NET INCOME (LOSS) PER SHARE

9 Months Ended

Sep. 30, 2021

Basic net income (loss) per share is calculated by dividing the net income (loss) attributable to common shares by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is calculated by dividing the net income (loss) attributable to common shares by the weighted average number of common shares outstanding plus dilutive potential common shares outstanding during the period.

Potential common shares include the shares of common stock issuable upon the exercise of outstanding stock options, the vesting of RSUs, the purchase of shares from the ESPP (using the treasury stock method) and the conversion of the excess conversion value on the 2022 Notes and 2025 Notes, if applicable. As discussed in Note 8, Debt, the Company has the option to pay cash for the aggregate principal amount due upon the conversion of its 2022 Notes and 2025 Notes. Since it is the Company’s intent to settle the principal amount of its 2022 Notes and 2025 Notes in cash, the potentially dilutive effect of such notes on net income (loss) per share is computed under the treasury stock method. ASU 2020-06 will require the Company to use the if-converted method upon adoption; this new accounting pronouncement has not been adopted as of September 30, 2021. For additional information regarding ASU 2020-06, see Note 2, Summary of Significant Accounting Policies.

Potential common shares are excluded from the diluted net income (loss) per share computation to the extent they would be antidilutive.

The following table sets forth the computation of basic and diluted net income per common share for the three and nine months ended September 30, 2021 and 2020 (in thousands, except per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Numerator:
Net income	$	17,660	$	130,119	$	47,110	$	131,008







Denominator:
Weighted average common shares outstanding—basic	44,476		42,928		44,151		42,393
Computation of diluted securities:
Dilutive effect of stock options	827		1,086		1,132		740
Dilutive effect of RSUs	160		261		337		200
Dilutive effect of conversion premium on the 2022 Notes	—		—		51		—
Dilutive effect of ESPP purchase options	—		—		3		—

Weighted average common shares outstanding—diluted	45,463		44,275		45,674		43,333
Net income per share:
Basic net income per common share	$	0.40	$	3.03	$	1.07	$	3.09
Diluted net income per common share	$	0.39	$	2.94	$	1.03	$	3.02

The following outstanding stock options, RSUs and ESPP purchase options are antidilutive in the periods presented (in thousands):


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
Weighted average number of stock options	2,707	3,585	1,895	4,746
Weighted average number of RSUs	369	5	132	126

Weighted average ESPP purchase options	26	25	9	22

Total	3,102	3,615	2,036	4,894