Net Loss per Share

The Company calculates basic net loss per share by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, less shares subject to repurchase. Diluted net loss per share is computed by giving effect to all potentially dilutive common stock equivalents outstanding for the period, including stock options and restricted stock units.

Prior to the Company’s closing of its initial public offering in October 2017, the Company calculated basic and diluted net loss per share attributable to common stockholders in conformity with the two-class method required for companies with participating securities. The Company considered all series of redeemable convertible preferred stock to have been participating securities as the holders were entitled to receive non-cumulative dividends on a pari passu basis in the event that a dividend had been paid on common stock. For further details on the Company’s historical participating securities, including warrants to purchase redeemable convertible preferred stock and common stock, refer to the Company’s 2018 Form 10-K, specifically in Part II, Item 8, Financial Statements and Supplementary Data under the Notes to Consolidated Financial Statements.

Under the two-class method, basic net loss per share attributable to common stockholders was calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, less shares subject to repurchase. The net loss attributable to common stockholders was not allocated to the redeemable convertible preferred stock as the holders of redeemable convertible preferred stock did not have a contractual obligation to share in losses. Diluted net loss per share attributable to common stockholders was computed by giving effect to all potentially dilutive common stock equivalents outstanding for the period. For purposes of this calculation, redeemable convertible preferred stock, stock options to purchase common stock, early exercised stock options, and warrants to purchase redeemable convertible preferred stock and common stock were considered common shares equivalents, but had been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect was anti-dilutive.

Basic and diluted net loss per share was the same for each period presented, as the inclusion of all potential common shares outstanding would have been anti-dilutive due to the net loss reported for each period presented.

The rights, including the liquidation and dividend rights, of the holders of Class A and Class B common stock are identical, except with respect to voting. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to 10 votes per share. As the liquidation and dividend rights are identical for Class A and Class B common stock, the undistributed earnings are allocated on a proportionate basis and the resulting net loss per share will, therefore, be the same for both Class A and Class B common stock on an individual or combined basis.

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share data):



	Three Months Ended October 31,						Nine Months Ended October 31,
	2018			2017			2018			2017
Numerator:
Net loss	$	(31,320	)	$	(24,216	)	$	(91,730	)	$	(69,985	)

Denominator:
Weighted-average shares used to compute net loss per share, basic and diluted	52,702,526			17,421,642			51,431,021			14,749,500

Net loss per share, basic and diluted	$	(0.59	)	$	(1.39	)	$	(1.78	)	$	(4.74	)

The shares underlying the conversion option in the Notes were not considered in the calculation of diluted net loss per share as the effect would have been anti-dilutive. Additionally, the Notes were not convertible as of October 31, 2018. Based on the initial conversion price, the entire outstanding principal amount of the Notes as of October 31, 2018 would have been convertible into approximately 4.4 million shares of the Company’s Class A common stock. However, the Company expects to settle the principal amount of the Notes in cash. As a result, only the amount by which the conversion value exceeds the aggregate principal amount of the Notes (the “conversion spread”) is considered in the diluted earnings per share computation under the treasury stock method. The conversion spread will have a dilutive impact on diluted net income per share when the average market price of the Company’s Class A common stock for a given period exceeds the initial conversion price of $68.15 per share for the Notes. In connection with the issuance of the Notes, the Company entered into Capped Calls, which were not included for purposes of calculating the number of diluted shares outstanding, as their effect 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 Notes.

During the three months ended October 31, 2018, the average market price of the Company’s Class A common stock was $71.66, which exceeded the initial conversion price. Although the Notes were not convertible as of October 31, 2018, the Company calculated the potentially dilutive effect of the conversion spread, which is included in the table below.

The following weighted-average outstanding potentially dilutive common shares were excluded from the computation of diluted net loss per share for the periods presented because the impact of including them would have been anti-dilutive.



	Three Months Ended October 31,		Nine Months Ended October 31,
	2018	2017	2018	2017
Redeemable convertible preferred stock (as converted)	—	24,316,192	—	26,045,352
Redeemable convertible preferred stock warrants (as converted)	—	1,339	—	30,122
Common stock warrants	—	116,485	—	120,190
Stock options to purchase Class A common stock	3,046,631	3,258,405	3,315,885	2,207,524
Stock options to purchase Class B common stock	7,137,570	9,321,627	8,136,949	9,783,945
Unvested restricted stock units	1,707,692	54,550	1,265,391	54,550
Early exercised stock options	94,026	318,240	146,248	236,231
Shares underlying the conversion spread in the convertible senior notes	215,879	—	71,960	—