Copart, Inc. (NASDAQ:CPRT) Q2 2025 Earnings Call Transcript

Copart, Inc. (NASDAQ:CPRT) Q2 2025 Earnings Call Transcript February 20, 2025

Copart, Inc. beats earnings expectations. Reported EPS is $0.4, expectations were $0.3717.

Operator: Good day, everyone, and welcome to the Copart Incorporated Second Quarter Fiscal 2025 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 Federal Security Laws, including management’s current views with respect to trends, opportunities, and uncertainties in the company’s markets. 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 and the company’s Annual Report on Form 10-K for the year ended July 31st, 2024, 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.

Jeff Liaw : Thank you, Owen, and welcome everybody to our second quarter 2025 earnings call. On our recent calls, we’ve discussed and addressed a range of long-term themes, including fundamental growth drivers for our insurance business, including macro forces such as total loss frequency, which we’ll touch upon today, as well as the proactive levers that we control to drive our growth in that portion of our business. Those levers include, for example, our artificial intelligence-enabled image recognition tools, which can empower insurance companies to total cars more accurately and more effectively, as well as our vertical extension into new service offerings such as Title Express. We’ve also talked about our response to major catastrophic events, including Hurricanes Helene and Milton from last year, and we, of course, have discussed as well the expansion of our business with sellers beyond the insurance industry to include financial institutions, rental car fleets, corporate fleets, among others.

We would encourage you to revisit those prior calls for deep dives on those subjects I would summarize today, simply by saying that those big-picture trends continue. First, we continue to grow our insurance volume, our auction liquidity, and the returns we’re generating for our sellers. Our insurance carriers each passing day are entrusting us with more of the workflow that they once handled in-house, both day-to-day and in storm events as well. As one very visible example, now that we are processing well over 1 million titles per year via our Title Express platform, no carrier who has started with Copart has taken it back in-house. We also continue to grow our volume with our non-insurance sellers, benefiting of course from the flywheel effect of our auctions.

And finally, we continue to invest proudly and aggressively in our business in the form of technology, real estate, and people to fuel our future growth. I wanted to provide a few brief comments on our insurance business specifically before turning it over to Leah to review the financial results and to take a few of your questions. First, on our insurance business, our global volume grew 8% for the quarter in comparison to the same quarter last year. A little over half of this was attributable to the catastrophic events of the second half of last year. As has been true since the dawn of our industry, we continue to experience increases in total loss frequency, of course with the singular exception of the blip from 2021 to 2022, when ACVs or pre-accident values increased more than they ever had previously in Copart’s history.

For the fourth quarter in the United States, total loss frequency hit 23.8%, an all-time high, though a portion of that is attributable to those storm events in the second half of last year, which tend to have very high total loss frequency rates. Nonetheless, the full-year trend of 22.2% represents an all-time annual high, and the total loss frequency drivers certainly continue unabated. Repairing cars becomes less attractive as time passes as labor costs increase, repair parts costs increase, and rental car rates do as well, while totaling vehicles becomes more attractive given the liquidity of our auctions, demand for our vehicles by international buyers, and the salvage returns we’re able to generate for our sellers. A couple of inquiries we’ve received in recent days that I thought might be worth addressing today.

First is the question about whether insurance coverage in general has changed. And I would note that over the past two years, the insurance industry has generally achieved rate relief through state regulatory bodies, and consumers have certainly felt those changes in the form of higher rates for their auto policies. This has caused a modest increase in the uninsured population relative to pre-COVID levels, certainly. Over many years, we’ve observed this to be a cyclical trend, meaning the uninsured motorist rate tends to go up and down over the years. And given where we sit right now, it likely is a modest, it represents a modest offset to the growth in our insurance business. The second topic I wanted to address briefly is the question of what potential tariffs mean for our business, and I’ll take a U.S.-centric view first to addressing this question.

