a full range of services that expedite each stage of the vehicle sales process, minimize administrative and processing costs and maximize the ultimate sales price through the online auction process. In the United States (“U.S.”), Canada, Brazil, the Republic of Ireland, Finland, the United Arab Emirates (“U.A.E.”), Oman, and Bahrain, the Company sells vehicles primarily as an agent and derives revenue primarily from auction and auction-related sales transaction fees charged for vehicle remarketing services as well as fees for services subsequent to the auction, such as delivery and storage. In the United Kingdom (“U.K.”), Germany, and Spain, the Company operates both as an agent and on a principal basis, in some cases purchasing salvage vehicles outright and reselling the vehicles for its own account. In Germany the Company also derives revenue from listing vehicles on behalf of insurance companies and insurance experts to determine the vehicle’s residual value and/or to facilitate a sale for the insured.
The consolidated financial statements of the Company include the accounts of the parent company and its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation.
On August 4, 2023, the Company’s Board of Directors approved a two -for-one common stock split effected in the form of a stock dividend entitling each stockholder of record to receive one additional share of common stock for every one share owned. On August 21, 2023, the Company effected the two -for-one stock dividend to stockholders of record as of August 14, 2023.
The stock dividend increased the number of shares of common stock outstanding and all share and per share amounts have been retroactively adjusted for the stock dividends, as of the date earliest presented in these financial statements to the conform to current year presentation.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates include, but are not limited to, vehicle pooling costs; income taxes; stock-based compensation; and contingencies. Actual results may differ from these estimates.
Revenue Recognition
The Company’s primary performance obligation is the auctioning of consigned vehicles through an online auction process. Service revenue and vehicle sales revenue are recognized at the date the vehicles are sold at auction, excluding annual registration fees. Costs to prepare the vehicles for auction, including inbound transportation costs and titling fees, are deferred and recognized at the time of revenue recognition at auction.
The Company’s disaggregation between service revenues and vehicle sales at the segment level reflects how the nature, timing, amount and uncertainty of its revenues and cash flows are impacted by economic factors. The Company reports sales taxes on relevant transactions on a net basis in the Company’s consolidated results of operations, and therefore does not include sales taxes in revenues or costs.
59
Table of Contents
Service Revenues
The Company’s service revenues consist of auction and auction-related sales transaction fees charged for vehicle remarketing services. Within this revenue category, the Company’s primary performance obligation is the auctioning of consigned vehicles through an online auction process. These auction and auction-related services may include a combination of (i) vehicle purchasing fees, vehicle listing fees, and vehicle selling fees that can be based on a predetermined percentage of the vehicle sales price, tiered vehicle sales price driven fees, or at a fixed fee based on the sale of each vehicle regardless of the selling price of the vehicle; (ii) transportation fees for the cost of transporting the vehicle to or from the Company’s facility; (iii) title processing and preparation fees; (iv) vehicle storage fees; (v) bidding fees; and (vi) vehicle loading fees. These services are not distinct within the context of the contract. Accordingly, revenue for these services is recognized when the single performance obligation is satisfied at the completion of the auction process. The Company does not take ownership of these consigned vehicles, which are stored at the Company’s facilities located throughout the U.S. and at its international locations. These fees are recognized as net revenue (not gross vehicle selling price) at the time of auction in the amount of such fees charged.
The Company has a separate performance obligation related to providing access to its online auction platform as the Company charges members an annual registration fee for the right to participate in its online auctions and access the Company’s bidding platform. This fee is recognized ratably over the term of the arrangement, generally one year, as each day of access to the online auction platform represents the best depiction of the transfer of the service.
No provision for returns has been established, as all sales are final with no right of return or warranty, except for separately identified vehicles subject to an arbitration policy, although the Company provides for expected credit losses in the case of non-performance by its buyers or sellers.
Year Ended July 31,
(In thousands) 2025 2024 2023
Service revenues
United States $ 3,451,558 $ 3,126,102 $ 2,841,641
International 517,104 434,900 356,487
Total service revenues $ 3,968,662 $ 3,561,002 $ 3,198,128
Vehicle sales
Certain vehicles are purchased and remarketed on the Company’s own behalf. The Company has a single performance obligation related to the sale of these vehicles, which is the completion of the online auction process. Vehicle sales revenue is recognized on the auction date. As the Company acts as a principal in vehicle sales transactions, the gross sales price at auction is recorded as revenue.
Year Ended July 31,
(In thousands) 2025 2024 2023
Vehicle sales
United States $ 403,546 $ 338,633 $ 348,007
International 274,750 337,188 323,383
Total vehicle sales $ 678,296 $ 675,821 $ 671,390
Contract assets
The Company capitalizes certain contract assets related to obtaining a contract, where the amortization period for the related asset is greater than one year. These assets are amortized over the expected life of the customer relationship. Contract assets are classified as current or long-term other assets, based on the timing of when the Company expects to recognize the related revenues and are amortized as an offset to the associated revenues on a straight-line basis. The Company assesses these costs for impairment at least quarterly and as “triggering” events occur that indicate it is more likely than not that an impairment exists. The contract asset costs where the amortization period for the related asset is one year or less are expensed as incurred and recorded within general and administrative expenses in the accompanying consolidated statements of income.
60
Table of Contents
The change in the carrying amount of contract assets was as follows (In thousands):
Balance as of July 31, 2023 $ 25,726
Capitalized contract assets during the period 32,622
Costs amortized during the period ( 9,017 )
Effect of foreign currency exchange rates ( 93 )
Balance as of July 31, 2024 $ 49,238
Capitalized contract assets during the period 22
Costs amortized during the period ( 9,149 )
Effect of foreign currency exchange rates ( 4 )
Balance as of July 31, 2025 $ 40,107
Vehicle Pooling Costs
The Company defers costs that relate directly to the fulfillment of its contracts associated with vehicles consigned to and received by the Company, but not sold as of the end of the period. The Company quantifies the deferred costs using a calculation that includes the number of vehicles at its facilities at the beginning and end of the period, the number of vehicles sold during the period, and an allocation of certain facility operation costs for the period. The primary expenses allocated and deferred are inbound transportation costs, titling fees, certain facility costs, labor, and vehicle processing costs. If the allocation factors change, then facility operation expenses could increase or decrease correspondingly in the future. These costs are expensed into facility operations expenses as vehicles are sold in subsequent periods on an average cost basis.
Foreign Currency Translation
The Company records foreign currency translation adjustments from the process of translating the functional currency of the financial statements of its foreign subsidiaries into the U.S. dollar reporting currency. The Pounds Sterling, Canadian dollar, Brazilian real, European Union euro, U.A.E. dirham, Omani rial, and Bahraini dinar are the functional currencies of the Company’s foreign subsidiaries as they are the primary currencies within the economic environment in which each subsidiary operates. The original equity investment in the respective subsidiaries is translated at historical rates. Assets and liabilities of the respective subsidiary’s operations are translated into U.S. dollars at period-end exchange rates, and revenues and expenses are translated into U.S. dollars at average exchange rates in effect during each reporting period. Adjustments resulting from the translation of each subsidiary’s financial statements are reported in other comprehensive income.
The cumulative effects of foreign currency exchange rate fluctuations were as follows (In thousands):
Cumulative loss on foreign currency translation as of July 31, 2023 $ ( 141,006 )
Loss on foreign currency translation ( 1,966 )
Cumulative loss on foreign currency translation as of July 31, 2024 $ ( 142,972 )
Gain on foreign currency translation 22,689
Cumulative loss on foreign currency translation as of July 31, 2025 $ ( 120,283 )
Fair Value of Financial Instruments
The Company records its financial assets and liabilities at fair value in accordance with the framework for measuring fair value in U.S. GAAP. In accordance with Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures , the Company considers fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants under current market conditions. This framework establishes a fair value hierarchy that prioritizes the inputs used to measure fair value:
Level I Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets.
Level II Inputs other than quoted prices included within Level I that are observable for the asset or liability, either directly or indirectly.
Level III Inputs that are generally unobservable. These inputs may be used with internally developed methodologies that result in management’s best estimate.
