Net Loss per Share Attributable to Common Stock

9 Months Ended

Sep. 30, 2020

Net Loss per Share Attributable to Common Stock

Net Income (Loss) per Share Attributable to Common Stock

Net income (loss) per share attributable to common stock is computed by dividing the net income (loss) attributable to common stock by the weighted-average number of common shares outstanding. We have outstanding stock options, restricted stock units, options to purchase shares under our ESPP, convertible preferred stock, and 2023 notes, which are considered in the calculation of diluted net income per share whenever doing so would be dilutive.

We calculate basic and diluted net income (loss) per share attributable to common stock in conformity with the two-class method required for companies with participating securities. We consider our convertible preferred stock to be participating securities. Under the two-class method, net loss attributable to common stock is not allocated to the preferred stock as its holders do not have a contractual obligation to share in losses, as discussed in Note 11.

The following table sets forth the calculation of basic and diluted net income (loss) per share attributable to common stock during the periods presented:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Numerator:
Net income (loss)	$	34,166	$	6,782	$	(32,562)	$	(73,023)
Dividend on convertible preferred stock	(1,530)		—		(2,814)		—
Undistributed earnings attributable to participating securities	(653)		—		—		—
Net income (loss) attributable to common stock—basic and diluted	$	31,983	$	6,782	$	(35,376)	$	(73,023)
Denominator:
Weighted average shares—basic(1)	99,840,144		91,994,731		97,365,122		91,279,086
Dilutive shares from stock plans	7,767,567		5,176,539		—		—
Weighted average shares—diluted(1)	107,607,711		97,171,270		97,365,122		91,279,086
Net income (loss) per share:
Net income (loss) attributable to common stock—basic	$	0.32	$	0.07	$	(0.36)	$	(0.80)
Net income (loss) attributable to common stock—diluted	$	0.30	$	0.07	$	(0.36)	$	(0.80)

(1) Basic and diluted weighted average shares outstanding include (i) common stock earned but not yet issued related to share-based dividends on our convertible preferred stock, and (ii) restricted stock units whose settlement into common stock were deferred at the option of certain non-employee directors.

The following outstanding shares of common stock equivalents were excluded from the computation of the diluted net income (loss) per share for the periods presented because their effect would have been anti-dilutive:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2020	2019	2020	2019
Convertible senior notes, as if converted	4,705,398	—	4,705,398	—
Convertible preferred stock, as if converted	2,040,000	—	2,040,000	—
Stock options outstanding	—	—	5,924,213	8,102,171
Restricted stock units outstanding(1)	—	1,744,366	3,932,539	4,536,677
Employee stock purchase plan	—	—	130,589	283,676
Total	6,745,398	1,744,366	16,732,739	12,922,524

(1) Net of vested restricted stock units whose settlement into common stock were deferred at the option of certain non-employee directors. The deferred shares of common stock are included in basic and diluted weighted average shares outstanding. See Note 12 for more information.

Due to the uncertainty in the economic environment as the result of the COVID-19 pandemic and in order to preserve our liquidity, we intend to settle any conversion of our 2023 notes in cash, shares or a combination thereof. The dilutive impact of the notes on our net income (loss) per share is considered using the if-converted method for the three and nine months ended September 30, 2020. For periods ending prior to September 30, 2020, we considered the impact of the notes on our diluted net income (loss) per share based on the treasury stock method as we had the ability, and intent, to settle any conversions of the notes solely in cash at that time. The treasury stock method requires that the dilutive effect of common stock issuable upon conversion of the notes be computed in the periods in which we report net income. For the three and nine months ended September 30, 2019 there was no dilutive impact from the notes.