Income (loss) per share

For fiscal years preceding 2013, basic and diluted net income (loss) per common share is presented in conformity with the two-class method required for participating securities. Immediately prior to the completion of the Company’s IPO on April 2, 2012, holders of Series A through Series F preferred stock were each entitled to receive non-cumulative dividends at the annual rate of 8% per share per annum, respectively, payable prior and in preference to any dividends on any shares of the Company’s common stock. In the event a dividend is paid on common stock, the holders of preferred stock were entitled to a proportionate share of any such dividend as if they were holders of common stock (on an as-if converted basis). The holders of the preferred stock did not have a contractual obligation to share in the losses of the Company. The Company considered its preferred stock to be participating securities. Additionally, the Company considers shares issued upon the early exercise of options subject to repurchase and unvested restricted shares to be participating securities as the holders of these shares have a nonforfeitable right to dividends. In accordance with the two-class method, earnings allocated to these participating securities and the related number of outstanding shares of the participating securities, which include contractual participation rights in undistributed earnings, have been excluded from the computation of basic and diluted net income (loss) per common share.

Under the two-class method, net income (loss) attributable to common stockholders is determined by allocating undistributed earnings, calculated as net income less income attributable to participating securities between common stock and participating securities. In computing diluted net income (loss) attributable to common stockholders for calculation of diluted net income (loss) per share, undistributed earnings are re-allocated to reflect the potential impact of dilutive securities. Basic net income (loss) per common share is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the period. All participating securities are excluded from basic weighted-average common shares outstanding. Diluted net income per share attributable to common stockholders is computed by dividing the net income attributable to common stockholders for calculation of diluted net income (loss) per share by the weighted-average number of common shares outstanding, including potential dilutive common shares assuming the dilutive effect of outstanding stock options using the treasury stock method.

For fiscal year 2013, the two-class method is not applicable due to the net loss, which must be attributed entirely to the common shareholders. Additionally, as of December 31, 2013, there are only 26,463 of participating securities, consisting of repurchasable shares issued from early exercise of options and unvested restricted shares, so that the future effect of participating securities would generally be immaterial, even in years with net income.

The following table presents the calculation of basic and diluted net income (loss) per share:



	Years ended December 31,
(in thousands, except for share and per share amounts)	2013			2012			2011
Numerator:
Net (loss) income	$	(10,465	)	$	2,893		$	(2,479	)
Less: undistributed earnings attributable to participating securities	—			(1,366		)	—
Net (loss) income attributable to common stockholders	$	(10,465	)	$	1,527		$	(2,479	)
Reallocation of undistributed earnings attributable to participating securities	—			32			—
Net (loss) income attributable to common stockholders for diluted net (loss) income per share	$	(10,465	)	$	1,559		$	(2,479	)

Denominator:
Weighted-average shares used to compute basic net income (loss) per common share	24,621			17,979			3,370
Effect of potentially dilutive securities:
Employee stock options and restricted stock units	—			2,547			—
Stock warrants	—			82			—
Weighted average shares used to compute diluted income (loss) per common share	24,621			20,608			3,370
Net (loss) income per share
Net (loss) income per common share - basic and diluted	$(0.43)			$0.08			$(0.74)

For the years ended 2013, 2012 and 2011, the following securities were not included in the calculation of diluted shares outstanding as the effect would have been anti-dilutive:



	As of December 31,
(in thousands)	2013	2012	2011
Convertible preferred stock (on an as if converted basis)	—	—	12,916
Options to purchase common stock	3,335	367	3,808
Common stock subject to repurchase	25	—	169
Warrants to purchase convertible preferred stock	—	—	213
Warrants to purchase common stock	44	—	—
Restricted stock units	623	25	—
Restricted stock awards	12	—	—