v3.20.2
Net Income (Loss) Per Share
 9 Months Ended
Sep. 30, 2020
Earnings Per Share [Abstract]  
Net Income (Loss) Per Share

14. Net Income (Loss) Per Share

Basic and diluted net income (loss) per common share is presented in conformity with the two-class method required for participating securities. Immediately prior to the consummation of the Company’s IPO in September 2019, all outstanding shares of convertible preferred stock and common stock were converted into shares of Class B common stock. As a result, Class A and Class B common stock are the only outstanding equity in the Company.

Basic and diluted net income (loss) per share is computed using the weighted-average number of shares of common stock outstanding during the period. The undistributed earnings are allocated based on the contractual participation rights of the Class A and Class B common stock as if the earnings for the year have been distributed. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis. Further, as the conversion of Class B common stock is assumed in the computation of the diluted net income (loss) per share of Class A common stock, the undistributed earnings are equal to net income (loss) for that computation.

The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data):

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Basic net loss per share:

 

Class A

 

 

Class B

 

 

 

 

 

 

 

 

 

 

Class A

 

 

Class B

 

 

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(9,773

)

 

$

(5,377

)

 

$

(93

)

 

$

(4,068

)

 

$

(4,257

)

 

$

(4,130

)

 

$

(157

)

 

$

(17,444

)

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares used in calculating net loss per share, basic

 

 

195,176

 

 

 

107,378

 

 

 

2,322

 

 

 

101,554

 

 

 

151,806

 

 

 

147,299

 

 

 

782

 

 

 

86,976

 

Basic net loss per share

 

$

(0.05

)

 

$

(0.05

)

 

$

(0.04

)

 

$

(0.04

)

 

$

(0.03

)

 

$

(0.03

)

 

$

(0.20

)

 

$

(0.20

)

Diluted net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allocation of distributed loss for basic

   computation

 

$

(9,773

)

 

$

(5,377

)

 

$

(93

)

 

$

(4,068

)

 

$

(4,257

)

 

$

(4,130

)

 

$

(157

)

 

$

(17,444

)

Reallocation of undistributed loss as a

   result of conversion of Class B to Class A shares

 

 

(5,377

)

 

 

—

 

 

 

(4,068

)

 

 

—

 

 

 

(4,130

)

 

 

—

 

 

 

(17,444

)

 

 

—

 

Allocation of undistributed loss

 

$

(15,150

)

 

$

(5,377

)

 

$

(4,161

)

 

$

(4,068

)

 

$

(8,387

)

 

$

(4,130

)

 

$

(17,601

)

 

$

(17,444

)

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of shares used in basic calculation

 

 

195,176

 

 

 

107,378

 

 

 

2,322

 

 

 

101,554

 

 

 

151,806

 

 

 

147,299

 

 

 

782

 

 

 

86,976

 

Weighted-average effect of diluted securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of Class B to Class A common shares outstanding

 

 

107,378

 

 

 

—

 

 

 

101,554

 

 

 

—

 

 

 

147,299

 

 

 

—

 

 

 

86,976

 

 

 

—

 

Number of shares used in diluted calculation

 

 

302,554

 

 

 

107,378

 

 

 

103,876

 

 

 

101,554

 

 

 

299,105

 

 

 

147,299

 

 

 

87,758

 

 

 

86,976

 

Diluted net loss per share

 

$

(0.05

)

 

$

(0.05

)

 

$

(0.04

)

 

$

(0.04

)

 

$

(0.03

)

 

$

(0.03

)

 

$

(0.20

)

 

$

(0.20

)

 

Since the Company was in a loss position for the periods presented, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential common shares outstanding would have been anti-dilutive. Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows (in thousands):

 

 

 

 

As of September 30,

 

 

 

2020

 

 

2019

 

Shares subject to outstanding stock options and restricted

   stock units

 

 

32,972

 

 

 

37,153

 

Unvested early exercised stock options and restricted stock

 

 

919

 

 

 

1,548

 

Shares subject to the employee stock purchase plan

 

 

131

 

 

 

—

 

Total

 

 

34,022

 

 

 

38,701

 

 

 

The Company uses the treasury stock method for calculating the potential dilutive effect of the conversion spread on diluted net income per share; if any, as the Company currently expects to settle the principal amount of the 2025 Notes in cash, and any excess in shares of the Company’s Class A common stock. The shares of the underlying conversion option for the 2025 Notes were not considered in the calculation of diluted net income per share as the effect would have been anti-dilutive. The effect of the conversion spread becomes dilutive when the average share price for the Company’s Class A common stock exceeds the conversion price of $92.30 per share, which did not occur as of September 30, 2020.

 

The Company entered into Capped Calls in connection with the issuance of the 2025 Notes. The effect of the Capped Calls was also excluded from the calculation of diluted net income per share as the effect of the Capped Calls would have been anti-dilutive. The Capped Calls are expected to partially offset the potential dilution to the Company’s Class A common stock upon any conversion of the 2025 Notes.