Copart, Inc. (NASDAQ:CPRT) Q3 2026 Earnings Call Transcript

Copart, Inc. (NASDAQ:CPRT) Q3 2026 Earnings Call Transcript May 21, 2026

Copart, Inc. beats earnings expectations. Reported EPS is $0.43, expectations were $0.4063.

Operator: Good day, everyone, and welcome to the Copart, Inc. Third Quarter Fiscal 2026 Earnings Call. Just a reminder, today’s conference is being recorded. Before turning the call over to management, I will share Copart’s safe harbor statement. The company’s comments today include forward-looking statements within the meaning of the federal securities laws, including management’s current views with respect to trends, opportunities and uncertainties in the company’s industry. These forward-looking statements involve substantial risks and uncertainties. For more detail on the risks associated with the company’s business, we refer you to the section titled Risk Factors in the company’s annual report on Form 10-K for the year ended July 31, 2025, and each of the company’s subsequent quarterly reports on Form 10-Q.

Any forward-looking statements are made as of today, and the company has no obligation to update or revise any forward-looking statements. I will now turn the call over to the company’s CEO, Jeff Liaw.

Jeffrey Liaw: Welcome and thank you for joining us for our call today. We’re pleased to report the results of our third quarter fiscal year 2026. I’ll begin with some brief remarks on our insurance business before passing the call to Leah to provide a summary of our financial results. We’ll then take your questions. On our insurance business. First, for the third quarter 2026, our global insurance unit sales declined 2.7% or 1.9%, excluding the effect of catastrophic volume from a year ago. Our U.S. insurance unit volume for the same period declined 4.2% or just over 3%, excluding the effect of those same catastrophic units. We believe the long-term growth algorithm for our insurance business remains very much intact, that over many years, we’ve observed modest gradual declines in accident frequency, which are then more than offset by increases in total loss frequency.

Total loss frequency is, in turn, a function of ever-rising repair costs, but more importantly, the differentiated returns that Copart generates by finding the highest and best use for a car globally, which is often full restoration back to roadworthiness. Nevertheless, the underlying drivers of near-term volume trends remain consistent with those we’ve discussed with you in prior quarters. A portion of this volume variance reflects shifts in policy in force mix among insurance carriers. And as we indicated previously, these trends tend to — have been cyclical historically. And we have observed a moderation in some of these trends among U.S. insurance carriers in recent quarters. Claims activity also remains somewhat softer as consumers continue adjusting their insurance purchasing behavior in response to rising premiums.

As one indicator of this trend from a macro level, earned car years according to ISS Fast Track have declined 4% year-over-year in the fourth calendar quarter of 2025, while vehicles in operation grew 1.4%. We believe this divergence, declining insurance coverage against a growing vehicle fleet, is clear evidence of the consumer pullback on insurance coverage. As one other strong indication of consumers absorbing ever more of the financial burdens of their claims, CCC has published data indicating that 25% of repairs are now self-pay and that in response, they’ve actually created a Buy Now, Pay Later product to support those consumers. Long-term historical data, though, indicates that this consumer retrenchment phenomenon regarding insurance coverage is cyclical and likely counter inflationary.

When consumers feel pocketbook pressure especially on a lagged basis regarding their auto insurance rates, they dial back their coverage. The same has been true in reverse. This softness in claims activity has been partially offset by continued increases in total loss frequency, consistent with the very long-term industry trend. The underlying forces here have been remarkably consistent, rising repair costs on the one hand and on the other, increasing auction returns at Copart. Total loss frequency for the first calendar quarter 2026 reached 23.6%, an increase of almost 5 full percentage points over the past 4 years. Although we always report this metric, it sounds like we described it as an industry metric, we are very much not passive beneficiaries of an increase in total loss frequency.