61
Table of Contents
The amounts recorded for financial instruments in the Company’s consolidated financial statements, which included cash, restricted cash, accounts receivable, accounts payable, accrued liabilities, and amounts outstanding under the Revolving Loan Facility approximated their fair values as of July 31, 2025 and 2024, due to the short-term nature of those instruments and are classified within Level II of the fair value hierarchy. Cash equivalents and long-term debt are classified within Level II of the fair value hierarchy because they are valued using market based inputs. Held to maturity investments are classified within Level I of the fair value hierarchy because they are valued at quoted prices for identical assets that are traded in active markets. See Note 9 – Long-Term Debt and Note 10 – Fair Value Measurements.
Cost of Vehicle Sales
Cost of vehicle sales includes the purchase price of vehicles sold for the Company’s own account.
Facility Operations
Facility operations expenses consist primarily of: (i) labor (operating personnel at facilities); (ii) transportation primarily provided by third-party (miles traveled and fuel rates); (iii) facilities (maintenance, property-related taxes, rent, and insurance); (iv) other (marketing and auction related costs); and (v) costs of vehicles sold.
General and Administrative Expenses
General and administrative expenses consist primarily of executive management, accounting, data processing, sales personnel, professional services, marketing expenses, and system maintenance and enhancements.
Advertising
All advertising costs are expensed as incurred and are included in facility operations expenses for costs directly related to the auction process and the remainder in general and administrative expenses on the consolidated statements of income. Advertising expenses were $ 33.6 million, $ 26.1 million, and $ 17.8 million for the years ended July 31, 2025, 2024, and 2023, respectively.
Other Income (Expense)
Other income (expense) consists primarily of interest income on U.S. Treasury Bills on held to maturity securities, interest expense on long-term debt; foreign exchange rate gains and losses; gains and losses from the disposal of assets, which will fluctuate based on the nature of these activities each period; and earnings from unconsolidated entities.
Income Taxes and Deferred Tax Assets
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, their respective tax basis, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company considers the need to maintain a valuation allowance on deferred tax assets based on an assessment of whether it is more likely than not that the Company would realize those deferred tax assets based on future reversals of existing taxable temporary differences and the ability to generate sufficient taxable income within the carryforward period available under the applicable tax law. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Excess tax benefits and deficiencies related to exercises of stock options are recognized as expense or benefit in the consolidated statements of income as discrete items in the reporting period in which they occur.
62
Table of Contents
The Company applies the provisions of the accounting standard for uncertain tax positions to its income taxes. In determining net income for financial statement purposes, the Company makes certain estimates and judgments in the calculation of tax provisions and the resultant tax liabilities. In the ordinary course of business, there may be transactions and calculations where the ultimate tax outcome is uncertain. The calculation of tax liabilities involves dealing with uncertainties in the interpretation and application of complex tax laws, and judgment may be necessary to (i) determine whether, based on the technical merits, a tax position is more likely than not to be sustained and (ii) measure the amount of tax benefit that qualifies for recognition. The Company recognizes potential liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on an estimate of the ultimate resolution of whether, and the extent to which, additional taxes will be due. Although the Company believes the estimates are reasonable, no assurance can be given that the final outcome of these matters will not be different from what is reflected in the historical income tax provisions and accruals. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense.
Net Income Per Share
Basic net income per share amounts were computed by dividing consolidated net income by the weighted average number of common shares outstanding during the period. Diluted net income per share amounts were computed by dividing consolidated net income by the weighted average number of common shares outstanding plus dilutive potential common shares calculated for stock options, restricted stock, restricted stock units, and performance stock units outstanding during the period using the treasury stock method.
Redeemable Noncontrolling Interest
Redeemable noncontrolling interests represent a 20 % noncontrolling ownership in Purple Wave, a consolidated subsidiary of the Company. Redeemable noncontrolling interests are presented outside of permanent equity on the consolidated balance sheets as they are redeemable by the holders of the noncontrolling interest and the redemption is outside the control of the Company. The redeemable noncontrolling interests were initially recorded at their issuance date fair value of $ 25.2 million. We record the carrying amount of the redeemable noncontrolling interests at the greater of (i) the initial carrying amount, increased or decreased for the noncontrolling interest’s share of net income or loss and its share of other comprehensive income or loss, and dividends or (ii) the redemption value. For interests that are redeemable in the future, we recognize changes in the redemption value immediately as they occur. Shares are redeemable at adjusted fair value from the third anniversary of the acquisition through the 10th anniversary of acquisition, and are redeemable at fair value thereafter.
Cash, Cash Equivalents, and Restricted Cash and Investments
The Company considers all highly liquid investments purchased with original maturities of three months or less at the time of purchase to be cash equivalents. Cash, cash equivalents, and restricted cash include cash held in checking, certificates of deposit, U.S. Treasury Bills, and money market accounts. The Company periodically invests its excess cash in money market funds and U.S. Treasury Bills. The Company’s cash, cash equivalents, and restricted cash are placed with high credit quality financial institutions.
The Company has held to maturity securities comprised of U.S. Treasury Bills. These investments are classified as held to maturity as the Company has the intent and ability to hold these investments until they mature. The held to maturity securities mature within the next 12 months. The table below shows the amortized cost, associated gross unrealized gains and associated fair value of held to maturity securities (in thousands).
(In thousands) July 31, 2025
Amortized Cost Gross Unrealized Gains Fair Value
Investment in held to maturity securities $ 2,008,539 $ 15,575 $ 2,024,114
(In thousands) July 31, 2024
Amortized Cost Gross Unrealized Gains Fair Value
Investment in held to maturity securities $ 1,908,047 $ 18,298 $ 1,926,345
63
Table of Contents
Inventory
Inventories of purchased vehicles are stated at the lower of cost or estimated realizable value. Cost includes the Company’s cost of acquiring ownership of the vehicle. The cost of vehicles sold is charged to cost of vehicle sales as sold on a specific identification basis.
Accounts Receivable
Accounts receivable, which consist primarily of advance charges receivable from the Company’s sellers and the gross sales price of the vehicle due from buyers, are recorded when billed, advanced or accrued and represent claims against third parties that will be settled in cash. Advance charges receivable represents amounts paid to third parties on behalf of insurance companies for which the Company will be reimbursed when the vehicle is sold.
Concentration of Credit Risk
Financial instruments, which subject the Company to potential credit risk, consist of its cash, cash equivalents, and restricted cash, short-term investments and accounts receivable. The Company adheres to its investment policy when placing investments. The investment policy has established guidelines to limit the Company’s exposure to credit risk by placing investments with high credit quality financial institutions, diversifying its investment portfolio, limiting investments in any one issuer or pooled fund and placing investments with maturities that maintain safety and liquidity. Deposits with these financial institutions may exceed the amount of insurance provided; however, these deposits typically are redeemable upon demand and, therefore, the Company believes that the financial risks associated with these financial instruments are minimal.
The Company generally does not require collateral on its accounts receivable. The Company estimates its allowances for credit loss based on historical collection trends, the age of outstanding receivables and existing economic conditions. If events or changes in circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and the allowance is adjusted accordingly. Past-due account balances are written off when the Company’s internal collection efforts have been unsuccessful in collecting the amounts due. The Company does not have off-balance sheet credit exposure related to its customers, and to date, the Company has not experienced significant credit-related losses.
No single customer accounted for more than 10% of the Company’s consolidated revenues for the years ended July 31, 2025, 2024, and 2023.
Property and Equipment
Property and equipment is stated at cost, less accumulated depreciation and amortization. Property and leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or the estimated useful lives of the respective improvements, which is between seven and ten years . Significant improvements which substantially extend the useful lives of assets are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation and amortization are computed on a straight-line basis over the estimated useful lives: three to seven years for internally developed or purchased software; three to twenty years for transportation and other equipment; three to five years for office furniture and equipment; and seven to forty years or the lease term, whichever is shorter, for buildings and improvements. Amortization of equipment under finance leases is included in depreciation expense.
Goodwill
In accordance with ASC 350, Intangibles—Goodwill and Other (“ASC 350”), goodwill is not amortized but is tested for potential impairment, at a minimum on an annual basis, or when indications of potential impairment exist. The Company assesses goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment. The Company has identified two reporting units, which are consistent with its two operating and reportable segments, U.S. and International. The Company evaluates goodwill for impairment annually as of the beginning of the fourth quarter, or when an indicator of impairment exists.
