Introduction
Coinbase's sales and marketing expense rose 62% in 2025, to $1.06 billion. On the face of its income statement, that is all an investor would see. In the notes, Coinbase showed where the money went: $441 million of rewards paid to customers holding the USDC stablecoin, almost double the year before, $403 million of marketing programs, $136 million of employee costs and $78 million of other items. Coinbase had chosen to adopt the new US expense disaggregation standard early, in its 2025 annual report, two years before it becomes mandatory.
From the 2027 fiscal year, every US public company will have to give similar detail. Accounting Standards Update (ASU) 2024-03, the Financial Accounting Standards Board's (FASB) response to years of investor requests for better information about costs, does not change what appears on the face of the income statement, but it requires each major expense line to be broken down by nature in a note. For analysts, it is one of the largest increases in income statement detail US companies have been required to provide in years.
What the Standard Requires
US companies present expenses by function, such as cost of sales, selling, general and administrative (SG&A) and research and development, in whatever captions they choose. Under the new standard, for each relevant expense caption, a company must disclose in a table the amounts within it of five natural expense categories: purchases of inventory, employee compensation, depreciation, intangible asset amortization and, for oil and gas producers, depreciation, depletion and amortization. It must also include in the same table certain amounts already required to be disclosed elsewhere, give a qualitative description of the amounts not separately broken out, and disclose its total selling expenses and how it defines them.
- Relevant expense caption
Under ASU 2024-03, any expense line presented on the face of the income statement that contains any of the specified natural expense categories, such as cost of sales, selling, general and administrative expenses or research and development. Each relevant caption must be disaggregated in a tabular note disclosure, while captions such as interest expense or income taxes are not.
The standard applies to public business entities for annual periods beginning after December 15, 2026, and to interim periods in annual periods beginning after December 15, 2027, after the FASB clarified the dates in early 2025, as Deloitte's summary of the effective date clarification explains. Companies may apply it prospectively or retrospectively, and early adoption is permitted, the route Coinbase took in its 2025 annual report. The requirement covers public business entities, including smaller Securities and Exchange Commission (SEC) registrants, but not private companies, and foreign companies filing International Financial Reporting Standards (IFRS) statements with the SEC follow IFRS 18 instead.
Selling Expenses
The separate requirement to disclose total selling expenses addresses a long-standing gap. Most US companies combine selling costs with general and administrative costs in a single SG&A line, the caption examined in operating expenses: SG&A and R&D, so investors could not tell how much a company spent to win customers as opposed to running its corporate functions. Each company must now disclose the total of its selling expenses in annual and interim reports and explain in its annual reports how it defines them, which will make customer acquisition costs and sales efficiency far easier to compare, particularly for software, consumer and industrial companies whose growth depends on sales spending.
Inventory Purchases and Cost of Sales
For companies that hold inventory, the purchases of inventory disclosed within cost of sales, combined with the change in the inventory balance, show how much of cost of sales is purchased goods and how much is labor, depreciation and overhead absorbed into products, the components described in cost of goods sold and gross profit. That split explains gross margin movements better than any ratio: a manufacturer whose margins fall because purchased materials became more expensive faces a different problem from one whose margins fall because its factories are underused and fixed costs are spread over fewer units.
What the Disclosure Reveals
Coinbase's note shows the kind of detail the standard produces:
| Line item | 2024 | 2025 |
|---|---|---|
| USDC rewards | 224.3 | 441.3 |
| Marketing programs | 247.1 | 402.6 |
| Employee-related | 151.0 | 136.2 |
| Other | 32.1 | 78.4 |
| Total sales and marketing | 654.4 | 1,058.6 |
| Employee-related | 1,036.7 | 1,052.6 |
| Website hosting and infrastructure | 228.4 | 322.1 |
| Amortization, depreciation and impairment | 122.6 | 157.1 |
| Other | 80.6 | 138.8 |
| Total technology and development | 1,468.3 | 1,670.6 |
Source: Coinbase 2025 Form 10-K, Note 17. Employee-related costs include employee compensation and benefits. Coinbase adopted ASU 2024-03 early, retrospectively. Sales and marketing rows do not sum exactly to the totals because of rounding from thousands.
The table answers questions the income statement cannot. The growth in sales and marketing came almost entirely from customer rewards and marketing, not from staff, which says something about how the cost will behave if activity falls. Technology spending grew more slowly than sales and marketing, and within it, hosting and infrastructure rose faster than people. A banker modeling the business can now separate costs that scale with customer activity from costs that scale with headcount.
Consistent EBITDA and Labor Costs
Two uses will matter across all industries. First, depreciation and amortization by caption make it possible to calculate EBITDA consistently even when companies bury depreciation in cost of sales or spread it across several lines, a recurring problem described in EBIT and EBITDA. Second, employee compensation by caption shows how labor-intensive each part of the cost base is, which helps in estimating operating leverage, cost savings in a restructuring and synergies in a merger.
How It Compares With IFRS 18
The US standard arrives alongside a similar change under IFRS. IFRS 18 requires companies that present expenses by function to disclose the amounts of depreciation, amortization, employee benefits, impairments and inventory write-downs within each line, as described in IFRS 18 and the new income statement. The two sets of requirements overlap substantially, so from 2027 analysts will be able to see a natural breakdown of costs for most large companies under either framework. The differences are in scope: IFRS 18 also restructures the income statement itself, while the US standard leaves the face of the statement unchanged and adds only the note.
What Bankers Will Do With It
The disclosure will change several pieces of routine work:
- Building EBITDA from depreciation and amortization disclosed by caption rather than from the cash flow statement, which mixes in other items.
- Estimating the share of costs that are fixed, variable or tied to headcount, for margin forecasts and downside cases.
- Sizing cost synergies in mergers by function, using disclosed employee compensation in selling, administrative and research lines.
- Comparing gross margins more consistently, by seeing how much depreciation and labor each company includes in cost of sales.
For most companies, the first disclosures will appear in annual reports for fiscal years beginning in 2027, filed in early 2028, with early adopters already providing a preview. The disclosure is narrow by design, but its effect on analysis is broad: it turns the most aggregated part of the income statement into something closer to a cost model, and it will make the assumptions behind margin forecasts, the analysis set out in profitability margins, much easier to test.
