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Earnings Per Share

9 Months Ended

Sep. 30, 2023

Earnings Per Share

Earnings Per Share

6. Earnings Per Share

Basic earnings per share is calculated by dividing the net income or loss by the weighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted earnings per share is computed by dividing the net income or loss by the weighted-average number of shares of common stock, plus potentially dilutive securities outstanding for the period, as determined in accordance with the treasury stock, if-converted, or contingently issuable accounting methods, depending on the nature of the security. For purposes of the diluted earnings per share calculation, stock options, restricted stock units (“RSUs”), performance share units (“PSUs”), and shares potentially issuable in connection with the Company’s employee stock purchase plan and convertible senior notes are considered potentially dilutive securities and included to the extent that their addition is not anti-dilutive.

The following table presents the computations of basic and dilutive earnings per common share:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Numerator:
Net income (loss)	$	20,634		$	457		$	16,215		$	(17,803)
Adjustment for interest expense recognized on convertible senior notes		1,645			—			—			—
Net income (loss) - diluted	$	22,279		$	457		$	16,215		$	(17,803)
Denominator:
Weighted-average shares outstanding — basic		33,744,209			34,058,802			34,226,488			33,912,832
Effect of dilutive securities:
Stock options		222,355			191,454			263,513			—
Restricted stock units		583,153			320,063			659,153			—
Convertible senior notes		7,509,104			—			—			—
Weighted average shares outstanding — diluted		42,058,821			34,570,319			35,149,154			33,912,832

Earnings (loss) per share — basic	$	0.61		$	0.01		$	0.47		$	(0.52)
Earnings (loss) per share — diluted	$	0.53		$	0.01		$	0.46		$	(0.52)

The Company has the option to settle the conversion obligation for its convertible senior notes due in 2026 and 2029 in cash, shares or a combination of the two. The Company uses the if-converted method for the convertible senior notes.

The following table presents dilutive securities excluded from the calculation of diluted earnings per share:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Stock options	749,443		1,061,235		395,405		2,156,501
Restricted stock units	979,200		523,991		977,250		1,960,160
Performance share units	503,880		447,770		503,880		447,770
Employee stock purchase plan	19,094		11,553		19,094		—
Warrants	—		1,041,667		—		1,041,667
Convertible senior notes	—		4,925,134		7,509,104		4,925,134

For PSUs, these securities were excluded from the calculation of diluted earnings per share as the performance-based or market-based vesting conditions were not met as of the end of the reporting period. All other securities presented in the table above were excluded from the calculation of diluted earnings per share as their inclusion would have had an antidilutive effect.

As discussed in Note 14, Equity, the forward contract in connection with the Company’s ASR Agreement was outstanding as of September 30, 2023. As the Company is entitled to receive additional shares of its common stock in connection with the outstanding forward contract, the receipt of additional shares of common stock would be

antidilutive. Therefore, no adjustments were made in the computation of earnings per share for the period the forward contract was outstanding.