64
Table of Contents
Capitalized Software Costs
The Company capitalizes system development costs and website development costs related to the enterprise computing services during the application development stage. Costs related to preliminary project activities and post implementation activities are expensed as incurred. Internal-use software is amortized on a straight-line basis over its estimated useful life, generally three to seven years . The Company evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that impact the recoverability of these assets. Total gross capitalized software as of July 31, 2025 and 2024 was $ 120.0 million and $ 105.0 million respectively. Accumulated amortization expense related to software as of July 31, 2025 and 2024 totaled $ 81.6 million and $ 68.0 million, respectively.
Stock-Based Compensation
The Company accounts for stock-based awards to employees and non-employees using the fair value method as required by ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees, consultants and directors based on estimated fair value. ASC 718 requires companies to estimate the fair value of stock-based awards on the measurement date. The value of the portion of the award that is ultimately expected to vest is recognized in expense over the requisite service periods.
Comprehensive Income
Comprehensive income includes all changes in stockholders’ equity during a period from non-stockholder sources. For the years ended July 31, 2025, 2024 and 2023, accumulated other comprehensive income (loss) was the effect of foreign currency translation adjustments. Deferred taxes are not provided on cumulative translation adjustments where the Company expects earnings of a foreign subsidiary to be indefinitely reinvested.
Recently Issued Accounting Pronouncements
Adopted
In March 2023 the FASB issued ASU 2023-02, Investments—Equity Method and Joint Ventures (Topic 323), which allows the option for reporting entities to elect to account for their tax equity investments, using the proportional amortization method if certain conditions are met. The amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company’s adoption of ASU 2023-02 did not have a material impact on the Company’s consolidated results of operations and financial position.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. The Company’s adoption of ASU 2023-07 did not have a material impact on the Company’s disclosures.
Pending
On December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topics 740): Improvements to Income Tax Disclosures" to expand the disclosure requirements for income taxes, primarily related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. Management is currently evaluating this ASU to determine its impact on the Company's disclosures.
On November 2024, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40). ASU 2024-03 requires disclosure of specified information about certain costs and expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied either prospectively or retrospectively. Management is currently evaluating this ASU to determine its impact on the Company's disclosures.
Note 2 — Acquisitions
Fiscal Year 2024 Transactions
On October 6, 2023, the Company acquired an 80 % controlling ownership in Purple Wave, an online offsite heavy equipment auction company. The Company acquired the controlling ownership by issuing 2.5 million shares of the Company’s
65
Table of Contents
common stock which was equal to the $ 108.0 million acquisition price divided by the 10-day volume average weighted price of the Company’s common stock prior to closing. Under U.S. GAAP, the fair value of the merger consideration paid for Purple Wave was $ 112.1 million and was determined on the basis of the closing price of the Company’s common stock on October 6, 2023. Substantially all of the merger consideration has been allocated to intangible assets, including goodwill. The fair value of the 20 % redeemable noncontrolling interest in Purple Wave was $ 25.2 million, and was estimated by applying the transaction method. Refer to Note 1 — Summary of Significant Accounting Policies for more details regarding the redeemable noncontrolling interests. Acquisition costs reflected in the general administrative line on the income statement were $ 1.2 million. The Company has finalized the allocation of fair value for acquired assets and liabilities. The resulting impact to the balance sheet and income statement were immaterial.
NOTE 3 — Accounts Receivable, Net
Accounts receivable, net consisted of:
July 31,
(In thousands) 2025 2024
Advance charges receivable $ 540,747 $ 598,805
Trade accounts receivable 200,969 173,652
Other receivables 34,040 25,953
775,756 798,410
Less: Allowance for credit loss ( 12,945 ) ( 12,533 )
Accounts receivable, net $ 762,811 $ 785,877
Advance charges receivable represents amounts paid to third parties on behalf of insurance companies for which the Company will be reimbursed when the vehicle is sold. Advance charges are recovered within one year. Trade accounts receivable includes fees and gross auction proceeds to be collected from insurance companies and buyers.
NOTE 4 — Property and Equipment, Net
Property and equipment, net consisted of the following:
July 31,
(In thousands) 2025 2024
Land $ 2,394,553 $ 2,027,639
Buildings and improvements 1,684,171 1,482,891
Transportation and other equipment 580,029 604,977
Office furniture and equipment 100,894 97,576
Internal-use software 120,031 105,001
4,879,678 4,318,084
Less: Accumulated depreciation and amortization ( 1,281,585 ) ( 1,142,246 )
Property and equipment, net $ 3,598,093 $ 3,175,838
Depreciation expense on property and equipment was $ 188.9 million, $ 167.7 million and $ 139.9 million for the years ended July 31, 2025, 2024, and 2023, respectively. Amortization expense of software was $ 13.0 million, $ 8.6 million, and $ 7.2 million for the years ended July 31, 2025, 2024 and 2023, respectively.
66
Table of Contents
NOTE 5— Leases
The Company has both lessee and lessor arrangements. The Company determines whether a contract is or contains a lease at the inception of the contract or at any subsequent modification. A contract will be deemed to be or contain a lease if the contract conveys the right to control and direct the use of identified property, plant, or equipment for a period of time in exchange for consideration. The Company generally must also have the right to obtain substantially all of the economic benefits from the use of the property, plant, and equipment. Depending on the terms, leases are classified as either operating or finance leases if the Company is the lessee, or as operating, sales-type, or direct financing leases if the Company is the lessor. Certain of the Company’s lessee and lessor leases have renewal options to extend the leases for additional periods at the Company’s discretion.
Leases - Lessee
The Company leases certain facilities and certain equipment under non-cancelable finance and operating leases, which are recorded as right-of-use assets and lease liabilities. Certain leases provide the Company with either a right of first refusal to acquire or an option to purchase a facility at fair value. Certain leases also contain escalation clauses and renewal option clauses calling for increased rents. Where a lease contains an escalation clause or a concession, such as a rent holiday or tenant improvement allowance, the Company includes these items in the determination of the right-of-use asset and the lease liabilities. The effects of these escalation clauses or concessions have been reflected in lease expense on a straight-line basis over the expected lease term and any variable lease payments subsequent to establishing the lease liability are expensed as incurred. The lease term commences on the date when the Company has the right to control the use of the leased property, which is typically before lease payments are due under the terms of the lease. Certain of the Company’s leases have renewal periods up to 40 years, exercisable at the Company’s option, and generally require the Company to pay property taxes, insurance and maintenance costs, in addition to the lease payments. At lease inception, the Company includes all renewals or option periods that are reasonably certain to be exercised when determining the expected lease term, as failure to renew the lease would impose an economic penalty.
Operating lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the expected lease term. To determine the present value of lease payments not yet paid, the Company estimates incremental borrowing rates based on the information available at the lease commencement date, as rates are not implicitly stated in the Company’s leases.
Components of lease expense were as follows:
Year Ended July 31,
(In thousands) 2025 2024
Operating lease expense $ 28,383 $ 26,222
Finance lease expense:
Amortization of right-of-use assets 101 14
Interest on finance lease liabilities 249 —
Short-term lease expense 6,627 4,371
Variable lease expense 1,407 1,359
Total lease expense $ 36,767 $ 31,966
67
Table of Contents
The components of right-of-use assets and lease liabilities on the consolidated balance sheets were as follows (In thousands):
Lease Asset and Liabilities Balance Sheet Classification (In thousands) July 31, 2025 July 31, 2024
Operating lease right-of-use assets Operating lease right-of-use assets $ 99,708 $ 116,301
Finance lease right-of-use assets Property and equipment, net 2,648 —
Total lease assets, net $ 102,356 $ 116,301
Operating lease liabilities - current Current portion of operating and finance lease liabilities $ 19,810 $ 21,304
Finance lease liabilities - current Current portion of operating and finance lease liabilities 59 —
Operating lease liabilities - non-current Operating and finance lease liabilities, net of current portion 81,224 97,429
Finance lease liabilities - non-current Operating and finance lease liabilities, net of current portion 2,646 —
Total lease liabilities $ 103,739 $ 118,733
The weighted-average remaining lease terms and discount rates as of July 31, 2025 were as follows:
Weighted-Average Remaining Lease Term (In years) Weighted-Average Discount Rate (1)
Operating leases 8.52 4.29 %
Finance leases 30.35 4.48 %
(1) The Company cannot determine the interest rate implicit in the Company’s leases. Therefore, the discount rate represents the Company’s incremental borrowing rate and is determined based on the risk-free rate, adjusted for the risk premium attributed to the Company’s imputed corporate credit rating for a secured or collateralized instrument.