It’s frankly similar to an inquiry that we get from time to time about whether high-used car prices or low-used car prices are better for our business. The reality is that we’re somewhat ambivalent, and in this case, the bottom line of a potential tariff-oriented approach would be — that it’s largely neutral to our business, though with a complex tapestry of offsetting forces, some of which we’ll briefly touch on today. As you know, in general, the effects of tariffs are largely inflationary. For each of the factors that in turn affect our business with the corresponding downstream effects on our unit volume, our selling prices, and our operating profits, here are a few such examples. Inbound tariffs in isolation would increase the cost of repair parts for vehicles, which all else equal would increase total loss frequency and drive increased volume to co-park.

Inbound tariffs, however, would also increase pre-accident values, or actual capital costs to use the American parlance, which in isolation would increase the cost of total losses to insurance carriers, reducing total loss frequency and suppressing volume to go part. But those inbound tariffs would also increase the selling prices for the vehicles that we sell at auction for the very same reason, yet again, driving total loss frequency up and improving our unit economics as well. If the story stopped there, I’d characterize the effect of tariffs as being modestly positive to go part. The great unknown, however, is what inbound tariffs for shipments to the United States, whether those tariffs could precipitate retaliatory tariffs from the same countries against whom we are imposing them.

On its face, those tariffs might appear to suppress selling prices for our vehicles at auction. However, for the automotive industries, the countries that would face the most substantial tariff burdens, such as Germany, Japan, Mexico, and Canada are generally not the providers of critical high value liquidity for our auctions. Those nations are typically in Eastern Europe, the Middle East, and Africa. As has been true now for many years, economic outcomes for our sellers and for Copart at our auctions are largely driven by the cars that we are selling as repairable, drivable cars, not as parts to be harvested, nor as metal to be scrapped. The countries who are hungriest for these types of cars generally do not have substantial domestic auto manufacturing capabilities.

And as such are not likely to be subject to significant automotive tariffs against which to retaliate in the first place. That’s a bit of a long-winded answer, but in sum, I think we believe that tariffs would have a likely neutral to modestly positive effect on our business, and we faced enough such inquiries that I thought it was worth exploring in greater detail. We concluded our quarter and are pleased with the results, and I’ll hand it to Leah to describe those more fully.

Leah Stearns : Thank you, Jeff. I’ll begin with our second quarter sales trend. During the quarter, our global unit sales increased 8%, and inventory decreased nearly 3% from a year-ago period. Focusing on our U.S. business, growth in unit sold was about 8%, which reflects fee unit growth of nearly 8% and purchase unit growth of 29%. Our U.S. insurance unit volume increased about 9% year-over-year, or approximately 2% when you exclude cat units. Non-insurance unit volume increases continue to outpace our insurance volume growth, excluding cat. Blue Car, which services our bank, rent, and fleet customers, continued its strong trend with year-over-year growth of over 27%. Dealer sales volume consisting of co-part dealer services and our national power sports auction business was flat year-over-year, with MPA increasing over 14% and CDS declining about 5%.

Low-value units, including charities and municipalities, declined just over 4% as we continue to focus on higher margin per unit business lines. On a final note, our partner in the equipment space, Purple Wave has driven 8% GTV growth year-over-year for the trailing 12 months ended January 31st. While we are observing the industry-wide trend of sellers taking a cautious wait-and-see approach due to uncertainties in the broader macro environment, Purple Wave’s overall GTV continues to significantly outpace the industry from a growth perspective. Overall inventory levels in the U.S. decreased about 4% and by about 5% when excluding low-value and cat units. Turning to our international business, growth in units sold was over 8% in the quarter and about 7% when you exclude cat units.

