NET INCOME (LOSS) PER SHARE

12 Months Ended

Dec. 31, 2019

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed in a similar manner, but it also includes the effect of potential common shares outstanding during the period, when dilutive. Potential common shares include Stock Options, RSUs, PSUs, shares to be purchased under the Company’s ESPP, the Notes due 2023, the Notes due 2024 and warrants issued in conjunction with the Notes due 2024. The dilutive effect of potentially dilutive common shares is reflected in diluted earnings per share by application of the treasury stock method for stock options, RSUs, PSUs, warrants, Notes due 2024 and shares to be purchased under the ESPP, and by application of the if-converted method for the Notes due 2023. To the extent these potential common shares are antidilutive, they are excluded from the calculation of diluted net income (loss) per share.

The following table presents the computation of basic and diluted net income (loss) per share for the periods presented.



	Years Ended December 31,
	2019		2018			2017
	(In thousands, except per share data)
Numerator:
Net income (loss)	$	161,148	$	(11,627	)	$	(45,192	)
Notes due 2023 interest and financing costs, net	1,088		—			—
Adjusted net income (loss)	$	162,236	$	(11,627	)	$	(45,192	)

Denominator:
Shares used in basic per share amounts:
Weighted average common shares outstanding	116,713		99,619			82,939

Shares used in diluted per share amounts:
Weighted average common shares outstanding	116,713		99,619			82,939
Effect of dilutive securities:
Employee stock-based awards	8,964		—			—
Warrants	—		—			—
Notes due 2024	451		—			—
Notes due 2023	5,516		—			—
Weighted average common shares outstanding for diluted calculation	131,644		99,619			82,939

Basic and diluted net income (loss) per share
Net income (loss) per share, basic	$	1.38	$	(0.12	)	$	(0.54	)
Net income (loss) per share, diluted	$	1.23	$	(0.12	)	$	(0.54	)

The following outstanding shares of common stock equivalents were excluded from the calculation of the diluted net income (loss) per share attributable to common stockholders because their effect would have been antidilutive.



	Years Ended December 31,
	2019	2018	2017
	(In thousands)
Employee stock options	27	7,710	8,433
RSUs and PSUs	158	5,273	3,029
Warrants to purchase common stock	300	—	1,083
Notes due 2023	—	11,701	—
Total	485	24,684	12,545

Diluted earnings per shares for the year ended December 31, 2019 includes the dilutive effect of stock options, RSUs, PSUs, and shares to be purchased under the ESPP, the Notes due 2023 and Notes due 2024. Certain common stock issuable under stock options, RSUs, PSUs and warrants issued in conjunction with the Notes due 2024 have been omitted from the diluted net income per share calculation because including such shares would have been antidilutive.

Since the Company has the intent and ability to settle the aggregate principal amount of the Notes due 2024 in cash and any excess in shares of the Company’s common stock, the Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. In order to compute the dilutive effect, the number of shares included in the denominator of diluted net income per share is determined by dividing the conversion spread value of the “in-the-money” Notes due 2024 by the Company’s average share price during the period and including the resulting share amount in the diluted net income per share denominator. The conversion spread will have a dilutive impact on net income per share of common stock when the average market price of the Company’s common stock for a given period exceeds the conversion price of $20.5010 per share for the Notes due 2024. The Company’s weighted average common stock price since the issuance of the Notes due 2024 was above the conversion price, resulting in an impact on the diluted net income per share.

Diluted earnings per shares for the years ended December 31, 2018 and 2017, excludes potential common stock issuable under stock options, RSUs, PSUs, and shares to be purchased under the ESPP and the Notes due 2023, as the Company incurred a net loss during these periods and including such shares would have been antidilutive.