We have helped to drive it upwards, and we view it as our ongoing responsibility to drive ever better auction returns, which then increases the attractiveness of the total loss pathway to insurance carriers who are considering various possibilities for resolving their claims. We are focused, as always, on delivering superior outcomes for our clients, first and foremost, through auction returns, but also, of course, through our differentiated service offerings from vehicle retrieval to title processing. We continue to invest heavily in our technology platforms, our physical infrastructure and our global buyer network to enable those outcomes, representing absolute investment levels that substantially exceed the balance of the industry collectively.

We do so proudly as stewards of the industry. On returns, specifically, despite the logistical and economic disruptions of global conflict, U.S. insurance ASPs increased 4.1% year-over-year for the quarter, reaching a seasonally adjusted all-time record high for Copart insurance ASPs in the third quarter. Consistent with our prior discussions, international buyers are a critical driver of these auction returns and today represent more than 1/3 of the volumes sold at U.S. Copart auctions and nearly half of our auction proceeds. In any given month or quarter, the precise mix of participating countries can surely vary. For example, given recent conflicts, direct participation in U.S. auctions from certain Middle Eastern markets has declined year-over-year.

What has sustained overall demand has been the breadth and diversification of this buyer base. As certain corridors moderated, others expanded to fill the gap, including parts of Central Europe, West Africa, Central America and the Caribbean. The virtue of robust auction liquidity is that no single seller or buyer and, in fact, no single region, country or currency unduly influences the auction outcomes we deliver to our sellers. The resilience of our marketplace comes from the depth and diversity of a buyer network we have spent decades cultivating, now spanning more than 160 countries worldwide. That network breadth is a meaningful driver of returns for our insurance clients. Our analysis also shows that international buyers, financed buyers, new buyers and particularly crossover buyers, which I’ll describe in greater detail, are critical enablers of the higher auction returns that we generate for our sellers.

We call crossover buyers those members who first discover Copart and engage with us, in search of a vehicle sold by rental car companies, financial institutions, dealers and the like, who then discover the wealth of product available from insurance sellers and then engage as buyers there as well. Looking back over the past 3 years of the more than 30,000 buyers who first entered the Copart ecosystem by virtue of those noninsurance vehicles, a strong majority would bid on an insurance vehicle within the first 90 days of their engagement. Whatever we or anyone else asserts about their auction liquidity, the best testimony for auction liquidity is your seller participation. Our sellers vote with their feet by entrusting ever more of their volume to us on a pure sale basis.

They know that by virtue of Copart’s buyer recruitment, product discovery and auction management practices that we will yield the highest and best value the first time through our auction. And in fact, today, for U.S. insurance sellers at Copart, the mix of pure sale units is at all-time highs. We estimate that our pure sale insurance volume is literally an order of magnitude higher than what is available at other similar platforms. We recently completed our 2026 Insurance Advisory Board meeting, a gathering of our largest U.S. insurance clients together to discuss current and future catalysts of change in our industry, including, of course, very notably artificial intelligence deployment. It marks, though, just one visible moment in our ongoing day-to-day engagement with our clients to extend and expand our commercial relationships as we handle ever more of the claims processes for them, including providing them the AI-enabled tools to make front-end total loss decisions more quickly and more accurately through to title procurement, loan settlement and ultimately, auction as well.

With that, I’ll turn the call over to Leah Stearns.

Leah Stearns: Thank you, Jeff, and good afternoon to everyone on the call. I’ll begin by walking through our financial results for the quarter, beginning with our consolidated performance, followed by a review of our U.S. and international segments. For the third quarter, consolidated revenue grew to $1.24 billion, up 2.1% year-over-year, driven by strength in both service and purchased vehicle sales. During the quarter, we continued to see expansion in average selling prices, which rose 4.6% and more than offset a modest decline in unit volumes of 2.4%. On the insurance side, global units were down 2.7%, consistent with the industry dynamics Jeff outlined, while global noninsurance units decreased 1.4%. Notably, while global inventory was down 2% from the prior year, global assignment volumes grew at a low single-digit pace.

