Basic and Diluted Earnings (Loss) per Share

3 Months Ended

Mar. 31, 2023

Basic and Diluted Earnings (Loss) per Share

(9) Basic and Diluted Earnings (Loss) per Share

The Company has two classes of common stock: class A common stock and class B common stock. Holders of class A common stock generally have the same rights, including rights to dividends, as holders of class B common stock, except that holders of class A common stock have one vote per share while holders of class B common stock have ten votes per share. Each share of class B common stock is convertible at any time, at the option of the holder, into one share of class A common stock. As such, basic and fully diluted earnings per share for class A common stock and for class B common stock are the same. The Company has never declared or paid any cash dividends on either class A or class B common stock. As of March 31, 2023 and December 31, 2022, there were no shares of preferred stock issued or outstanding.

The impact from potential shares of common stock on the diluted earnings per share calculation are included when dilutive. Potential shares of class A common stock issuable upon the exercise of outstanding stock options, the vesting of restricted stock units, and in connection with the 2021 ESPP are computed using the treasury stock method. Potential shares of class A common stock issuable upon conversion of the Convertible Notes are computed using the if-converted method. In computing diluted earnings per share, the Company first calculates the earnings per incremental share (“EPIS”) for each class of potential shares of common stock and ranks the classes

from the most dilutive (i.e., lowest EPIS) to the least dilutive (i.e., highest EPIS). Basic earnings per share is then adjusted for the effect of each class of shares, in sequence and cumulatively, until a particular class no longer produces further dilution.

The following table sets forth the computation of basic and diluted earnings (loss) per share (in thousands, except per share data) for the periods indicated:


	Three Months Ended
	March 31,
	2023		2022
Numerator:
Net income (loss) - Basic	$	461,193	$	(130,751	)
Effect of dilutive shares on net income (loss):
Interest expense on 2025 Convertible Notes, net of tax		1,414		0
Interest expense on 2027 Convertible Notes, net of tax		720		0
Net income (loss) - Diluted	$	463,327	$	(130,751	)

Denominator:
Weighted average common shares of class A common stock		9,870		9,325
Weighted average common shares of class B common stock		1,964		1,964
Total weighted average shares of common stock outstanding - Basic		11,834		11,289

Effect of dilutive shares on weighted average common shares outstanding:
Stock options		354		0
Restricted stock units		21		0
Employee stock purchase plan		0		0
2025 Convertible Notes		1,633		0
2027 Convertible Notes		733		0
Total weighted average shares of common stock outstanding - Diluted		14,575		11,289

Earnings (loss) per share:
Basic earnings (loss) per share (1)	$	38.97	$	(11.58	)
Diluted earnings (loss) per share (1)	$	31.79	$	(11.58	)

(1) Basic and fully diluted earnings (loss) per share for class A and class B common stock are the same.

For the three months ended March 31, 2023 and 2022, the following weighted average shares of potential class A common stock were excluded from the diluted earnings (loss) per share calculation because their impact would have been anti-dilutive (in thousands):


	Three Months Ended
	March 31,
	2023		2022
Stock options		711		1,311
Restricted stock units		42		107
Employee stock purchase plan		3		2
2025 Convertible Notes		0		1,633
2027 Convertible Notes		0		733
Total		756		3,786