Net Loss Per Share

3 Months Ended

Mar. 31, 2022

On January 1, 2021, the Company adopted the accounting standard update to simplify the accounting for convertible debt instruments. The Company now uses the if converted method for its convertible notes in calculating the diluted net income (loss) per share, and includes the effect of potential share settlement for the convertible notes, if the effect is dilutive.

Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method and the if-converted method. Dilutive potential common shares include outstanding stock options, restricted stock units, performance stock units, ESPP shares and conversion shares under the convertible notes. The diluted EPS is computed with the assumption that the Company will settle the convertible debt in shares, rather than cash.

As of March 31, 2022, the Company’s convertible notes were potentially convertible into 4,167,232 shares of common stock. The Company used the if-converted method to calculate the potential dilutive effect of the conversion spread on diluted net income per share for the three months ended March 31, 2022.

The denominator for diluted net income (loss) per share does not include any effect from the capped call transactions the Company entered into concurrently with the issuance of the convertible notes, as this effect would be anti-dilutive. In the event of conversion of a Convertible note, shares delivered to the Company under the capped call will offset the dilutive effect of the shares that the Company would issue under the convertible notes. In the three months ended March 31, 2022, the “if-converted method” was not applied as the effect would have been anti-dilutive.

For the three months ended March 31, 2022, a basic loss per common share and diluted loss per common share are the same in each respective period as the inclusion of any potentially issuable shares would be anti-dilutive.

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


	Three Months Ended March 31,
	2022		2021
Numerator:
Net loss used in calculating net loss per share, basic and diluted	$	(15,142)	$	(359)
Denominator:
Weighted average shares of common stock outstanding used in computing net loss per share, basic	18,080		17,768
Dilutive effect of incremental shares and share equivalents:
Options	—		—
RSUs	—		—
PSUs	—		—
ESPP	—		—
Weighted average shares of common stock outstanding used in computing net loss per share, diluted	18,080		17,768
Net loss per share:
Net loss per share, basic	$	(0.84)	$	(0.02)
Net loss per share, diluted	$	(0.84)	$	(0.02)

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


	Three Months Ended March 31,
	2022	2021
Capped call	4,167	4,167
Convertible notes	4,167	4,167
Options to purchase common stock	485	245
Restricted stock units	526	585
Performance stock units	482	92
Employee stock purchase plan shares	32	30
Total	9,859	9,286