International fee units increased 11% and purchase units decreased 6% for the quarter. Our international business ended the quarter with inventory levels 2% ahead of the prior year period. Global ASPs increased by approximately 2% for the quarter relative to the year ago. Our U.S. insurance ASPs increased by nearly 2% over the same period and increased just over 1% when you exclude the impact of cat units. Our international ASPs decreased by less than 1% and international insurance ASPs increased 3%. Turning to our financial performance, global revenue in the quarter increased 14%, nearly $1.2 billion. Global service revenue increased nearly $130 million or 15% for the second quarter due to increased volume and higher revenue per unit. U.S. service revenue grew by nearly 15% for the quarter and 8% when excluding CAT units.

And international service revenue grew by about 17%. Global purchase vehicle sales for the second quarter increased approximately 9% while global purchase vehicle gross profit increased 110% in the second quarter. In the U.S., purchase vehicle revenue was up about $32 million or 43% while purchase vehicle gross profit increased over $9 million or about 205% in the quarter. Internationally, purchase vehicle revenue decreased by over $18 million or 22% and gross profit increased by more than $3 million or about 48% in the second quarter. As a reminder, the reduction in international purchase vehicle revenue accompanied by an increase in gross margin continues to be driven by higher ASP insurance vehicles in Germany which have transitioned from a purchase contract to a consignment model as well as stronger purchase unit margins in the UK.

Global facility-related costs which include facility operations, depreciation and amortization and stock-based compensation increased 81 million or about 20%. In the U.S., facility-related costs increased $75 million or nearly 22%. During the quarter, we recognized $27 million of incremental costs associated with the hurricanes, Helene and Milton. This reflects the recognition of expenses associated with cat units sold during the period. There remains over $5 million costs which are incurred and are currently capitalized on our balance sheet which will be recognized as the remaining cat units are sold. Excluding the costs associated with the hurricanes, facility-related costs per unit increased about 12% from the prior year period. This increase in per unit costs reflect our ongoing investments and expanded operational capacity to support our continued growth.

International facility-related costs were up almost $6 million which is an increase of nearly 9% or less than 1% on a growth, on a per unit basis. During the quarter, global gross profit was approximately $526 million, an increase of over $61 million or about 13% and our gross margin percentage was 45% per quarter. In the U.S., our gross profit was approximately $463 million and increase of about 11% and gross margin was about 48% for the quarter. Our international gross profit was approximately $62 million, an increase of about 32% and gross margin was about 33% in the quarter. Second quarter GAAP operating income increased about 12% to over $426 million which reflects the growth and gross profit and our general and administrative expenditures of $99 million which are up about 15 million over the prior year.

And finally, second quarter GAAP net income increased 19% to over $387 million or $0.40 per diluted common share. During the quarter, we benefited from an increase of nearly $7 million of interest income as we have actively invested our cash into treasury securities. And for the quarter, our tax rate was approximately 17%. Turning to our capital structure, as of the end of January, we had over $5 billion of liquidity which is comprised of nearly $3.8 billion in cash and our capacity under our revolving credit facility of over $1.2 billion. With that, Jeff and I would be happy to take some questions.

Q&A Session

Operator: Ladies and gentlemen, we will now begin the question and answer session. [Operator Instructions] And our first question comes from the line of Bob Labick with CJS Securities. Please proceed.

Bob Labick: Good afternoon. Thanks for taking our questions.

Jeff Liaw : Hi, Bob.

Bob Labick: Hey. So I want to start. On the salvage side, you guys have advanced the industry for decades by serving your customers’ needs. What are the biggest points of friction in the total loss process for the insurance customers you serve now? And what, and how are you working to solve those?

Jeff Liaw : Sure. It’s a great question, Bob. I’d say the critical points of friction, some of which we can help with directly, others of which are at least for now and not yet in our hands, would start from the moment of the accident forward, right? So from the moment of the accident forward, in particular in the United States, the direction of that initial tow often happens without the insurance company’s knowledge at all. So costs are incurred. The cars are often towed to an impound facility, for example, where a store is charges accumulate until the insurance carrier is even aware of the accident in the first place. So first notice of loss is a critical milestone in the claims process that the insurance carriers manage. Once they’re aware, we certainly can begin to assist them with a faster assessment of the total loss.