Supplemental cash flow information related to leases as of July 31, 2025 were as follows (In thousands):
Year Ended July 31,
(In thousands) 2025 2024
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows related to operating leases $ 28,026 $ 25,320
Operating cash flows related to finance leases 260 —
Financing cash flows related to finance leases 49 14
Right-of-use assets obtained in exchange for new operating lease liabilities 9,516 37,172
Right-of-use assets obtained in exchange for new finance lease liabilities 2,653 —
The annual maturities of the Company’s lease liabilities as of July 31, 2025 were as follows:
Fiscal Year (In thousands) Finance Leases Operating Leases
2026 $ 135 $ 22,407
2027 135 18,104
2028 135 16,625
2029 135 13,956
2030 135 8,534
Thereafter 4,536 39,670
Total future lease commitments $ 5,211 $ 119,296
Less: imputed interest ( 2,506 ) ( 18,262 )
Present value of lease liabilities $ 2,705 $ 101,034
68
Table of Contents
Leases - Lessor
The Company’s lessor arrangements include certain facilities and various land locations, of which each qualifies as an operating lease. Certain leases also contain escalation clauses and renewal option clauses calling for increased rents. Where a lease contains an escalation clause or a concession, such as a rent holiday or tenant improvement allowance, the Company includes these items in the determination of the straight-line rental income. The effects of these escalation clauses or concessions have been reflected in lease payments receivable on a straight-line basis over the expected lease term and any variable lease income subsequent to establishing the receivable will be recognized as earned.
Future lease payments receivable under operating leases with terms greater than one year as of July 31, 2025 were as follows:
Fiscal Year (In thousands) Operating Leases
2026 $ 5,077
2027 5,093
2028 4,361
2029 3,263
2030 27
Thereafter 135
Total future lease payments receivable $ 17,956
The cost of the leased space was $ 58.8 million and $ 50.3 million as of July 31, 2025 and 2024, respectively. The accumulated depreciation associated with the leased assets was $ 6.7 million and $ 4.6 million as of July 31, 2025 and 2024, respectively. Both the leased assets and accumulated depreciation are included in Property and equipment, net on the consolidated balance sheets. Rental income from these operating leases was $ 20.7 million and $ 17.6 million for the years ended July 31, 2025 and 2024, respectively, and is included within service revenues on the consolidated statements of income.
NOTE 6 — Goodwill
The change in the carrying amount of goodwill was as follows:
July 31,
(In thousands) 2025 2024
Beginning balance $ 513,909 $ 394,289
Adjustments related to business combinations 207 120,153
Effect of foreign currency exchange rates 3,663 ( 533 )
Ending balance $ 517,779 $ 513,909
In accordance with the guidance in ASC 350, goodwill is tested for impairment on an annual basis or upon the occurrence of circumstances that indicate that goodwill may be impaired.
The Company’s annual goodwill impairment analysis, which was performed qualitatively during the fourth quarter of fiscal 2025 and 2024, did not result in an impairment charge. This qualitative analysis considered all relevant factors specific to the reporting units, including macroeconomic conditions; industry and market considerations; overall financial performance; and relevant entity-specific events.
69
Table of Contents
NOTE 7 — Intangibles, Net
The following table sets forth intangible assets by major asset class:
Gross
Carrying
Amount Accumulated
Amortization Net
Book Value Weighted Average
Remaining Useful
Life (in years)
July 31, July 31, July 31, July 31,
(In thousands, except remaining useful life) 2025 2024 2025 2024 2025 2024 2025 2024
Amortized intangibles:
Supply contracts and customer relationships $ 86,956 $ 84,228 $ ( 58,747 ) $ ( 47,864 ) $ 28,209 $ 36,364 3 4
Trade names 19,327 19,299 ( 14,451 ) ( 12,705 ) 4,876 6,594 3 4
Licenses and databases 16,608 16,571 ( 3,622 ) ( 1,996 ) 12,986 14,575 8 9
Indefinite-lived intangibles:
Trade names: 16,761 16,555 — — 16,761 16,555 0 0
Total intangibles $ 139,652 $ 136,653 $ ( 76,820 ) $ ( 62,565 ) $ 62,832 $ 74,088
Aggregate amortization expense on intangible assets was $ 13.9 million, $ 13.4 million, and $ 12.4 million for the years ended July 31, 2025, 2024, and 2023, respectively.
Intangible amortization expense for the next five fiscal years based upon July 31, 2025 intangible assets is expected to be as follows (In thousands):
2026 $ ( 12,784 )
2027 ( 12,651 )
2028 ( 11,659 )
2029 ( 2,066 )
2030 ( 1,678 )
Thereafter ( 5,233 )
Total future intangible amortization expense $ ( 46,071 )
NOTE 8 — Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities consisted of the following:
July 31,
(In thousands) 2025 2024
Accounts payable to sellers $ 184,697 $ 169,413
Buyer deposits and prepayments 169,629 155,911
Trade accounts payable 29,705 23,920
Accrued compensation and benefits 67,057 64,036
Taxes payable 12,789 8,220
Accrued insurance 30,165 11,065
Other accrued liabilities 97,789 85,583
Total accounts payable and accrued expenses $ 591,831 $ 518,148
The Company is required to charge for and collect value added taxes ("VAT") on its sales on behalf of various international taxing authorities. The Company records VAT that the Company has billed to the buyers as VAT payable. In addition, the Company is required to pay VAT on its purchases. The Company records VAT that is charged by its vendors as VAT receivable. The Company is required to file VAT returns on at least a quarterly basis with the various international taxing authorities and is entitled to claim the VAT charged by the Company's vendors as VAT credit and these credits can be applied to the Company's VAT payables billed to the buyers. Accordingly, these VAT payables and receivables are presented as net amounts for financial statement purposes and are shown in the taxes payable line in the table above.
70
Table of Contents
The Company is partially self-insured for certain losses related to general liability, workers’ compensation and auto liability. Accrued insurance liability represents an estimate of the ultimate cost of claims incurred as of the balance sheet date, including an estimate for reported and unreported claims. The estimated liability is not discounted and is established based upon analysis of historical data, including the severity of the Company’s frequency of claims, actuarial estimates and is reviewed periodically by management to ensure that the liability is appropriate.
NOTE 9 – Long-Term Debt
Credit Agreement
On December 21, 2021, the Company entered into a Second Amended and Restated Credit Agreement by and among the Company, certain subsidiaries of the Company party thereto, the lenders party thereto, and Bank of America, N.A., as administrative agent (the “Second Amended and Restated Credit Agreement”). The Second Amended and Restated Credit Agreement amends and restates certain terms of the First Amended and Restated Credit Agreement, dated as of July 21, 2020, by and among the Company, the lenders party thereto, and Bank of America, N.A., as administrative agent (as successor in interest to Wells Fargo Bank, National Association) (the “Existing Credit Agreement”). The Second Amended and Restated Credit Agreement provides for, among other things, (a) an increase in the secured revolving credit commitments by $ 200.0 million, bringing the aggregate principal amount of the revolving credit commitments under the Second Amended and Restated Credit Agreement (the “Revolving Loan Facility”) to $ 1,250.0 million, (b) an increase in the letter of credit sublimit from $ 60.0 million to $ 100.0 million, (c) addition of Copart UK Limited, CPRT GmbH and Copart Autos España, S.L.U., each a wholly-owned direct or indirect foreign subsidiary of the Company, as borrowers, (d) addition of the ability to borrow under the Second and Amended and Restated Credit Agreement in certain foreign currencies including Pounds Sterling, Euro and Canadian Dollars, (e) extension of the maturity date of the revolving credit facility under the Existing Credit Agreement from July 21, 2023 to December 21, 2026, (f) replacing the LIBOR interest rate applicable to U.S. Dollar denominated borrowings with a SOFR-based interest rate, and (g) changing the pricing levels with respect to the revolving loans as further described below.