From a profitability standpoint, the quarter was strong. Global gross profit increased 3.7% to $572.6 million, with global gross margins increasing 71 basis points to 46.3%. During the quarter, we continued to invest across our platform to enhance the products and services we offer to participants across our global marketplace. This includes the recent launch of our domestic long-haul delivery services in the U.S. Operating income grew 2.8% to $464.3 million, net income was $402.4 million, and earnings per diluted share increased 2.4% to $0.43, benefiting in part from our ongoing share repurchase activity. Turning to our U.S. segment. Total units declined 4.2% or 3.3% excluding Copart direct units. Insurance volumes decreased 4.2%, which are consistent with the claims frequency trends Jeff described a few moments ago.

Beyond insurance, we are seeing encouraging momentum across our diversified seller base. Our Dealer Services and powersports businesses grew unit by 1%. And our BluCar commercial consignment channel expanded by over 4% over the prior year. Combined fleet and finance seller volume grew at a healthy double-digit pace, which was partially offset by the continued impact of higher repair activity we’ve seen among our rental customers. Our Copart direct unit volume declined 26.3% as we continue to strategically shift lower-value units to our direct buy channel. On the inventory side, U.S. inventory is down 4.7% year-over-year, and U.S. assignments declined at a low single-digit pace during the quarter. Shifting to Purple Wave. Our focus on organic territory sales expansion continues to yield strong gross transaction value growth, which was more than 25% for the last 12 months.

The momentum we are experiencing is being fueled by strong traction in our expansion markets and deepening relationships with select enterprise accounts, which is a real testament to the progress our team is making to scale their platform. On revenue, the U.S. segment was essentially flat, down 0.4% as higher revenue per unit largely was offset by volume headwinds. Insurance ASPs increased 4.1%, noninsurance ASPs increased 3.7% and purchased unit ASPs increased 23%. U.S. gross profit grew to $484.1 million, up 0.9%, and gross profit margin was 48.3%. Operating income was $390.4 million, reflecting a 38.1% operating margin. Internationally, the story is one of continued momentum. Total units sold increased 5.9% with insurance units up 4.6% and noninsurance units growing at an impressive 11.2% in the quarter.

Inventory in our international segment increased over 10% from a year ago period and international assignments increased at a low teens pace. These trends reflect the broad-based growth that we are seeing across our diversified international footprint, with particularly strong contributions from the U.K., Germany and Canada. For the quarter, international revenue grew 14.1% or 7.9%, excluding the positive impact of foreign currency fluctuations, to $234.2 million. The primary source of growth internationally came from service revenues, which were up 17.9%, which was driven by a 10.5% increase in fee revenue per unit and strong volume growth. Revenue per unit was positively impacted by strong ASP growth with insurance ASPs increasing 8.4% and noninsurance ASPs growing 16.7%.

The profit picture was equally compelling, with gross profit increasing 21.9% and operating income reaching $73.8 million, representing a 31.5% operating margin. Finally, turning to our capital structure and liquidity. Copart remains in an exceptionally strong financial position. We ended the quarter with liquidity of approximately $5.5 billion, which includes $4.2 billion in cash and equivalents and held to maturity securities and no debt. Our balance sheet gives us tremendous flexibility to be opportunistic investors throughout business and credit cycles. We continue to generate robust free cash flow, which has increased 12% year-to-date, supported by disciplined capital allocation into land, facilities and technology, which positions us to efficiently serve both insurance and noninsurance clients while delivering strong operating efficiency.

On the capital return front, we continue to repurchase shares during the third quarter through a combination of 10b5-1 and open market transactions. Fiscal year-to-date, we have repurchased over 43.4 million shares for an aggregate amount of over $1.6 billion, underscoring our confidence in the future growth prospects for Copart and the long-term value of our business. Thank you. And with that, we’ll open up the call for questions.

Q&A Session

Operator: [Operator Instructions] And the first question comes from the line of Bob Labick with CJS Securities.

Bob Labick: So I want to start on fuel. Fuel prices, transportation costs are up across the economy and talked about a lot in general and was wondering if you could talk — remind us how it flows through for Copart now. I think years ago, it was all company fleet, then you outsourced your fleet. I think you kind of have a hybrid towing fleet now. So if you could give us color on the impact and do you charge surcharges, pricing to your customers? Or how do you mitigate fuel as well?

