Total operating expenses
Also known as: operating expenses, opex, operating costs
Total operating expenses is the sum of all costs incurred in running the business during the period, typically combining cost of goods sold, selling general & administrative expenses, and research & development. Some income statements present operating expenses excluding cost of goods sold, so the exact composition depends on how a company structures its reporting. It is worth checking the footnotes before comparing across companies.
Subtracting total operating expenses from revenue gives you operating profit, making this line the bridge between the top line and the core earnings of the business.
Its significance is less as a standalone figure and more as a control total. Analysts use it to assess operating leverage, the degree to which revenue growth outpaces expense growth. A business with strong operating leverage sees total operating expenses grow slowly relative to revenue, so each additional dollar of sales drops more efficiently to operating profit.