The Second and Amended and Restated Credit Agreement provides for a revolving loan facility (the “Revolving Loan Facility”) of $ 1,250.0 million maturing on December 21, 2026 (including up to $ 550.0 million equivalent of borrowings in Pounds Sterling, European Union euro and Canadian dollars) with a $ 150.0 million equivalent sub-facility available to CPRT GmbH, a $ 150.0 million equivalent sub-facility available to Copart Autos España, S.L.U. and a $ 250.0 million equivalent sub-facility available to Copart UK Limited. The proceeds may be used for general corporate purposes, including working capital and capital expenditures, potential share repurchases, acquisitions, or other investments relating to the Company’s expansion strategies in domestic and international markets.
Borrowings under the Second Amended and Restated Credit Agreement bear interest based on, at our option, either (1) the applicable fixed rate plus 1.00 % to 1.75 % or (2) the daily rate plus 0.0 % to 0.75 %, in each case, depending on the Company’s consolidated total net leverage ratio. Additionally, the unused revolving commitments under the Second Amended and Restated Credit Agreement are subject to the payment of a customary commitment fee at a range of 0.175 % to 0.275 %, depending on the Company’s consolidated total net leverage ratio. The applicable fixed rates described above with respect to borrowings denominated in (1) U.S. Dollars is SOFR plus certain “spread adjustments” described in the Second Amended and Restated Credit Agreement, (2) Pounds Sterling is SONIA plus certain “spread adjustments” described in the Second Amended and Restated Credit Agreement, (3) the European Union euro is EURIBOR, and (4) Canadian dollars is CDOR. The Company had no outstanding borrowings under the Revolving Loan Facility as of July 31, 2025 and July 31, 2024.
The Company’s obligations under the Second Amended and Restated Credit Agreement are guaranteed by certain of the Company’s domestic subsidiaries meeting materiality thresholds set forth in the Second Amended and Restated Credit Agreement. Such obligations, including the guaranties, are secured by substantially all of the assets of the Company and the assets of the subsidiary guarantors pursuant to a Security Documents Confirmation Agreement as part of the Second Amended and Restated Credit Agreement.
The Second Amended and Restated Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict the Company’s and its subsidiaries’ ability to, among other things, incur indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into transactions with affiliates, pay dividends, or make distributions on and repurchase stock, in each case subject to certain exceptions. The Company is also required to maintain compliance, measured at the end of each fiscal quarter, with a consolidated total net leverage ratio and a consolidated interest coverage ratio. The Second Amended and Restated Credit Agreement contains no restrictions on the payment of dividends and other restricted payments, as defined, as long as (1) the consolidated total net leverage ratio, as defined, both before and after giving effect to any such dividend or restricted payment on a pro forma basis, is less than 3.25 :1,
71
Table of Contents
in an unlimited amount, (2) if clause (1) is not available, so long as the consolidated total net leverage ratio both before and after giving effect to any such dividend on a pro forma basis is less than 3.50 :1, in an aggregate amount not to exceed the available amount, as defined, and (3) if clauses (1) and (2) are not available, in an aggregate amount not to exceed $ 50.0 million; provided, that, minimum liquidity, as defined, shall be not less than $ 75.0 million both before and after giving effect to any such dividend or restricted payment. As of July 31, 2025, the consolidated total net leverage ratio was ( 2.35 ):1. Minimum liquidity requirement as of July 31, 2025 was $ 6.0 billion. Accordingly, the Company does not believe that the provisions of the Second Amended and Restated Credit Agreement represent a significant restriction to its ability to pay dividends or to the successful future operations of the business. The Company has not paid a cash dividend since becoming a public company in 1994. The Company was in compliance with all covenants related to the Second Amended and Restated Credit Agreement as of July 31, 2025.
Related to execution of the Second Amended and Restated Credit Agreement, the Company incurred $ 2.7 million in costs, which were capitalized as debt issuance fees. The debt discount is amortized to interest expense over the term of the respective debt instruments and is included in other assets on the consolidated balance sheet.
NOTE 10 – Fair Value Measurements
The following table summarizes the carrying values and fair values of the Company’s financial instruments that were not carried at fair value in the consolidated balance sheets:
July 31, 2025 July 31, 2024
(In thousands) Carrying Value Total Fair Value Total Carrying Value Total Fair Value Total
Assets
Cash equivalents $ 2,196,593 $ 2,204,512 $ 1,125,231 $ 1,127,275
Investment in held to maturity securities 2,008,539 2,024,114 1,908,047 1,926,345
Total assets $ 4,205,132 $ 4,228,626 $ 3,033,278 $ 3,053,620
The Company has investments in U.S. Treasury Bills some of which mature over a period greater than 90 days and are classified as short-term investments. The U.S. Treasury Bills are carried at amortized cost and classified as held to maturity as the Company has the intent and the ability to hold them until they mature. The carrying value of the U.S. Treasury Bills are adjusted for accretion of discounts over the remaining life of the investment. Income related to the U.S. Treasury Bills is recognized in interest income in the Company’s consolidated statements of income. The U.S. Treasury Bills are classified within Level I of the fair value hierarchy.
During the year ended July 31, 2025, no transfers were made between any levels within the fair value hierarchy. See Note 1 — Summary of Significant Accounting Policies and Note 9 – Long-Term Debt .
NOTE 11 — Net Income Per Share
The table below reconciles basic weighted average shares outstanding to diluted weighted average shares outstanding:
Year Ended July 31,
(In thousands) 2025 2024 2023
Weighted average common shares outstanding 965,306 960,739 953,574
Effect of dilutive securities 12,257 14,059 13,073
Weighted average common and dilutive potential common shares outstanding 977,563 974,798 966,647
There were no material adjustments to net income required in calculating diluted net income per share. Excluded from the dilutive net income per share calculation were 4,523,264 ; 2,612,116 ; and 8,333,268 options to purchase the Company’s common stock and restrictive stock for the years ended July 31, 2025, 2024 and 2023, respectively, because their inclusion would have been anti-dilutive.
72
Table of Contents
NOTE 12 — Stockholders’ Equity
General
The Company has authorized the issuance of 1.6 billion shares of common stock, with a par value of $ 0.0001 , of which 967,478,690 shares were issued and outstanding at July 31, 2025. As of July 31, 2025 and 2024, the Company had reserved 45,431,198 and 49,707,714 shares of common stock, respectively, for the issuance of options, restricted stock (“RSA”), restricted stock units (“RSU”), or performance stock units (“PSU”) granted under the Company’s equity incentive plans and 3,300,386 and 3,638,112 shares of common stock, respectively, for the issuance of shares under the Copart, Inc. Employee Stock Purchase Plan (“ESPP”). The Company has authorized the issuance of five million shares of preferred stock, with a par value of $ 0.0001 , none of which were issued or outstanding at July 31, 2025 or 2024, which have the rights and preferences as the Company’s Board of Directors shall determine, from time to time.
Stock Repurchases
On September 22, 2011, the Company’s Board of Directors approved a 320 million share increase in the stock repurchase program, bringing the total current authorization to 784 million shares. The repurchases may be effected through solicited or unsolicited transactions in the open market or in privately negotiated transactions. No time limit has been placed on the duration of the stock repurchase program. Subject to applicable securities laws, such repurchases will be made at such times and in such amounts as the Company deems appropriate and may be discontinued at any time. For fiscal 2025, 2024 and 2023, the Company did not repurchase any shares of its common stock under the program. As of July 31, 2025, the total number of shares repurchased under the program was 458,196,792 , and subject to applicable limitations under Delaware law, 325,803,208 shares were available for repurchase under our program.
In fiscal 2025, certain employees held stock option awards that could be exercised through a cashless exercise. For the years ended July 31, 2025, 2024 and 2023, no employee exercised stock options through a cashless exercise. If exercised a portion of the options exercised will be net settled in satisfaction of the exercise price and employees’ statutory withholding requirements. Any shares withheld for taxes are treated as a repurchase of shares for accounting purposes but do not count against our stock repurchase program.