Jeffrey Liaw: Great. Thanks for your question, Bob. The fuel — we are, as you noted, a hybrid. We do manage our own in-house truck fleet. We do have a substantial program that we call Truck In a Box in which we help contractors and help support their businesses with a structured lease program and a structured tow program with us as well. So we have cultivated liquidity on the towing side with some mix of our owned assets as well as the supported third parties as well. And then as you know, for many years, we have leveraged the — a large third-party subcontractor network as well. So all three of the above. And not surprisingly, fuel is very relevant to all of them. And so we have been thoughtfully responsive with them as necessary to adjust rates, to ensure ongoing service and to ensure that they also can long term prosperously support us, our business as well as the business of our clients.

So it’s a microeconomic decision market by market, but we do have to account, of course, for that input cost in our business.

Bob Labick: Okay. Understood. Great. And then I guess, one bigger picture question in terms of the decline in new car sales and SAAR kind of started in 2020 from COVID. And how do you see that as — is there an impact on expected salvage volumes in 2027 and beyond as those cohorts start hitting the sweet spot for total loss frequency? I know there’s lots of other variables you talked about insurance affordability claims earned car years, et cetera, which can be offsetting. But I guess I drive it down to one thing. Can you talk about the kind of the macro drivers and that one in particular, the decline in SAAR? And then more so just the biggest Copart specific growth drivers over the next 5 years, noting that macro is a little bit tough.

Jeffrey Liaw: Yes. A very good question. And Bob, if I just conjecture on my part. But I think in your mind, you may be thinking there are some auction houses, for example, who sell vehicles on behalf of OEMs at the end of a lease. And so if in 1 year, there are very few lease originations, then 3, 5, 7 years, hence, perhaps there are fewer vehicles to sell them. For us, the catalyst is much less when the cars enter the ecosystem in the first place. So whether the car was sold originally in ’18, ’19, ’20 or ’21, is not especially of consequence to us. What really matters to us is that the vehicles are on the road period, right? There are cars being driven miles being traversed in the cars themselves and then, of course, collision rates, total loss rates as well.

So at least in theory, even at the extremes, if you completely eliminated all new cars sold in 2021 altogether, which is not that far from the truth, given what we now know of the semiconductor crisis at the time, that doesn’t have any real pronounced effects given the way our supply is a layer cake of more than a decade’s worth of new car shipments, right? So any given 1 or 2 or 3 years of disruption, so long as it doesn’t coincide with a dramatic decline in miles driven, which, in turn, would really be the independent variable of consequence, not the new cars to begin with.

Bob Labick: Got it. Understood. And then just like the primary drivers, I guess, is my last one, I’ll get back in queue, for your growth over the next 5 years.

Jeffrey Liaw: Sure. I think you heard me walk through principally the insurance side of the house, which is to say that the insurance industry has been a strong growth lever for us for decades even on a same client basis, so to speak, as accident frequency has historically been very much more than offset by rising total loss frequency. The catalysts for that phenomenon, we think largely remain true. So that’s the insurance business part 1 in all the markets in which we already do business today. Lever #2, you heard Leah and I both talk about some which is the liquidity that we are pursuing and succeeding in obtaining in noninsurance-insurance markets. These are the rental car companies, dealers, corporate fleets and financial institutions who are increasingly entrusting us with their vehicles as well.

As you know from our prior discussions, Bob, the nature of rising total loss frequency means that we are ever more selling actual cars and not selling basket parts or not selling baskets of raw materials. And to the extent that we’re selling vehicles that are drivable that are worth $5,000, $10,000, $15,000, $20,000 plus, we become, with each passing day and year, the more appropriate forum for a growing variety of vehicles, including those vehicles from the aforementioned institutions. So that’s a big — that has been a meaningful growth lever for the past 5 years. And with the confluence of total loss frequency and the natural flywheel effect of earning more of those cars, we expect more liquidity to come from those sources as well. We have expanded globally, as you know, perhaps most notably in 2007.

