Research and Development Expense (R&D expense) refers to the costs incurred by a company to innovate and develop new products or services. This includes expenses for salaries, materials, and overhead associated with research activities. R&D is crucial for companies aiming to improve their offerings and maintain a competitive edge in the market. These expenses are typically recorded on a company's income statement and can significantly impact profitability. While R&D expenses do not guarantee immediate returns, they are considered an investment in future growth and can lead to breakthroughs that enhance a company's market position and revenue potential.