Net Income Per Share

12 Months Ended

Dec. 31, 2023

Basic and diluted net income per share are computed using the two-class method as required when there are participating securities and multiple classes of common stock. Basic net income per share is computed using the weighted-average number of shares outstanding during the period. Diluted net income per share is computed using the weighted-average number of shares and the effect of potentially dilutive securities outstanding during the period.

Prior to May 14, 2021, when the Company’s Series A preferred stock and Series B preferred stock converted into shares of Class B common stock, the Company’s redeemable convertible preferred stock were participating securities as the holders of the redeemable convertible preferred stock were entitled to participate in dividends with common stock. In periods of net income, net income after deducting the accretion of redeemable convertible preferred stock was attributed to common stockholders and participating securities based on their participation rights. Net losses after deducting the accretion of redeemable convertible preferred stock are not allocated to the participating securities as the participating securities do not have a contractual obligation to share in any losses.

In April 2021, the Company filed its amended and restated certificate of incorporation, which resulted in the creation of Class A common stock and Class B common stock. As the liquidation and dividend rights are identical for Class A and Class B common stock (see Note 13), the undistributed earnings under the two-class method are allocated on a proportional basis and the resulting net income per share attributable to common stockholders is, therefore, the same for both Class A and Class B common stock on an individual or combined basis.

The following table presents the Company’s basic net income per share (in thousands, except per share amounts):


	Year Ended December 31,
		2023		2022		2021
Net income per share, basic:
Net income		$	49,098	$	61,494	$	3,600
Less: Accretion of redeemable convertible preferred stock		—		—		(1,480)
Less: Undistributed earnings attributable to participating securities		—		—		(168)
Net income attributable to Class A and Class B common stockholders		$	49,098	$	61,494	$	1,952
Weighted average shares of Class A and Class B common stock outstanding		100,730		114,272		102,230
Net income per share attributable to Class A and Class B common stockholders, basic		$	0.49	$	0.54	$	0.02

The Company computes diluted net income per share under the two-class method where income is reallocated between common stock, potential common stock and participating securities. Potential common stock primarily includes stock options and RSUs computed using the treasury stock method and the conversion of the convertible notes and accrued interest using the if converted method.

The following table presents the Company’s diluted net income per share (in thousands, except per share amounts):


	Year Ended December 31,
		2023		2022		2021
Net income per share, diluted:
Numerator:
Net income attributable to Class A and Class B common stockholders		$	49,098	$	61,494	$	1,952
Add:
Reallocation of net income attributable to participating securities		—		—		18

Net income attributable to Class A and Class B common stockholders, diluted		$	49,098	$	61,494	$	1,970

Denominator:
Weighted average shares of Class A and Class B common stock outstanding, basic		100,730		114,272		102,230
Effect of dilutive securities:
Options to purchase common stock		4,761		6,943		12,471

Unvested restricted stock units		267		183		725
Employee stock purchase plan		23		—		12
Unvested early exercise common stock		—		—		33
Weighted average shares of Class A and Class B common stock outstanding, diluted		105,781		121,398		115,471
Net income per share attributable to Class A and Class B common stockholders, diluted		$	0.46	$	0.51	$	0.02

The following table presents the weighted average number of potentially dilutive common stock equivalents excluded from the computation of diluted net income per share because their inclusion would have been anti-dilutive (in thousands):


	Year Ended December 31,
		2023	2022	2021
Options to purchase common stock		5	71	3
Unvested restricted stock units		6,247	5,681	153
Convertible notes with related parties, if converted basis		—	—	1,226
Employee stock purchase plan		124	240	45
Total shares excluded from diluted net income per share		6,376	5,992	1,427

The CEO Performance Award is excluded from the above table because none of the market conditions had been met as of December 31, 2023. Additionally, in December 2023, the Company entered into the Cancellation Agreement with the CEO, which provided for the cancellation of the 1.4 million market-based RSUs included in the CEO Performance Award. For more information on the Cancellation Agreement, please see Note 15.