Operating Expenses (OpEx)

Category

Income Statement

Units

Currency

US-GAAP elements

OperatingExpensesCostsAndExpensesOperatingCostsAndExpenses

Reference

Regulation S-X Rules 5-03.3 through 5-03.6 (Other operating costs and expenses; Selling, general and administrative expenses; Provision for doubtful accounts and notes; Other general expenses)

Source

Reported in SEC EDGAR filings (US-GAAP XBRL taxonomy)

Operating expenses are the recurring costs a company incurs to run its business that are not directly tied to producing the goods and services it sells. They typically include selling, general and administrative expense, research and development, and other operating costs, and they are subtracted from gross profit to arrive at operating income.

Different filers draw the line in different places. Some present operating expenses excluding cost of revenue, while others present a single total of costs and expenses that includes it.

The SEC's XBRL element OperatingExpenses is the narrower definition: it covers recurring costs of normal operations other than those clearly tied to production and included in cost of sales, and it includes selling, general and administrative expense. Companies that present one combined total including cost of sales tag it as CostsAndExpenses. A third element, OperatingCostsAndExpenses, covers operating costs excluding SG&A. Check which one a company uses before comparing totals.

Regulation S-X Rule 5-03 lists the relevant captions after revenue and cost of sales: other operating costs and expenses (5-03.3), selling, general and administrative expenses (5-03.4), the provision for doubtful accounts and notes (5-03.5), and other general expenses (5-03.6). Research and development is not an S-X caption, but ASC 730 requires it to be expensed, and most technology and pharmaceutical companies show it as its own operating line. Restructuring charges, impairments, and amortization of acquired intangibles are also often reported within operating expenses.

Operating expenses show how much it costs to support a company's revenue base. Analysts track them as a percentage of revenue to measure operating leverage: if sales grow faster than operating expenses, operating margin expands. Because many operating costs, such as headcount and rent, are relatively fixed in the short run, a revenue decline can compress operating income faster than it compresses gross profit.