So almost 20 years ago. We’re approaching the anniversary soon of our entry into the United Kingdom. We now also operate and operate profitably in Spain, in Germany, Finland, the Middle East, Canada, Brazil, et cetera. So international expansion has historically been part of our playbook as well. There are some countries that still share many of the characteristics that make total losses so compelling in the markets I just mentioned. There are other markets that will no doubt emerge over the course of the next 20 years, 10 or 20 years as well. So international expansion also relevant. The one thing I skipped over, I glossed over briefly, is the total loss frequency. When I mentioned at the outset that we view it as our responsibility to help drive total loss frequency upwards, right?

And so far, as we play an affirmative role in enhancing the economics of total loss, we can help insurance carriers literally save money every time they choose to total a car instead of repairing it because we could generate a better return by selling the car to Poland or to Central America. We are helping them. We’re helping preserve their P&Ls. We’re helping them keep their rates lower to their policyholders as well. So that sounds esoteric, but it’s a very real what we do day-to-day is to build the tools to enable them to make that decision, partner with them to incorporate it more and more upstream, the earlier, the better. But as you know, in the United States, at the scene of the accident, those tows typically are directed not by the insurance carriers or even by the policyholders.

Those typically happen on police rotation. So that’s a difficult moment at which to intercept the vehicle, but we are moving upstream. The closer to that moment, the better in terms of arresting depreciation or arresting fee accumulation of advanced charges and equipping the insurance carriers to make a better and faster total loss decision. So those are the big levers. You’ve heard also talk about the ecosystem that we serve. You heard Leah talk today some about logistics and long-haul towing. We are pursuing those initiatives both because they can be profit streams for us but also because they reduce friction, right? The better that logistics and financing and warranty and so forth can be for our buyers, the more — the greater the breadth of buyers who can reasonably participate on any given car that is sold at a Copart auction.

Operator: The next question comes from the line of Craig Kennison with Baird.

Craig Kennison: Jeff, it sounds like you hosted a forum for your insurance partners. I’m just curious, first, what are those insurance partners saying about the outlook for claims in 2026, 2027? And then you had also mentioned some catalysts for change in the industry. And I wondered if you would elaborate on some of those catalysts.

Jeffrey Liaw: Sure. Appreciate the question, Craig. This is an annual gathering we have of our major insurance clients here in the U.S. In some respects, it’s a big deal because we’re gathered face-to-face for several days in a row and talking about some really meaty matters together. And then on the other hand, it’s also overstating it a bit because we talk to these clients all the time, day-to-day, week-to-week. But it does become a forum to tackle issues that beyond the day-to-day, beyond resolving individual claims, beyond figuring out how to succeed in X geography or Y geography. In this case, when it comes to claims frequency, I think we’ll hear a variety of perspectives on it. I think everyone recognizes that, yes, many consumers, we’ve seen some research that indicates as many as 1 in every 6 policyholders in the auto space has pulled back on their insurance coverage in one way or the other, meaning they’ve moved from collision to liability only or they have increased their deductibles, et cetera, et cetera, right?

That’s a survey done in the middle of 2025 or so. And we do hear insurance carriers echoing those statements. So they see claims frequency down. They know the consumers are swallowing hard, in some cases, and eating minor repairs on their own, either because economically, they wouldn’t clear the deductible. Or even if they did, they fear the rate increase that might come with an actual economic claim as well. So that’s what we’re hearing from the insurance industry. I think they also recognize these trends tend to be cyclical, not secular that eventually folks are rational about the coverage they need and want to pay for and folks who ultimately pay for the insurance they need. And that has proven true over a multiple decade-long horizon. When it comes to catalysts for change in the future, definitely some discussion of near-term trends like the conflict that we and the world find ourselves in.

