Once a project passes a technical feasibility threshold, accounting rules allow some development costs to become an asset on the balance-sheet. The cost then leaves the income statement as amortisation spread over the useful life.
A company that suddenly capitalises more of its research-and-development shows better margins without selling anything extra. Cash flow is unchanged: the spending simply moves from operating outflow to investing outflow, which also flatters operating-cash-flow.
Example: Northwind Cloud capitalises $24M of the $90M it spends on development and amortises it over four years. Reported operating income rises by $24M less the $6M of first-year amortisation, so by $18M, on identical cash spending.
Related: research-and-development, amortisation