Basic and Diluted (Loss) Earnings per Share

9 Months Ended

Sep. 30, 2023

Basic and Diluted (Loss) Earnings per Share

(9) Basic and Diluted (Loss) Earnings per Share

The Company has two classes of common stock: class A common stock and class B common stock. Holders of class A common stock generally have the same rights, including rights to dividends, as holders of class B common stock, except that holders of class A common stock have one vote per share while holders of class B common stock have ten votes per share. Each share of class B common stock is convertible at any time, at the option of the holder, into one share of class A common stock. As such, basic and fully diluted earnings per share for class A common stock and for class B common stock are the same. The Company has never declared or paid any cash dividends on either class A or class B common stock. As of September 30, 2023 and December 31, 2022, there were no shares of preferred stock issued or outstanding.

The impact from potential shares of common stock on the diluted earnings per share calculation are included when dilutive. Potential shares of class A common stock issuable upon the exercise of outstanding stock options, the vesting of restricted stock units and performance stock units considered probable of achievement, and in connection with the 2021 ESPP are computed using the treasury stock method. Potential shares of class A common stock issuable upon conversion of the Convertible Notes are computed using the if-converted method. In computing diluted earnings per share, the Company first calculates the earnings per incremental share (“EPIS”) for each class of potential shares of common stock and ranks the classes from the most dilutive (i.e., lowest EPIS) to the least dilutive (i.e., highest EPIS). Basic earnings per share is then adjusted for the effect of each class of shares, in sequence and cumulatively, until a particular class no longer produces further dilution.

The following table sets forth the computation of basic and diluted (loss) earnings per share (in thousands, except per share data) for the periods indicated:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2023			2022			2023		2022
Numerator:
Net (loss) income - Basic	$	(143,441	)	$	(27,079	)	$	339,995	$	(1,220,128	)
Effect of dilutive shares on net (loss) income:
Interest expense on 2025 Convertible Notes, net of tax		0			0			4,255		0
Interest expense on 2027 Convertible Notes, net of tax		0			0			2,165		0
Net (loss) income - Diluted	$	(143,441	)	$	(27,079	)	$	346,415	$	(1,220,128	)

Denominator:
Weighted average common shares of class A common stock		12,257			9,344			9,701		9,335
Weighted average common shares of class B common stock		1,964			1,964			1,964		1,964
Total weighted average shares of common stock outstanding - Basic		14,221			11,308			11,665		11,299

Effect of dilutive shares on weighted average common shares outstanding:
Stock options		0			0			430		0
Restricted stock units		0			0			43		0
Performance stock units		0			0			8		0
Employee stock purchase plan		0			0			0		0
2025 Convertible Notes		0			0			1,633		0
2027 Convertible Notes		0			0			733		0
Total weighted average shares of common stock outstanding - Diluted		14,221			11,308			14,512		11,299

(Loss) earnings per share:
Basic (loss) earnings per share (1)	$	(10.09	)	$	(2.39	)	$	29.15	$	(107.99	)
Diluted (loss) earnings per share (1)	$	(10.09	)	$	(2.39	)	$	23.87	$	(107.99	)

(1) Basic and fully diluted (loss) earnings per share for class A and class B common stock are the same.

For the three and nine months ended September 30, 2023 and 2022, the following weighted average shares of potential class A common stock were excluded from the diluted (loss) earnings per share calculation because their impact would have been anti-dilutive (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Stock options		1,406		1,497		633		1,428
Restricted stock units		204		130		34		118
Performance stock units		52		0		0		0
Employee stock purchase plan		3		5		2		2
2025 Convertible Notes		1,633		1,633		0		1,633
2027 Convertible Notes		733		733		0		733
Total		4,031		3,998		669		3,914