Earnings per Share

9 Months Ended

Sep. 30, 2021

Note 8. Earnings per Share

Basic and diluted earnings per share is presented in conformity with the two-class method required for multiple classes of common stock. In connection with our IPO, we established two classes of authorized common stock: Class A common stock and Class B common stock. The rights of the holders of Class A and Class B common stock are identical, except for voting and conversion rights. Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to ten votes per share and is convertible at any time into one share of Class A common stock.

Basic earnings per share is computed by dividing the net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

Diluted earnings per share represents net income divided by the weighted-average number of shares of common stock outstanding, inclusive of the effect of dilutive stock options and RSUs. The undistributed earnings are allocated based on the participation rights of shares of 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 for both classes, the undistributed earnings are allocated on a proportionate basis.

The calculation of diluted earnings per share for Class A common stock assumes the conversion of Class B common stock, while diluted earnings per share of Class B common stock does not assume the conversion of Class A common stock as Class A common stock is not convertible into Class B common stock. Similarly, outstanding options to purchase Class B common stock and RSUs that are dilutive are included in the calculation of diluted earnings for both Class A and Class B common stock.

The following table presents the calculation of basic and diluted earnings per share:


	Three Months Ended September 30,								Nine Months Ended September 30,
	2021				2020				2021				2020
	Class A		Class B		Class A		Class B		Class A		Class B		Class A		Class B
	(in thousands, except per share data)
Numerator
Net income	$	8,787	$	7,881	$	5,379	$	14,059	$	35,585	$	34,873	$	9,196	$	28,634
Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares		7,881		—		14,059		—		34,873		—		28,634		—
Reallocation of undistributed earnings to Class B shares		—		243		—		179		—		1,013		—		455
Net income attributable to common stockholders — diluted	$	16,668	$	8,124	$	19,438	$	14,238	$	70,458	$	35,886	$	37,830	$	29,089
Denominator
Weighted average shares used to compute earnings per share — basic		38,383		34,427		19,336		50,536		36,530		35,800		16,903		52,634
Conversion of Class B to Class A common shares outstanding		34,427		—		50,536		—		35,800		—		52,634		—
Effect of dilutive stock options and RSUs		2,071		2,071		2,409		2,409		2,119		2,119		3,618		3,618
Weighted average number of shares used to compute earnings per share — diluted		74,881		36,498		72,281		52,945		74,449		37,919		73,155		56,252
Earnings per share:
Basic	$	0.23	$	0.23	$	0.28	$	0.28	$	0.97	$	0.97	$	0.54	$	0.54
Diluted	$	0.22	$	0.22	$	0.27	$	0.27	$	0.95	$	0.95	$	0.52	$	0.52

The following have been excluded from the computation of basic and diluted earnings per share as their effect would have been anti-dilutive (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Stock options to purchase Class B shares and RSUs		73		665		342		4,024