Net Income (Loss) Per Share

9 Months Ended

Sep. 30, 2019

Basic Earnings Per Share ("EPS") is calculated by dividing net income or loss available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if options or other securities with features that could result in the issuance of common stock were exercised or converted to common stock. The following tables reconcile the numerator and the denominator of the basic and diluted net income (loss) per share computation (in thousands, except for per share data):



	Three months ended September 30,
	2019				2018
	Basic		Diluted		Basic		Diluted
Numerator:
Net income applicable to InterDigital, Inc.	$	2,234	$	2,234	$	21,752	$	21,752
Denominator:
Weighted-average shares outstanding: Basic	31,130		31,130		34,651		34,651
Dilutive effect of stock options, RSUs, convertible securities and warrants			178				956
Weighted-average shares outstanding: Diluted			31,308				35,607
Earnings Per Share:
Net income per common share: Basic	$	0.07	$	0.07	$	0.63	$	0.63
Dilutive effect of stock options, RSUs, convertible securities and warrants			—				(0.02		)
Net income per common share: Diluted			$	0.07			$	0.61



	Nine months ended September 30,
	2019					2018
	Basic		Diluted			Basic		Diluted
Numerator:
Net income applicable to InterDigital, Inc.	$	7,174	$	7,174		$	62,948	$	62,948
Denominator:
Weighted-average shares outstanding: Basic	31,757		31,757			34,687		34,687
Dilutive effect of stock options, RSUs, convertible securities and warrants			253					927
Weighted-average shares outstanding: Diluted			32,010					35,614
Earnings Per Share:
Net income per common share: Basic	$	0.23	$	0.23		$	1.81	$	1.81
Dilutive effect of stock options, RSUs, convertible securities and warrants			(0.01		)			(0.04		)
Net income per common share: Diluted			$	0.22				$	1.77

Shares of common stock issuable upon the exercise or conversion of certain securities have been excluded from our computation of EPS because the strike price or conversion rate, as applicable, of such securities was greater than the average market price of our common stock and, as a result, the effect of such exercise or conversion would have been anti-dilutive. Set forth below are the securities and the weighted average number of shares of common stock underlying such securities that were excluded from our computation of EPS for the periods presented (in thousands).



	Three months ended September 30,		Nine months ended September 30,
	2019	2018	2019	2018
Restricted stock units and stock options	155	78	120	44
Convertible securities	6,260	—	5,236	—
Warrants	6,260	4,405	5,236	4,404
Total	12,675	4,483	10,592	4,448

Convertible Notes and Warrants

Refer to Note 9, "Long-Term Debt," for information about the Company's convertible notes and warrants and related conversion and strike prices. During periods in which the average market price of the Company's common stock is above the applicable conversion price of the Company's convertible notes, or above the strike price of our outstanding warrants, the impact of conversion or exercise, as applicable, would be dilutive and such dilutive effect is reflected in diluted EPS. As a result, in periods where the average market price of the Company's common stock is above the conversion price or strike price, as applicable, under the treasury stock method, the Company calculates the number of shares issuable under the terms of the convertible notes and the warrants based on the average market price of the stock during the period, and includes that number in the total diluted shares outstanding for the period.