Note

10.

Net Loss Per Share

Basic net income (loss) per share is computed using the weighted-average number of shares outstanding during the period. In periods of net income, diluted shares outstanding include the dilutive effect of in-the-money equity awards (stock options, restricted stock units, performance stock units and employee stock purchase plan contributions), which is calculated based on the average share price for each fiscal period using the treasury stock method. In accordance with ASC

260,

the assumed proceeds under the treasury stock method include the average unrecognized compensation expense of in-the money stock options and restricted stock units. This results in the assumed buyback of additional shares, thereby reducing the dilutive impact of equity awards.

Diluted earnings per share is the same as basic earnings per share for the periods in which the Company had a net loss because the inclusion of outstanding common stock equivalents would be anti-dilutive.

The following table sets forth the computation of basic and diluted net income (loss) and the weighted average number of shares used in computing basic and diluted net income (loss) per share (in thousands, except per share data):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Numerator
Net income (loss)	$	(873)	$	6,188	$	(4,477)	$	7,113
Denominator
Weighted average shares of common stock outstanding used in computing net income (loss) per share, basic		13,851		13,973		13,717		13,917
Dilutive effect of incremental shares and share equivalents		—		794		—		816
Weighted average shares of common stock outstanding used in computing net income (loss) per share, diluted		13,851		14,767		13,717		14,733
Net income (loss) per share:
Net income (loss) per share, basic	$	(0.06)	$	0.44	$	(0.33)	$	0.51
Net income (loss) per share, diluted	$	(0.06)	$	0.42	$	(0.33)	$	0.48

The following numbers of shares outstanding, prior to the application of the treasury stock method, were excluded from the computation of diluted net income (loss) per common share for the period presented because including them would have had an anti-dilutive effect (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Options to purchase common stock		607		42		707		31
Restricted stock units		411		—		419		6
Performance stock units		24		—		19		—
Employee stock purchase plan shares		47		—		82		—
Total		1,089		42		1,227		37