Net Income Per Share

3 Months Ended

May 01, 2020

Basic net income per share is computed by dividing net income by the weighted-average number of common stock outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted-average number of common stock outstanding and potentially dilutive securities outstanding during the period, as calculated using the

treasury stock method. Potentially dilutive securities primarily include unvested restricted stock units (“RSUs”), including performance stock unit (“PSU”) awards, and stock options, including purchase options under VMware’s employee stock purchase plan, which included Pivotal’s employee stock purchase plan through the date of acquisition. Securities are excluded from the computation of diluted net income per share if their effect would be anti-dilutive. VMware uses the two-class method to calculate net income per share as both classes share the same rights in dividends; therefore, basic and diluted earnings per share are the same for both classes.

The following table sets forth the computations of basic and diluted net income per share during the periods presented (table in millions, except per share amounts and shares in thousands):



	Three Months Ended
	May 1,		May 3,
	2020		2019
Net income attributable to VMware, Inc.	$	386	$	380

Weighted-average shares, basic for Classes A and B	418,383		417,636
Effect of other dilutive securities	3,130		9,061
Weighted-average shares, diluted for Classes A and B	421,513		426,697
Net income per weighted-average share attributable to VMware, Inc. common stockholders, basic for Classes A and B	$	0.92	$	0.91
Net income per weighted-average share attributable to VMware, Inc. common stockholders, diluted for Classes A and B	$	0.92	$	0.89

The following table sets forth the weighted-average common share equivalents of Class A common stock that were excluded from the diluted net income per share calculations during the periods presented because their effect would have been anti-dilutive (shares in thousands):



	Three Months Ended
	May 1,	May 3,
	2020	2019
Anti-dilutive securities:
Employee stock options	550	—
Restricted stock units	6,167	81
Total	6,717	81