We do talk about artificial intelligence and what it means for claims, what it means for insurance companies. As you might imagine, they are both excited and terrified of it, right? An insurance company by its nature have to be very thoughtful and rigorous about new tools that are deployed. In many cases, decisions they make or their service providers may have to be thoughtful and auditable and trackable and accountable right? They can’t be black box decision-making either. So we talked a great length about artificial intelligence, how we’re deploying to Copart in support of their outcomes and how we can support them in deploying it as well. I think the insurance industry, broadly speaking, I would say, is exploring AI certainly across the multiple dimension of its industry.

But if anything, we understand it on the claims side as well as anyone, right? They will consider it for marketing. Certainly, underwriting. Certainly, repricing and the like and CRM and so forth. On the claims end, if anything, that’s a language we may speak more fluently than they do as institutions.

Craig Kennison: And then either Jeff or Leah, I’m just looking at that international service revenue line up, I think, 18%. Maybe could you get some light on what exactly is driving that? To what extent is the market performing, the underlying markets in which you participate? Is that performing well? And to what extent is that a representation of traction you’re getting, especially I’m curious about in Germany, as I know you’re flipping that market towards the Copart-style remarketing service.

Leah Stearns: Yes. Yes, Craig. So the growth internationally that we saw on the revenue side was, as I mentioned in my prepared remarks, there is contribution across many markets. The U.K. was particularly strong in the quarter. Germany followed it up as well as Canada. And so we’ve seen really strong demand across all 3 markets, both on the insurance side as well as the noninsurance business. Germany continues to perform incredibly well on a relative basis to where it was several years ago. We continue to see carriers be open-minded about how they’re approaching the total loss process, and that’s a market where we’ve seen some meaningful progress from a unit volume as well as a profitability perspective. So we’re really pleased with our performance.

Operator: The next question comes from of Jash Patwa with JPMorgan.

Jash Patwa: Could you just give us an update on the size of the noninsurance-insurance or whole car business? And it would be really helpful to get a sense of the typical profile of a crossover buyer. How does their wallet share with Copart tend to evolve over time? If possible, it would be helpful to hear an example or anecdote of how a dealer maybe initially engages with Copart and what that early exploration phase looks like and how that activity typically ramps up as the relationship develops. And I have a follow-up.

Jeffrey Liaw: Fair question. On the — I’ll start with your second question. On the nature of the crossover buyer, these are both domestic buyers and international buyers as well, who will first discover Copart through some mix of SEM or SEO. So literally, a Google search for a given vehicle may lead them to Copart for the first time. It can also be via social media. If you will check us on the YouTubes and TikToks and Instagrams and such, not even just our content alone, but you’ll find third parties posting about the vehicles they bought and transformed from Copart. So they’ll discover us in a range of different ways. And naturally, it’s often in the first car you explore Copart is one that could theoretically be driven off a Copart lot or close to it.

Those are the cars that most intrigued them at the outset. Then when they begin bidding, when they begin engaging on the platform, they discover that there’s an insurance vehicle that was a theft recovery, right? So perhaps it was never damaged at all that might be in their sweet spot as well. Their business is transforming Lexus SUVs, and they discover Lexus SUV with hail damage or theft recovery, that begins — that whets their appetite for an insurance car. Then they discovered that there’s a vehicle with light flood damage or rear-end damage, and it’s just a camera that’s knocked out the car is otherwise intact and the drivetrain is fine, right? So you can imagine that a given buyer comes for one type of car. And then once he or she realizes the breadth of inventory available to him or her, they migrate outward in concentric circles from that Lexus to other insurance Lexuses, then to Toyotas, then to BMWs, then to cars further away geographically from where they originated.

So that tends to be the discovery journey. The member universe for us is very dynamic, right? So we have many tens of thousands of new members every year. It’s — there’s tremendous creative disruption in the automotive rebuilding business, so to speak. So in every country, there are new folks in business every year, folks who go out of business every year. So replenishing that buyer universe is critical, but we have generally found that folks come to pursue very — excellent conditioned vehicles, and then they tend to expand their aperture from there.