Employee Stock Purchase Plan
The ESPP provides for the purchase of up to an aggregate of 40 million shares of common stock of the Company by employees pursuant to the terms of the ESPP. The Company’s ESPP was adopted by the Board of Directors and approved by the Company’s stockholders in 1994. The ESPP was amended and restated in 2003 and again approved by the stockholders. In 2014, a new ESPP was approved by the Board of Directors and approved by the Company’s stockholders. Under the ESPP, employees of the Company who elect to participate have the right to purchase common stock at a 15 % discount from the lower of the market value of the common stock at the beginning or the end of each six month offering period. The ESPP permits an enrolled employee to have contributions withheld from their salary an amount up to 10% of their compensation (which amount may be increased from time to time by the Company but may not exceed 15% of compensation). No employee may purchase more than $ 25,000 worth of common stock (calculated at the time the purchase right is granted) in any calendar year. The Compensation Committee of the Board of Directors administers the ESPP. The number of shares of common stock issued pursuant to the ESPP during the years ended July 31, 2025, 2024 and 2023 was 337,707 ; 315,042 ; and 448,714 ; respectively. As of July 31, 2025, there were 37,019,910 shares of common stock issued pursuant to the ESPP and 3,300,386 shares remain available for purchase under the ESPP.
Stock Options
In December 2007, the Company adopted the Copart, Inc. 2007 Equity Incentive Plan (“Plan”), presently covering an aggregate of 144 million shares of the Company’s common stock. The Plan provides for the grant of incentive stock options, restricted stock, restricted stock units and other equity-based awards to employees and non-qualified stock options, restricted stock, restricted stock units and other equity-based awards to employees, officers, directors and consultants at prices not less than 100 % of the fair market value for incentive and non-qualified stock options, as determined by the Board of Directors at the grant date. Incentive and non-qualified stock options may have terms of up to ten years and vest over periods determined by the Board of Directors. Options generally vest ratably over a five year period. The Plan replaced the Company’s 2001 Stock Option Plan. As of July 31, 2025, 20,577,321 shares were available for grant under the Plan and the number of options that were in-the-money was 17,210,911 at July 31, 2025.
73
Table of Contents
The table below sets forth the stock-based compensation recognized by the Company for stock options, restricted stock, restricted unit awards, and performance stock units:
Year Ended July 31,
(In thousands) 2025 2024 2023
General and administrative $ 29,897 $ 28,284 $ 32,747
Facility operations 8,107 6,950 6,926
Total stock-based compensation $ 38,004 $ 35,234 $ 39,673
Additionally, Purple Wave maintains an equity-based compensation plan for certain executives. Compensation cost attributable to Purple Wave equity-based compensation plan was $ 2.3 million and $ 1.9 million included in stock based compensation for the fiscal years ended July 31, 2025 and 2024, respectively.
There were no material compensation costs capitalized as part of the cost of an asset as of July 31, 2025 and 2024. The Company recognizes compensation expense for stock option awards on a straight-line basis over the requisite service period of the award.
The fair value of each stock option without a market-based condition was estimated on the measurement date using the Black-Scholes Merton (“BSM”) option-pricing model. For options that included a market-based condition either the Monte Carlo simulation model or a lattice model was used. The BSM option-pricing model utilized the following assumptions:
July 31,
2025 2024 2023
Expected life (in years) 5.0 — 5.7 5.0 — 6.3 5.0 — 6.3
Risk-free interest rate 3.5 % — 4.03 % 3.86 % — 4.43 % 3.67 % — 3.88 %
Estimated volatility 29.6 % — 30.3 % 30.1 % — 30.6 % 29.6 % — 32.0 %
Expected dividends — % — % — %
Weighted average fair value at measurement date $ 20.58 $ 9.93 $ 12.10
Expected life— Expected life represents the period that the Company’s stock-based awards are expected to be outstanding and was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior as influenced by changes to the terms of its stock-based awards.
Risk-free interest rate—The Company bases the risk-free interest rate used in the BSM option-pricing model on the implied yield currently available on U.S. Treasury zero-coupon issues with the same or substantially equivalent expected life.
Estimated volatility—The Company uses the trading history of its common stock in determining an estimated volatility factor when using the BSM option-pricing model to determine the fair value of options granted.
Expected dividend—The Company does not expect to declared dividends. Therefore, the Company uses a zero value for the expected dividend value factor when using the BSM option-pricing model to determine the fair value of options granted.
Net cash proceeds from the exercise of stock options were $ 42.8 million, $ 24.3 million and $ 49.7 million for the years ended July 31, 2025, 2024 and 2023, respectively.
A summary of the status of the Company’s unvested stock options awards and activity during the year ended July 31, 2025 was as follows:
(In thousands, except per share amounts) Shares Weighted
Average Grant-
date Fair Value
Unvested shares at July 31, 2024 4,178 $ 9.80
Grants of non-vested shares 159 20.58
Vested ( 2,226 ) 10.73
Forfeitures or expirations ( 22 ) 1.03
Unvested shares at July 31, 2025 2,089 $ 14.30
74
Table of Contents
The following is a summary of activity for the Company’s stock options for the year ended July 31, 2025:
(In thousands, except per share and term data) Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (In years) Aggregate Intrinsic Value
Outstanding as of July 31, 2024 16,310 $ 18.60 4.34 $ 550,115
Grants of options 159 58.34
Exercises ( 3,961 ) 10.79
Forfeitures or expirations ( 21 ) 4.41
Outstanding as of July 31, 2025 12,487 $ 21.61 3.87 $ 302,750
Exercisable as of July 31, 2025 11,069 $ 19.21 3.42 $ 291,821
Vested and expected to vest as of July 31, 2025 12,481 $ 21.61 3.87 $ 302,636
The Company grants option awards to certain executives that contain service and market conditions. The options will become exercisable over five years , subject to continued service by the executive, with 20 % vesting on the first anniversary of the grant date and the balance vesting monthly over the subsequent four years . Separate and apart from the time-based vesting schedule, the options are also subject to a market condition requiring the trading price of Copart, Inc. common stock on the NASDAQ Global Select Market to be greater than or equal to 125 % of the exercise price of the options, determined both (i) at the time of any exercise, and (ii) based on the closing price on each of the twenty consecutive trading days preceding the date of any exercise. The exercise price of the options is equivalent to the closing price of the Company’s common stock on the grant date. The fair value of the awards is determined at the grant date using either the Lattice or Monte Carlo model, risk-free interest rates ranging from 0.71 % to 4.37 %, estimated volatility ranging from 25.2 % to 29.8 %, and no expected dividends. The total estimated compensation expense to be recognized by the Company over the five-year service period for these options was $ 50.1 million as of July 31, 2025 and will be recognized using the accelerated attribution method over each vesting tranche of the award. The Company recognized $ 3.8 million, $ 7.4 million and $ 12.2 million in compensation expense related to these awards for the years ended July 31, 2025, 2024 and 2023, respectively.
The following is a summary of activity for the Company’s stock option awards subject to market conditions for the year ended July 31, 2025:
(In thousands, except per share and term data) Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (In years) Aggregate Intrinsic Value
Outstanding as of July 31, 2024
5,995 $ 24.70 6.47 $ 165,656
Grants of options — —
Exercises — —
Forfeitures or expirations — —
Outstanding as of July 31, 2025
5,995 $ 24.70 5.47 $ 124,108
Exercisable as of July 31, 2025
5,302 $ 23.64 5.28 $ 115,169
Vested and expected to vest as of July 31, 2025
5,994 $ 24.70 5.47 $ 124,085
The aggregate intrinsic value in the tables above represents the total pre-tax intrinsic value (i.e., the difference between the Company’s closing stock price on the last trading day of the year ended July 31, 2025 and the exercise price, times the number of shares) that would have been received by the option holders had all option holders exercised their options on July 31, 2025. The aggregate intrinsic value of options exercised was $ 188.3 million, $ 105.5 million and $ 131.1 million in the years ended July 31, 2025, 2024 and 2023, respectively, and represents the difference between the exercise price of the option and the estimated fair value of the Company’s common stock on the dates exercised. As of July 31, 2025, the total compensation cost related to non-vested stock options granted to employees under the Company’s stock equity incentive plans but not yet recognized was $ 22.1 million. This cost will be amortized on a straight-line basis over a weighted average remaining term of 2.17 years. The fair value of options vested for the years ended July 31, 2025, 2024 and 2023 was $ 23.9 million, $ 21.5 million and $ 24.5 million, respectively.
