NET INCOME PER SHARE

6 Months Ended

Jun. 30, 2023

Basic net income per common share is calculated by dividing the net income attributable to common shares by the weighted average number of common shares outstanding during the period. Diluted net income per common share is calculated by dividing the net income 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 and the purchase of shares from the ESPP (using the treasury stock method), if applicable. Potential common shares associated with convertible notes are treated under the if-converted method, adjustments are made to the diluted net income per common share calculation as if the Company had converted the convertible debt on the first day of each period presented. Adjustments to the numerator are made to add back the interest expense associated with the convertible debt on a post-tax basis. Adjustments to the denominator reflect the number of shares assumed to be convertible at the beginning of the period.

Potential common shares are excluded from the diluted net income per common 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 six months ended June 30, 2023 and 2022 (in thousands, except per share amounts):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerator:
Net income—basic	$	25,763	$	19,876	$	6,227	$	26,704
ASU 2020-06 convertible notes if-converted method adjustment	1,029		1,039		—		2,078

Adjusted net income—diluted	$	26,792	$	20,915	$	6,227	$	28,782





Denominator:
Weighted average common shares outstanding—basic	46,088		45,501		46,019		45,185
Computation of diluted securities:
ASU 2020-06 convertible notes if-converted method adjustment	5,607		5,607		—		5,607
Dilutive effect of stock options	108		1,016		92		1,106
Dilutive effect of RSUs	244		347		170		360
Dilutive effect of ESPP purchase options	7		7		4		4
Weighted average common shares outstanding—diluted	52,054		52,478		46,285		52,262
Net income per share:
Basic net income per common share	$	0.56	$	0.44	$	0.14	$	0.59
Diluted net income per common share	$	0.51	$	0.40	$	0.13	$	0.55

The following table summarizes the outstanding stock options, RSUs and convertible senior notes that were excluded from the diluted net income per common share calculation because the effects of including these potential shares were antidilutive in the periods presented (in thousands):


	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
Weighted average number of stock options	5,404	1,948	5,403	1,855
Convertible senior notes	—	—	5,607	1,196
Weighted average number of RSUs	701	31	759	24

Total	6,105	1,979	11,769	3,075

For the six months ended June 30, 2023, the antidilutive impact associated with the convertible senior notes would have included an interest expense add-back to net income of $2.1 million.