Jash Patwa: Got it. That’s very helpful. Just as a follow-up, could we double-click on the pure sale mix with U.S. insurance sellers? I just wanted to understand if this is more contractual in nature or something more dynamic that can be toggled up or down and whether a higher mix of PR sale units has positive implications for Copart’s earnings profile?

Jeffrey Liaw: It’s a fair question. It’s not contractual. So our insurance carrier maintained the discretion to manage the auctions as they see fit. So in comparison to say where we were even 7 or 8 years ago, many more insurance carriers have moved to effectively a nearly 100% pure sale approach and a handful of carriers have moved from 100% down very meaningfully as well. Effectively, nobody has increased their portion of managed sale auctions at Copart. The reason that’s true is because they know and they can literally physically attend and not physically, but virtually other computers attend a Copart auction and they see the thousands of attendees at a given auction. They see the bidders. If you were to watch 1 car transact to Copart, you’ll see buyers in Poland bidding against buyers in Oklahoma and then Maine and then Canada and then Ecuador.

You’ll see it happen in real time. So they recognize that there is no real way to escape the liquidity at Copart. A vehicle that is sold at Copart will find its highest and best use worldwide. And so the insurance carriers have voted with their feet. They could, in theory, impose high reserve prices on every car. I think they, at this point, recognize that that’s counterproductive as well, right? That will merely chill buyer participation. If you have ever bought anything at auction, and I myself have silly things, musical instruments or collectibles that I’ll buy at the eBays and elsewhere, buyers tend to gravitate to pure sale, pure sale items. And you tend to generate better outcomes and faster outcomes when buyers are excited to participate.

So that pure sale mix has increased very steadily and very meaningfully, really, through Copart’s entire history, but in particular, over the past 5 to 7 years.

Jash Patwa: Understood. Great color. If I could just sneak one more in on RPU, continued strong growth here despite having fully lapped prior pricing actions. Could you maybe unpack the drivers of the strength, maybe break it down between contribution from pure ASP expansion versus other vectors like mix and initiatives like Title Express?

Jeffrey Liaw: Just directionally speaking, we definitely, as I noted, have provided more services of the Title Express offering. Here at Copart, we would estimate we are processing volume 6, 7, 8x more than anyone else in the industry. So that particular product has penetrated more accounts. So that’s a portion of it. As you noted, a portion is simply by virtue of the higher selling prices we’re sharing — we’re generating an auction. The mechanism of our economics are such that as we deliver higher sale prices to our sellers, we also share in a very small portion of that incremental proceeds as well. Those are the big drivers. Certainly, volume growth. Certainly, growth among those noninsurance-insurance sellers that we noted earlier. Those cars tend to sell for even more still than the average insurance card as well. Those are all the underlying drivers.

Operator: The next question comes from the line of John Healy with Northcoast Research.

John Healy: Jeff, I appreciate the comments on the whole car side. And frankly, that’s kind of one of the areas we’re getting most questions about from investors. So I would love to spend a couple more minutes there. Can you just remind us again just the size of the business, maybe either in terms of dollars or units again? And when you look at kind of the whole car business, I think there’s different definitions that probably different folks in the industry use. When I talk to people in the industry, they seem to tell me that you guys are selling a lot of hail damage type vehicles. So would love to know from a consignor standpoint, not necessarily the demand side that you talked about in the last question, but from a seller standpoint, where those whole car units are coming from?

And are they largely attached to some sort of, what I would say, damaged vehicle, not necessarily a complete salvage? But would just kind of love for you to kind of dive into help us think about your definition of whole car. And secondly, as you think about growing that business and aspirations to be more on the dealer side, I know you’ve had Copart Dealer Services for a number of years, is that a strong enough presence brand to do what you want to accomplish there? And I know you’ve kind of toyed around with BluCar for the last couple of years, but what’s your level of satisfaction with BluCar? And do you think you maybe need a different tool, a different platform or maybe just a brand that doesn’t say Copart to be a successful there as you want it to be?