The faster we can help them make that decision, and that requires upstream integration into their business processes, into an aspect of claims that we had historically not been as plugged into. But the earlier we can assist them with that decision, the more we can arrest those advanced charges in the first place. So that remains a key point of friction in the industry more broadly. We have a number of initiatives with a number of carriers underway already to help them make that decision more quickly. At the other end of the spectrum, I think it was probably a couple of calls ago, we talked a great length about the Title Express platform or Title Procurement function that we now perform on behalf of insurance companies. That is likewise a large administrative burden for anyone, especially when there are liens outstanding on a total loss claim vehicle.

That requires interacting with lenders. And if you’ve studied this space, you’re aware that the fragmentation of the U.S. lender base is vast. Going from the big money center banks at the front end, the obvious Bank of America, Citibank, JPMorgan, and so forth, all the way to the very smallest regional credit unions, most of which you haven’t heard of. It requires sophistication on the part of an institution like us to absorb that burden, especially as we’re beginning to see an uptick in underwater loans in the first place. So that’s an area where we have now, you heard me mention during the call, taken on that burden for well over 1 million cars a year and counting and growing. And I’d say the carriers who have signed up for that service have by and large been delighted with it.

So those are a couple of points of friction and there’s certainly others, Bob, but we’re excited to help them with those two critical touch points in the claims process.

Bob Labick: Okay, great. Appreciate that color. And then one on the non-salvage the whole car side. Please give us a sense of where you are in your salesforce build out to grow and your market share in the light damaged, non-salvage cars and how big of an opportunity is that segment for Copart?

Jeff Liaw : Yeah, that’s a fair question, Bob. I think the question you posed and the answer frankly is a dynamic one. And as we — and the interplay of total loss frequency and the vehicles that we sell for sellers beyond insurance companies works in concert. But as total loss frequency rises and the cars we sell increasingly are almost not recognizable as totals. In some cases, you could not tell by the naked eye that the car had even been in an accident. The universe of buyers for those vehicles begins to very heavily resemble the buyers of cars at traditional auto auctions, wholesale auto auctions. So that trend continues in our favor. So the liquidity pool that Copart provides just organically extends into that space more and more.

Broadly speaking, as you I’m sure are well aware, the wholesale auction intermediated market is in the north of 15 million cars a year. Some of those cars of course sell for $30,000, $40,000 plus. Those aren’t yet our sweet spot. But as for the cars that are in the insurance zone, so to speak, we are talking many, many, many cars. We should be in the early innings of our experience there. And we have invested in the sales force as you know, Bob, our aspiration is to invest far more over the years to come. Both as our capabilities grow, the auction liquidity continues to move in that direction and we become a still more credible provider of those services to sellers in that universe.

Bob Labick: Super, thanks so much. I’ll get back in queue.

Operator: The next question comes from the line of Chris Bottiglieri with BNP Paribas. Please proceed.

Chris Bottiglieri: Yeah, thanks for taking the question. We’ve had two today. I guess the first one was on currency. I think it’s been a number of years since I’ve asked this, but can you just remind us kind of how a strong USD, like how it plays throughout your business? Does it impact the fees buyers pay? Does it impact ASPs? Historically, you’ve seen periods of strong dollar. I think it’s been a number of years, but what would the impact be from your perspective?

Jeff Liaw : Yeah, I think we are in broad strokes, Chris, I’d say we’re more short the dollar than we are long. A strong U.S. dollar makes assets in the U.S. more expensive for those outside U.S. borders to purchase. So it can taken to the extremes, a super strong U.S. dollar could suppress selling prices for vehicles at cohort auctions. That said, I’d say over the years, currency fluctuations tend not to be universal or unanimous. Invariably, there are some countries with stronger currencies relative to the dollar at any moment in time. And as a result then, our reach, our footprint, so to speak, in terms of the countries to which our auctions reach tend to be diversified enough that even if some countries suffer in the form of weaker currencies relative to the dollar, others step into the fold.

