Earnings per Share

We compute earnings per share (EPS) of Class A and Class B common stock using the two-class method required for participating securities. We consider restricted stock awards to be participating securities because holders of such shares have non-forfeitable dividend rights in the event of our declaration of a dividend for common shares.

Undistributed earnings allocated to participating securities are subtracted from net income in determining net income attributable to common stockholders. Basic EPS is computed by dividing net income attributable to common stockholders by the weighted-average number of shares of our Class A and Class B common stock outstanding, adjusted for outstanding shares that are subject to repurchase.

For the calculation of diluted EPS, net income attributable to common stockholders for basic EPS is adjusted by the effect of dilutive securities, such as awards under our equity compensation plans and inducement awards under separate non-plan restricted stock unit (RSU) award agreements. In addition, the computation of the diluted EPS of Class A common stock assumes the conversion of our Class B common stock to Class A common stock, while the diluted EPS of Class B common stock does not assume the conversion of those shares to Class A common stock. Diluted EPS attributable to common stockholders is computed by dividing the resulting net income attributable to common stockholders by the weighted-average number of fully diluted common shares outstanding.

Basic and dilutive securities in our basic and diluted EPS calculation for the year ended December 31, 2016 also included the effect of earn-out shares which issuance was contingent upon completion of certain milestones. The performance milestones related to our earn-out shares were completed in the second quarter of 2016. Basic and dilutive securities in our basic and diluted EPS calculation for the years ended December 31, 2015 and 2014 excluded the effect of these earn-out shares because the milestones were not met as of December 31, 2015.

Certain RSUs were excluded from the EPS calculation because the impact would be anti-dilutive. These excluded RSUs were not material for the years ended December 31, 2016, 2015, and 2014, respectively.

Basic and diluted EPS are the same for each class of common stock because they are entitled to the same liquidation and dividend rights.

The numerators and denominators of the basic and diluted EPS computations for our common stock are calculated as follows (in millions, except per share amounts):



	Year Ended December 31,
	2016				2015				2014
	Class A		Class B		Class A		Class B		Class A		Class B
Basic EPS:
Numerator
Net income	$	8,270	$	1,947	$	2,959	$	729	$	2,308	$	632
Less: Net income attributable to participating securities	24		5		15		4		12		3
Net income attributable to common stockholders	$	8,246	$	1,942	$	2,944	$	725	$	2,296	$	629
Denominator
Weighted average shares outstanding	2,323		548		2,259		559		2,059		568
Less: Shares subject to repurchase	6		2		10		5		6		7
Number of shares used for basic EPS computation	2,317		546		2,249		554		2,053		561
Basic EPS	$	3.56	$	3.56	$	1.31	$	1.31	$	1.12	$	1.12
Diluted EPS:
Numerator
Net income attributable to common stockholders	$	8,246	$	1,942	$	2,944	$	725	$	2,296	$	629
Reallocation of net income attributable to participating securities	29		—		19		—		15		—
Reallocation of net income as a result of conversion of Class B to Class A common stock	1,942		—		725		—		629		—
Reallocation of net income to Class B common stock	—		14		—		15		—		23
Net income attributable to common stockholders for diluted EPS	$	10,217	$	1,956	$	3,688	$	740	$	2,940	$	652
Denominator
Number of shares used for basic EPS computation	2,317		546		2,249		554		2,053		561
Conversion of Class B to Class A common stock	546		—		554		—		561		—
Weighted average effect of dilutive securities:
Employee stock options	6		6		8		8		13		13
RSUs	49		5		37		9		30		13
Shares subject to repurchase	5		1		5		2		7		4
Earn-out shares	2		2		—		—		—		—
Number of shares used for diluted EPS computation	2,925		560		2,853		573		2,664		591
Diluted EPS	$	3.49	$	3.49	$	1.29	$	1.29	$	1.10	$	1.10