75
Table of Contents
The following table summarizes stock options outstanding and exercisable as of July 31, 2025:
(In thousands, except per share amounts) Options Outstanding Options Exercisable
Range of Exercise Prices Number Weighted
Average
Remaining
Contractual
Life Weighted
Average
Exercise
Price Number Weighted
Average
Exercise
Price
$ 4.76 — $ 8.7 1,876 1.59 $ 7.43 1,876 $ 7.43
$ 9.08 — $ 11.80 1,885 2.05 9.85 1,885 9.85
$ 14.57 — $ 31.22 9,938 4.32 20.79 9,613 20.58
$ 31.42 — $ 62.08 4,783 6.54 37.38 2,997 35.91
Outstanding as of July 31, 2025 18,482 4.39 $ 22.61 16,371 $ 20.65
The Company’s restricted stock awards (“RSA”), RSUs, and PSUs have generally been issued with vesting periods ranging from two years to five years . RSAs and RSUs vest solely on service conditions while PSUs will vest over five years , when and if certain financial performance targets are met. Accordingly, the Company recognizes compensation expense for RSA and RSU awards on a straight-line basis over the requisite service period of the award. Compensation expense for PSU awards is recognized on an accelerated attribution method when the achievement of certain financial performance targets appear probable and is recognized over the remaining requisite service period.
The following is a summary of activity for the Company’s RSAs, RSUs, ans PSUs for the for the year ended July 31, 2025:
(In thousands, except per share data) Restricted and Performance Shares Weighted Average Grant Date Fair Value
Outstanding as of July 31, 2024 1,873 $ 47.29
Grants 250 51.51
Vested ( 318 ) 39.99
Forfeitures or expirations ( 27 ) 45.18
Outstanding as of July 31, 2025 1,778 $ 48.93
76
Table of Contents
NOTE 13 — Income Taxes
Income before taxes consisted of the following:
Year Ended July 31,
(In thousands) 2025 2024 2023
U.S. $ 1,686,794 $ 1,593,381 $ 1,437,126
International 208,787 121,220 117,202
Total income before taxes $ 1,895,581 $ 1,714,601 $ 1,554,328
Income tax expense (benefit) from continuing operations consisted of the following:
Year Ended July 31,
(In thousands) 2025 2024 2023
Federal:
Current $ 272,836 $ 271,820 $ 243,253
Deferred ( 12,654 ) ( 1,174 ) ( 4,642 )
260,182 270,646 238,611
State:
Current 37,487 49,539 47,507
Deferred ( 2,576 ) ( 1,611 ) 813
34,911 47,928 48,320
International:
Current 51,113 34,179 26,150
Deferred 1,012 ( 499 ) 3,506
52,125 33,680 29,656
Income tax expense $ 347,218 $ 352,254 $ 316,587
A reconciliation of the expected U.S. statutory tax rate to the actual effective income tax rate is as follows:
Year Ended July 31,
(In thousands) 2025 2024 2023
Federal statutory rate 21.0 % 21.0 % 21.0 %
State income taxes, net of federal income tax benefit 2.1 % 2.4 % 2.0 %
International rate differential 0.3 % 0.1 % ( 0.3 ) %
Compensation and fringe benefits ( 1.6 ) % ( 0.7 ) % ( 1.0 ) %
FDII and/or GILTI ( 2.8 ) % ( 2.8 ) % ( 2.8 ) %
Federal return to provision adjustment ( 0.1 ) % — % ( 0.1 ) %
Other differences ( 0.6 ) % 0.5 % 1.6 %
Effective tax rate 18.3 % 20.5 % 20.4 %
77
Table of Contents
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets (liabilities) are presented below:
July 31,
(In thousands) 2025 2024
Deferred tax assets:
Allowance for credit loss $ 2,794 $ 2,483
Accrued compensation and benefits 24,868 22,957
Operating lease liabilities 21,213 24,897
Accrued other 3,233 5,528
Deferred revenue 5,989 5,544
Losses carried forward/interest disallowance 52,256 48,599
Federal tax benefit 7,974 12,821
Total gross deferred tax assets 118,327 122,829
Less: Valuation allowance ( 50,311 ) ( 47,377 )
Net deferred tax assets 68,016 75,452
Deferred tax liabilities:
Vehicle pooling costs ( 25,018 ) ( 27,716 )
Property and equipment ( 58,782 ) ( 74,741 )
Operating lease right-of-use assets ( 21,655 ) ( 24,612 )
Other prepaids ( 2,420 ) ( 2,339 )
Intangibles and goodwill ( 38,586 ) ( 38,279 )
Total gross deferred tax liabilities ( 146,461 ) ( 167,687 )
Net deferred tax liabilities $ ( 78,445 ) $ ( 92,235 )
On July 4, 2025, the U.S. government enacted The One Big Beautiful Bill Act of 2025 (the “OBBBA”) which includes, among other provisions, changes to the U.S. corporate income tax system including extensions and modifications of the Tax Cuts and Jobs Act of 2017. The OBBBA did not have a material impact on the Company results of operations and financial position as of and for the fiscal year ended July 31, 2025.
The Company’s effective income tax rates were 18.3 %, 20.5 %, and 20.4 % for fiscal 2025, 2024 and 2023, respectively. The Company’s U.S. federal statutory tax rate for fiscal years 2025, 2024, and 2023 was 21.0 %. The effective tax rate for the fiscal year ended July 31, 2025 was favorably impacted by a $ 55.0 million tax benefit related to the FDII deduction and $ 36.7 million in excess tax benefits from the exercise of employee stock options and negatively impacted by $ 38.6 million related to state income taxes. The effective tax rate for the fiscal year ended July 31, 2024 was favorably impacted by a $ 47.7 million tax benefit related to the FDII deduction and $ 14.8 million in excess tax benefits from the exercise of employee stock options and negatively impacted by $ 40.6 million related to state income taxes. The effective tax rate for the fiscal year ended July 31, 2023 was favorably impacted by a tax benefit of $ 42.6 million related to the FDII deduction and $ 21.0 million tax benefits from the exercise of employee stock options and negatively impacted by $ 30.3 million related to state income taxes.
The Company’s ability to realize deferred tax assets is dependent on its ability to generate future taxable income. Accordingly, the Company has established a valuation allowance in taxable jurisdictions where the utilization of the tax assets does not meet the more-likely-than-not threshold of recognition. Additional timing differences or future tax losses may occur which could warrant a need for establishing additional valuation allowances against certain deferred tax assets. During fiscal year 2025, the Company recorded a $ 2.9 million increase in valuation allowances primarily due to additional operating losses and interest disallowance carryforward generated in foreign jurisdictions unlikely to be realized.
As of July 31, 2025 and 2024, the Company had foreign operating losses and interest disallowance carryforward of $ 52.3 million and $ 48.6 million (tax effected), respectively. The foreign operating losses, subject to certain limitations, usually can be carried forward indefinitely. However, these losses are subject to valuation allowance based on realizability. The valuation allowance for the fiscal year ended July 31, 2025 and 2024 was $ 50.3 million and $ 47.4 million, respectively, which are primarily related to operating losses in certain foreign jurisdictions.
78
Table of Contents
The following table summarizes the activities related to the Company’s unrecognized tax benefits resulting from uncertain tax positions.