And certainly, domestic buyers would be advantaged in that instance as well. So it’s an organic enough supply. It’s an organic enough demand curve, so to speak, that we haven’t seen meaningful lifts in many years. So whatever headlines we read about the Mexican peso, the Canadian dollar and elsewhere, we wouldn’t, per se see in the day-to-day selling prices in Copart auctions because our risk is sufficiently diversified.

Chris Bottiglieri: Got you. Okay. That makes sense. And I kind of wanted to delve into the title a little bit more. It sounds like you’ve progressed well excess that 1 million now. You sell roughly 4 million units in North America today. What can you tell us, like are insurers moving all of the units they could sign with you? Are they kind of giving you like a sample at first? And then to what extent can you push this product out to even units you don’t serve, like what does your competitors do, for example? And then lastly, what kind of knock-on effects are you seeing? Are you seeing them kind of engage with you in other services? Or are they thinking — like I guess, besides just making life easier for them, in what other ways is this helping your business?

Jeff Liaw : Yeah. To the second half or latter portion of your question, I think the knock-on effects that are most valuable to both us and to our insurance company clients is that we generally reduce cycle times for those vehicles because we are performing this function at scale across 50 states with the many thousands of lenders and the established traffic patterns, so to speak, as to when to call and how many titles you can negotiate with a given lender when you finally get through on hold or those we negotiate to participate actively in our portal and so forth, right? So there is a natural benefit of the scale that we have built on that side of the business, which ultimately manifests itself in moving the cars more quickly, which, generally speaking, generates higher returns and of course, makes better use of our storage capacity as well.

I think it is a critical point of trust with our insurance carriers, as you noted. If you — if an insurance company entrusts Copart to navigate policyholder interactions at the moment of a pretty intense claim, right? By its nature, a total loss claim is a more serious claim than, say, glass breakage, windshield crack or what have you, that insurance companies have entrusted us with that pivotal moment. I think it’s a sign that yes, they will, over the years to come, likely entrust us with still more the total loss decision tools that I mentioned at the outset, among other sub-services. And we’re delighted to do it because I think we have the scale and the expertise and the interest to do a fantastic job. I think you posed the question as to how the progression naturally works.

And yes, it tends to start with a pilot for a given state or given subset of states and then migrate its way to the entire company or all of their total loss claims. And barring any folks that are in a trial period now, I’d say virtually every Title Express client has virtually every title has been procured by us. It doesn’t make sense to try to segment them in some way to keep X states and transfer Y states, it tends to be all or nothing.

Chris Bottiglieri: Perfect. That makes a lot of sense. Thank you.

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

Craig Kennison : Hey, good afternoon. Thanks for taking my questions. I wanted to focus on Purple Wave, if I could. And maybe you could just help us understand your geographic expansion plans and whether it’s important that you expand in geographically adjacent markets, so you can leverage network effects that you built up locally? And I have a few follow-ups.

Leah Stearns : Hi, Craig, thanks for the question. There are one components to our expansion of the Purple Wave sales force. One is densification of sales professionals in the existing territories that Purple Wave was operating in prior to our investment. And the second is to identify the markets where the highest volume of transactions occur and identify seasoned professionals to join the team to help expedite our ability to win share in those markets. So it’s really been a two-pronged approach that we’ve taken, and it served us well. We’re seeing that we’re able to basically densify our sales force in some of our — in some of Purple Wave legacy markets, and that’s helping us win more share in those markets as well.

Jeff Liaw : And Craig, to the credit, Aaron, Suzy McKee and the team have built a strong virtual auction business for the heavy equipment space. So they have, by and large, not relied on physical stores. So even as we expand into new geographic adjacencies, the investment is largely people and systems oriented as opposed to large storage facilities or large physical infrastructure. But that is certainly part of the playbook for [Indiscernible].

