There are different accounting strategies for when you recognize income/expenses.

Say you land a long term contract to provide a service for 5 years and you need to buy extra hardware to fulfill this service, you can choose to expense the hardware immediately in the first year while you let the earnings come in over the next 5 years. In the first year you would be taking a huge loss (on paper), and in the following four years you would see larger than average profits (on paper).

Alternatively, you could acknowledge the full value of the contract immediately. Or another alternative is to expense the hardware over time.

I'm not an accountant, but this analogy is my basic understanding of the flexibility that companies have.