Copart (CPRT) risk factors, FY2026 10-K

Risks Related to Our Business and Industry

1. 01Our business is exposed to risks associated with online commerce security and credit card fraud
2. 02Implementation of our online auction model in new markets may not result in the same synergies and benefits that we achieved when we implemented the model in the U.S., Canada, and the U.K
3. 03Failure to maintain sufficient capacity to accept additional vehicles at one or more of our storage facilities could adversely affect our relationships with insurance companies or other sellers of vehicles
4. 04Because the growth of our business has been due in large part to acquisitions and development of new facilities, the rate of growth of our business and revenues may decline if we are not able to successfully complete acquisitions and develop new facilities25% rewritten
5. 05As we continue to expand our operations, our failure to manage growth could harm our business and adversely affect our consolidated results of operations and financial position
6. 06If we experience problems with our subhaulers and trucking fleet operations, our business could be harmed
7. 07New member programs could impact our operating results
8. 08If we lose key management or are unable to attract and retain the talent required for our business, we may not be able to successfully manage our business or achieve our objectives
9. 09The vehicle sales industry is highly competitive, and we may not be able to compete successfully
10. 10We may incur substantial indebtedness and any failure to meet our debt obligations may adversely affect our business, financial condition, and results of operationsNew

Risks Related to Regulatory Compliance and Legal Matters

1. 11Our business activities and public policy interests expose us to political, regulatory, economic, and reputational risks
2. 12Our operations and acquisitions in the U.S. and certain foreign areas expose us to political, regulatory, economic, and reputational risks68% rewritten
3. 13Although we face risks associated with international expansion in each of the non-U.S. markets where we operate, recent regulatory proposals in Brazil heighten the risks we face relating to our Brazil operations69% rewritten
4. 14We face risks associated with transacting on a principal rather than agent basis, which may have an adverse impact on our gross margin percentages and expose us to inventory risks
5. 15Our business is subject to a variety of domestic and international laws and other obligations regarding privacy and data protection75% rewritten
6. 16Regulation of the vehicle sales industry may impair our operations, increase our costs of doing business, and create potential liability
7. 17Changes in laws or the interpretation of laws, including foreign laws and regulations, affecting the import and export of vehicles may have an adverse effect on our business and financial condition20% rewritten
8. 18The operation of our storage facilities poses certain environmental risks, which could adversely affect our consolidated results of operations, financial position, or cash flows
9. 19Changes in federal, state and local, or foreign tax laws, changing interpretations of existing tax laws, or adverse determinations by tax authorities could increase our tax burden or otherwise adversely affect our results of operations, and financial condition33% rewritten

Risks Related to Our Intellectual Property and Technology

1. 20Our internet-based sales model has increased the relative importance of intellectual property assets to our business, and any inability to protect those rights could have a material adverse effect on our business, results of operations, or financial position38% rewritten
2. 21We have in the past been, and may in the future be, subject to intellectual property rights claims, which are costly to defend, could require us to pay damages, and could limit our ability to use certain technologies in the future27% rewritten
3. 22We have developed a proprietary enterprise operating system, and we may experience difficulties operating our business as we continue to design and develop this system
4. 23Rapid technological changes may render our technology obsolete or decrease the competitiveness of our services46% rewritten
5. 24Our development and use of artificial intelligence and machine learning technologies present operational, legal, competitive, and reputational risks that could adversely affect our business, consolidated results of operations, and financial positionNew

Risks Related to Ownership of Our Common Stock

1. 25Our annual and quarterly performance may fluctuate, causing the price of our stock to decline
2. 26Our executive officers, directors, and their affiliates hold a large percentage of our stock and their interests may differ from other stockholders
3. 27This provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act, for which the U.S. federal courts have exclusive jurisdiction, or the Securities Act

General Risk Factors

1. 28Cash investments are subject to risks
2. 29We are partially self-insured for certain losses and if our estimates of the cost of future claims differ from actual trends, our results of operations could be harmed
3. 30Macroeconomic factors such as fluctuations in fuel prices, commodities as well as used car prices, and vehicle-related technological advances may have an adverse effect on our revenues and operating results, as well as our earnings growth rates
4. 31Adverse U.S. and international economic conditions may negatively affect our business, operating results, and financial condition
5. 32Fluctuations in foreign currency exchange rates could result in declines in our reported revenues and earnings