Craig Kennison : And maybe you can help me, Jeff, understand the network effect in your buyer base. How often does equipment leave the local market and find its way around the world?

Jeff Liaw : For Purple Wave, it definitely does. The equipment is often expensive enough to — or high-value enough, so to speak, to justify transporting it to other places, in the attendees that are out of the town or out of the state are certainly substantial. And I think it’s probably — you probably already know this, Craig. But even in Copart’s core business because we serve insurance companies, even before the Purple Wave, the investment, the Purple Wave partnership, we were already a very significant purveyor of heavy equipment in the construction space, agricultural, et cetera, almost incidentally so because insurance carriers often have policies that cover these types of assets as well. So we are experiencing, we are leveraging the benefits in both directions and we’ll do so in the future as well. In terms of the crossover buyers that would be interested who are participants in Copart would be interested in Purple Wave and vice versa.

Craig Kennison : Thanks. And just one more. I think, Leah, you mentioned that you do target veteran or seasoned professionals in that industry. I know you’ve said in the past, you’ve doubled the head count or the territory manager headcount. I’m sure it takes time to ramp. But is 8% GTV growth consistent with, I guess, increasing your sales force by that much?

Leah Stearns : I would just say that there is a ramp-up period and that, I would say, doubling of the sales force has recently occurred. So I think of really the first two to three months as being coming in, getting trained, getting the full playbook for the Purple Wave platform. And then they begin to build up their book of business and their future visibility into their pipeline. And so yes, I think we’re pleased with where that new cohort is performing and would expect to see further growth from them come in over the next several quarters.

Craig Kennison : Great. Thank you.

Operator: [Operator Instructions] And the next question comes from the line of Bret Jordan with Jefferies. Please proceed.

Bret Jordan : Hey, good evening, guys. On the CDS compare year-over-year, I guess, was there an abnormal spike in the prior year? Or is it just tougher to get that volume since it’s such sort of a one-off acquisition at the dealer level?

Leah Stearns : I’d say the CDS volume, we’ve seen be more volatile this year. I think the overall wholesale market is expected to be flat year-on-year. And so we’ve seen months where we’ve been well ahead of prior year, and we’ve seen months where we’ve just been behind. So I think it’s been, all in, a bit weaker than we had expected. But net-net, the team continues to focus on adding additional accounts and that we’re able to build out that base within our dealer business to have a strong platform to grow from.

Bret Jordan : Okay. And then a follow-up. Germany, you mentioned, it has transitioned mostly to consignment. Could you talk about the German growth specifically within international? And as it goes to consignment, does that allow it to accelerate faster just because it’s more efficient to get the unit?

Jeff Liaw : Bret, I was going to add just one afterthought on your CDS inquiry as well. I think it’s fair to say that the CDS business is, by its nature, not as entirely durable at the insurance businesses, but I wouldn’t describe it as transactional either, meaning we build deep and lasting relationships with the sellers participating at Copart, and we certainly have to engage with them on a regular basis to continue that flow of vehicles. But I wouldn’t describe it as the kind of business that if you just turned away for a day, it would go away either. I wouldn’t characterize it that way. As to your second question about Germany, I wouldn’t describe the consignment versus purchase approach as, per se, the bottleneck in our penetration growth in Germany.

That remains those things we’ve tackled, I think, on prior discussions with you and others about the historical practices in Germany. Some regulatory matters. I think it’s frankly more habit culture in historical practices than it is even the regulatory burdens. But because that, the total loss market has emerged very differently in Germany. We have to overcome that institutional inertia. We have to overcome the habits of both the claims team as well as the marketing team, the legal teams, the tax teams. There’s inertia to overcome. So the consignment question is it’s a helpful fact for us is, it better aligns our interest with the insurance companies. We’ve talked about that in the past, too, that we always prefer to sell on a consignment basis because it meets the insurance carrier, and we are rooting for the same outcome as opposed to the very naturally adversarial relationship when we buy cars from them.

