Operating Expenses (OpEx)
The ongoing costs of running a business that are not directly tied to producing goods, including SG&A and R&D.
What is Operating Expenses?
Operating expenses (OpEx) are the costs a company incurs in its normal business operations that are not included in the cost of goods sold. They typically include selling, general, and administrative expenses (SG&A), research and development (R&D), and depreciation and amortization. Operating expenses are subtracted from gross profit to calculate operating income (EBIT). Unlike capital expenditures (CapEx), which are investments in long-term assets, operating expenses are fully deducted in the period they occur. Companies aim to grow revenue faster than operating expenses to achieve positive operating leverage — expanding margins as the business scales.
Example
Meta Platforms reported total operating expenses of approximately $88 billion in FY2024 (excluding cost of revenue), including $46 billion in R&D — primarily for AI infrastructure and its Reality Labs division — and $26 billion in marketing and general administrative costs.