Jeffrey Liaw: Yes. It’s a very fair question. And I think underlying it, John, you’ve got the intuition that every car is somewhere on a spectrum from a total burn that’s almost unrecognizable as a vehicle at all the way to a brand-new Bentley that is just off the dealer lot, and there’s a spectrum of vehicles in between. And assuredly, when we talk about vehicles, we are sourcing from institutions other than insurance companies, we start at one end of the spectrum. For sure, we are an obvious marketplace for a damaged rental car or a heavily beaten up repo vehicle. From there, we earn the right to sell the 3-year-old car that is being de-fleeted by one of the major rental car companies. We earn the right to sell a repo vehicle that is actually an excellent condition, right?

That was a voluntary repo of a car that’s 4 years old with very light mileage on it. And so we — as we described the concentric circles earlier, we have our foot in the door and we earn the right to sell “better and better cars” over time. That is reflected in part in our average selling prices. We tend to talk about insurance in isolation, but it’s reflected in the average selling prices of the cars we sell from financial institutions as well. So eventually, the TAM, when you consider all of the auction-mediated vehicles that are not from insurance companies in the United States, that’s 15 million plus, right? And not all of them are day 1 addressable for us. But as total loss frequency rises, as we earn the right to sell, more of those cars from the noninsurance sellers with each passing year, we earn the right to sell more of those cars as well.

So I think you’re right, it is a spectrum, and we are moving up and to the right on that spectrum.

John Healy: Great. And then just you might have mentioned it, and I missed it. Maybe talk a little bit about the industrial side of the business? Maybe where you’re at as you think about investments there. Maybe I don’t know if you mentioned how the GTV performed. Any call-outs for us to think about how Purple Wave is performing?

Leah Stearns: Sure, John, I’ll take that. Just in terms of GTV, we look at it on an LTM basis, and GTV has grown over 25% year-over-year. And so we’re very pleased with that. The majority of the growth is coming from territory expansion. We started out the business with a principally Central Time zone focused territory sales force and have expanded out to the coast. The majority of our investment in Purple Wave has been in headcount in that territory sales force as well as some very focused enterprise-level accounts that are focused on building relationships with large nationwide sellers. So the GTV growth that we’re seeing is a result of the success that we’ve had with that territory expansion and the enterprise relationships.

We’re pleased with that. I’d say we’re probably about, in terms of overall size, the team is about 2.5 to 3x the size it was when we acquired Purple Wave. And we still have some ways to go in terms of achieving full nationwide coverage, but we certainly hit the top areas that are most important for Copart to penetrate from a territory presence perspective, and we’re pleased with the progress we’re seeing so far.

Operator: [Operator Instructions] And the next question comes from the line of Jeff Lick with Stephens.

Jeffrey Lick: I actually got most of them on the whole car side, but I was wondering if you could talk a little bit on the recent long haul that you referenced. What exactly you’re doing there? And how is that impacting — how you’re adding that into your business?

Leah Stearns: Sure, Jeff, on the long-haul side, that’s an additional product that we have really always offered to our members. However, we shifted our market — our product offering a little over 12 months ago. We’ve seen rapid adoption of it and are quite pleased with the level of buyer participation that we’ve seen effectively procure long-haul delivery through the Copart delivered product. So we believe it reduces friction. It gives our buyers certainty in terms of cost upfront. And we’re — like I said, we’re pleased with how that’s progressing. And just in terms of overall impact for the quarter, we saw about 15 million of year-over-year increase in cost on the facility ops line related to our long-haul delivery product. And that product is generating a nice margin for us as well as the revenue line.

Jeffrey Lick: And just a quick point of clarification on pure sale units, is that just analogous to a non-reserved sale or is there any nuance there?

Jeffrey Liaw: That’s it. That’s correct.

Leah Stearns: Yes.

Operator: Thank you. This concludes question-and-answer session. I’d like to turn the call back over to Jeff Liaw for closing remarks.

Jeffrey Liaw: Great. Thank you, everybody. We’ll talk to you next quarter.

Operator: And this does conclude today’s conference. You may disconnect your lines at this time, and we thank you for your participation.