Net Income Per Share

9 Months Ended

Sep. 30, 2022

Disclosure Text Block

Net Income Per Share

3. Net Income Per Share

The following table sets forth the computation of basic and diluted net income per common share (in thousands, except per share amounts):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Numerator:
Net income	$	50,317	$	55,845	$	126,198	$	487,074
Add back interest expense, net of tax benefit, on assumed conversion of 2024 Convertible Notes		445		—		1,335		—
Add back interest expense, net of tax benefit, on assumed conversion of 2026 Convertible Notes		667		—		2,000		—
Numerator used in computing net income per share — diluted		51,429		55,845		129,533		487,074
Denominator:
Weighted average number of common shares outstanding used in computing net income per share — basic		153,066		162,742		154,713		161,892
Effect of dilutive securities:
Stock options		283		802		318		461
Time-based restricted stock units		966		1,392		1,278		1,342
Performance-based restricted stock units		225		219		196		120
Restricted stock		49		82		122		113
Shares subject to issuance under Employee Stock Purchase Plan		8		5		9		2
2024 Convertible Notes assumed conversion		14,934		—		14,934		—
2026 Convertible Notes assumed conversion		14,934		—		14,934		—
Dilutive potential common shares
Weighted average number of common shares outstanding used in computing net income per share — diluted		184,465		165,242		186,504		163,930
Net income per share — basic	$	0.33	$	0.34	$	0.82	$	3.01
Net income per share — diluted	$	0.28	$	0.34	$	0.69	$	2.97

The outstanding securities have been excluded from the computation of diluted weighted average shares outstanding, as applicable, as their effect would be anti-dilutive (in thousands):

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2022	2021	2022	2021
Stock options	5,847	5,872	6,021	8,101
Time-based restricted stock units	139	88	64	51
Performance-based restricted stock units	528	314	572	596
Note Hedge Warrants	8,318	8,318	8,318	8,318
2022 Convertible Notes	—	8,318	—	8,318
2024 Convertible Notes	—	14,934	—	14,934
2026 Convertible Notes	—	14,934	—	14,934
Total	14,832	52,778	14,975	55,252

Prior to the adoption of ASU 2020-06, the potentially dilutive impact of the 2022 Convertible Notes, 2024 Convertible Notes and 2026 Convertible notes (together, the “Convertible Senior Notes”) (Note 8) was determined using the treasury stock method. Under this method, no numerator or denominator adjustments arose from the principal and interest components of the Convertible Senior Notes because the Company had the intent and ability to settle the Convertible Senior Notes’ principal and interest in cash. Instead, the Company was required to increase the diluted net income per share denominator by the variable number of shares that would be issued upon conversion if it settled the conversion spread obligation with shares. For diluted net income per share purposes, the conversion spread obligation was calculated based on whether the average market price of the Company’s Class A Common Stock during the reporting period was in excess of the conversion price of the Convertible Senior Notes. There was no calculated spread added to the denominator for the three and nine months ended September 30, 2021.

Following the adoption of ASU 2020-06 on January 1, 2022, the dilutive impact of the Convertible Senior Notes is determined using the if-converted method. Under the if-converted method, the Convertible Senior Notes are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later). Interest charges are deducted from the numerator, unless the principal amount of the convertible instruments is required to be paid in cash.

There was no dilutive impact of the 2022 Convertible Notes for the three and nine months ended September 30, 2022 because the Company had elected prior to the beginning of the period to settle the conversion of 2022 Convertible Notes, if any, with a combination settlement of a cash payment equal to the principal value of converted notes and shares of Class A Common Stock equal to the conversion value in excess of the principal value, if any. Accordingly, interest expense was not removed from the numerator and there was no calculated spread added to the denominator because the average market price of the Company’s Class A common stock during the portion of each period in which the 2022 Convertible Notes were outstanding was not in excess of the conversion price.