July 31,
(In thousands) 2025 2024 2023
Beginning balance $ 45,725 $ 57,445 $ 55,754
Increases related to current year tax positions — 2,955 10,006
Prior year tax positions:
Increases recognized during the period 126 11 1,388
Decreases recognized during the period ( 9,724 ) ( 7,070 ) ( 7,623 )
Cash settlements during the period ( 8,951 ) ( 6,062 ) ( 403 )
Lapse of statute of limitations ( 1,950 ) ( 1,554 ) ( 1,677 )
Ending balance $ 25,226 $ 45,725 $ 57,445
As of July 31, 2025 and 2024, if recognized, the portion of liabilities for unrecognized tax benefits resulting from uncertain tax positions that would favorably affect the Company’s effective tax rate was $ 19.9 million and $ 36.1 million , respectively. It is possible that the amount of unrecognized tax benefits will change in the next twelve months, due to tax legislation updates or future audit outcomes; however, an estimate of the range of the possible change cannot be made at this time.
The Company recognizes interest and penalties related to income tax matters in income tax expense. As of July 31, 2025, 2024 and 2023, the Company had accrued interest and penalties related to unrecognized tax benefits of $ 10.4 million, $ 13.8 million and $ 11.7 million, respectively.
The Company files income tax returns in the U.S. federal jurisdiction, various states and foreign jurisdictions. The Company is currently under examination by certain taxing authorities in the U.S. for fiscal years between 2020 and 2022. At this time, the Company does not believe that the outcome of any examination will have a material impact on the Company’s consolidated results of operations and financial position.
As of July 31, 2025, the Company has undistributed earnings of approximately $ 688.5 million generated by its foreign subsidiaries. As the Company determined these undistributed foreign earnings along with any additional outside basis differences were indefinitely reinvested as of July 31, 2025, no deferred tax was therefore provided. The Company believes it is not practicable to estimate the amount of deferred tax liability related to the entire outside basis differences due to the complexity of the calculation and the uncertainty regarding assumptions necessary to compute the tax. However, the Company would not anticipate any significant tax liability associated with the repatriation of the undistributed earnings.
79
Table of Contents
NOTE 14 — Segments and Other Geographic Reporting
The Company’s U.S. and International regions are considered two separate operating segments and are disclosed as two reportable segments. The segments represent geographic areas and reflect how the chief operating decision maker “CODM”, the Company’s Chief Executive Officer, allocates resources and measures results. The primary financial measures used by the CODM for assessing performance and allocating resources are service revenue, vehicle sales, and operating income.
The following tables present financial information by segment:
Year Ended July 31, 2025
(In thousands) United States International Total
Service revenues $ 3,451,558 $ 517,104 $ 3,968,662
Vehicle sales 403,546 274,750 678,296
Total service revenues and vehicle sales 3,855,104 791,854 4,646,958
Facility operations 1,646,183 298,135 1,944,318
Cost of vehicle sales 378,100 224,897 602,997
General and administrative 349,935 52,994 402,929
Operating income $ 1,480,886 $ 215,828 $ 1,696,714
Depreciation and amortization, excluding debt costs $ 184,026 $ 31,823 $ 215,849
Interest income 168,641 10,268 178,909
Capital expenditures, including acquisitions 490,965 79,248 570,213
Total assets 8,834,063 1,256,839 10,090,902
Goodwill 390,422 127,357 517,779
Year Ended July 31, 2024
(In thousands) United States International Total
Service revenues $ 3,126,102 $ 434,900 $ 3,561,002
Vehicle sales 338,633 337,188 675,821
Total service revenues and vehicle sales 3,464,735 772,088 4,236,823
Facility operations 1,440,707 269,377 1,710,084
Cost of vehicle sales 313,449 306,038 619,487
General and administrative 282,545 52,684 335,229
Operating income $ 1,428,034 $ 143,989 $ 1,572,023
Depreciation and amortization, excluding debt costs $ 161,685 $ 28,076 $ 189,761
Interest income 140,728 4,945 145,673
Capital expenditures, including acquisitions 491,497 113,906 605,403
Total assets 7,386,103 1,041,661 8,427,764
Goodwill 390,421 123,488 513,909
80
Table of Contents
Year Ended July 31, 2023
(In thousands) United States International Total
Service revenues $ 2,841,641 $ 356,487 $ 3,198,128
Vehicle sales 348,007 323,383 671,390
Total service revenues and vehicle sales 3,189,648 679,870 3,869,518
Facility operations 1,292,527 225,502 1,518,029
Cost of vehicle sales 326,764 287,734 614,498
General and administrative 202,260 48,162 250,422
Operating income $ 1,368,097 $ 118,472 $ 1,486,569
Depreciation and amortization, excluding debt costs $ 135,804 $ 23,674 $ 159,478
Interest income 64,082 1,846 65,928
Capital expenditures, including acquisitions 373,190 143,446 516,636
Total assets 5,825,064 912,815 6,737,879
Goodwill 270,269 124,020 394,289
NOTE 15 — Commitments and Contingencies
Commitments
Letters of Credit
Under a letter of credit facility separate from our Revolving Loan Facility, the Company had outstanding letters of credit of $ 15.0 million at July 31, 2025, which are primarily used to secure certain insurance obligations.
Contingencies
Legal Proceedings
The Company is subject to threats of litigation and is involved in actual litigation and damage claims arising in the ordinary course of business, such as actions related to injuries, property damage, contract disputes, and handling or disposal of vehicles. In addition, from time to time, the Company receives communications from government or regulatory agencies concerning investigations or allegations of noncompliance with laws or regulations in jurisdictions in which the Company operates. Except as otherwise noted in this Note 15, there are no material pending legal proceedings to which the Company is a party, or with respect to which any of the Company’s property is subject.
The Company provides accruals for matters when a loss is probable and the amount can be reasonably estimated. The effect of the outcome of any such matters on the Company’s future consolidated results of operations and cash flows cannot be predicted because any such effect depends on future results of operations and the amount and timing of the resolution of any such matters. The Company believes that any ultimate liability regarding existing litigation and claims would not have a material effect on its consolidated results of operations, financial position, or cash flows. However, legal and regulatory proceedings are inherently unpredictable, and the amount of the liabilities associated with claims, if any, cannot be determined with certainty. If one or more matters were resolved against us for amounts in excess of the Company’s expectations, the impact on the Company’s consolidated results of operations, financial position, or cash flow could be material. The Company maintains insurance which may or may not provide coverage for claims made against the Company. There is no assurance that there will be insurance coverage available when and if needed. Additionally, the insurance that the Company carries requires that the Company pay for costs and/or claims exposure up to the amount of the insurance deductibles.
The U.S. Department of Justice, Consumer Protection Branch (DOJ) is conducting an ongoing investigation into potential violations by the Company of certain money laundering laws related to its practices and procedures for preventing and detecting money-laundering activity by its auction platform members. In connection with this investigation, the Company received a letter from the DOJ in October 2023 in which the DOJ indicated the Company may have exposure as a result of potential violations of such money laundering statutes and regulations. The Company is cooperating with the DOJ’s investigation. At this time, we are unable to predict the duration, scope, or result of any potential governmental, criminal, or civil proceeding that
81
Table of Contents
may result, the imposition of fines and penalties, and/or other remedies, and as a result, are unable to predict the range of possible loss.
NOTE 16 — Guarantees — Indemnifications to Officers and Directors
The Company typically enters into indemnification agreements with its directors and certain of its officers to indemnify them to the extent permitted by law against any and all liabilities, costs, expenses, amounts paid in settlement and damages incurred by the directors and officers as a result of any lawsuit, or any judicial, administrative or investigative proceeding in which the directors and officers are sued as a result of their service to the Company.
NOTE 17 — Related Party Transactions
There were no amounts due to or from related parties as of July 31, 2025 and 2024.
NOTE 18 — Employee Benefit Plan
The Company sponsors a 401(k) defined contribution plan covering its eligible employees. The plan is available to all U.S. employees who meet minimum age and service requirements and provides employees with tax deferred salary deductions and alternative investment options. The Company matches 20 % of employee contributions up to 15 % of employee salary deferral. The Company recognized expenses of $ 3.1 million, $ 2.3 million, and $ 2.2 million for the year ended July 31, 2025, 2024, and 2023, respectively, related to this plan.
The Company also sponsors an additional defined contribution plan for its U.K. employees, which is available to all U.K. employees who meet minimum service requirements. The Company matches up to 5 % of employee contributions. The Company recognized expenses of $ 2.6 million, $ 2.1 million, and $ 1.6 million for the year ended July 31, 2025, 2024, and 2023, respectively, related to this plan.
82