And we are in turn now moving to the highest possible price that we sell the vehicle for and they’re rooting to the lowest possible price because they want to make sure that they hadn’t foregone value that belong to that. So it’s a good fact, but it’s not, per se, the enabler in isolation.

Bret Jordan : Okay. Can I work in a half a question, follow-up to Craig’s. On Purple Wave, is there an export market through that equipment? Or is it just too large to logistically sell to the buyers who would be buying transportation from you in Africa or Eastern Europe?

Jeff Liaw : There can be less so today than there is at Copart, meaningfully less so. But the equipment, for the same reason, is value, we have had some cross-border movement from Europe and Canada, what have you assumed. I wouldn’t say the answer is no, but not yet to the same degree that the Copart auctions experience.

Bret Jordan : Thank you.

Operator: The next question comes from the line of Jash Patwa with JPMorgan. Please proceed.

Jash Patwa : Hi, good evening. Thanks for taking my questions. I just wanted to start off with a question on the trends in service and purchased vehicles, gross profit margin. You had called out a favorable environment in UK as a driver of the transitory uplift in purchase margins. But it looks like in Q2, it was another strong quarter of purchased vehicle gross margins. Could you talk about the trends you’re seeing in the market? Is this primarily a function of market dynamics? Or has there been an increase in focus by the company to better capitalize on any market and efficiencies? And I have a follow-up.

Leah Stearns : Sure. The specific trend in terms of purchased vehicles gross margin is attributable, one, primarily to the transition of a top customer in Germany to a consignment model, but also just the contract structure for certain sellers in the UK that were previously using more of a purchase contract there also, they’ve also moved to a consignment model. And then in addition to that, there is some benefit from a margin perspective, purely on vehicles that we purchase and sell through the auction from consumers. So it’s a combination of factors. It’s not just one.

Jeff Liaw : I think in the broadest — through the broadest lens, I would view vehicles that Copart sells on a purchase basis, there’s the consumer business, which you know about. That’s our Cash for Cars platform because we aren’t yet a meaningful household name, the Cash for Cars business is a more straightforward way of selling cars on behalf of the consumers. We take all the risk we bought the cars from them. Virtually, every other corner of Copart in which we are buying and selling cars, I would view that as a transitional step over time to a consignment model. It is proving to the seller that we generate returns. We’ll be happy to share those results with them to show them that we’re in fact making money on the cars, put us together and migrate to consignment models so that we can sit on the same side of the table together.

Jash Patwa : Understood. That’s super helpful. Just as a follow-up, could you talk about the drivers of sequential downtick in G&A spend despite seasonally higher revenue? Would it be reasonable to view the Q2 run rate as a normalized run rate going forward? Or are there any material investments in the pipeline as we go to 2025? Thank you.

Jeff Liaw : Yeah, the G&A question is a good one. And I think we’ll say the same thing in quarters that are heavier quarters than are light. I think you — we should all look at multiple quarters of historical results to — from which to assess any meaningful trends. We manage our costs very thoughtfully. We want to invest in the business to grow it. I wouldn’t read into any given quarter. And that goes for CapEx and G&A and so forth. We’re not managing for the smoothness of our earnings, we manage to grow the enterprise profitably for the benefit of our customers and our shareholders long term. So the quarterly blips, there’s some seasonality in the business indirectly and yard expenses, there’s some variability in G&A for projects or what have you. And we undertake no efforts to smooth them whatsoever, right? So they are what they are, look to multiple quarters to draw any conclusions.

Jash Patwa : Make sense. Thanks and good luck.

Operator: Thank you. Ladies and gentlemen, we’ve reached the end of the question-and-answer session. I would like to turn the call back to Jeff Liaw for closing remarks.

Jeff Liaw : Great. Thanks, everybody, for joining us, and we’ll talk to you next quarter.

Operator: This concludes today’s conference. You may disconnect your lines at this time. Enjoy the rest of your day.