Net Loss per Share

3 Months Ended

Mar. 31, 2015

Net Loss per Share

Net Loss per Share

10. Net Loss per Share

Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, less the weighted-average unvested common stock subject to repurchase or forfeiture as they are not deemed to be issued for accounting purposes. Diluted net loss per share is computed by giving effect to all potential shares of common stock, including preferred stock, stock options, RSUs and employee stock purchase plan, to the extent they are dilutive.

The following table sets forth the computation of the Company’s basic and diluted net loss per share of common stock under the two-class method attributable to common stockholders:

	Three Months Ended March 31,
	2015			2014
	(in thousands, except per share amount)
Numerator:
Net loss attributable to Marketo	$	(18,158	)	$	(12,509	)
Denominator:
Weighted-average common shares outstanding	41,815			39,628
Less: Weighted-average unvested common shares subject to repurchase or forfeiture and shares held in escrow	(202		)	(249		)
Weighted-average shares used in computing net loss per share of common stock, basic and diluted	41,613			39,379
Net loss per share of common stock, basic and diluted	$	(0.44	)	$	(0.32	)

The Company applied the two-class method to calculate its basic and diluted net loss per share of common stock, as its convertible preferred stock, common stock subject to repurchase and common stock held in escrow are participating securities. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common shareholders.

However, the two-class method does not impact the net loss per share of common stock as the Company was in a loss position for each of the periods presented and preferred shareholders, holders of common stock subject to repurchase and common stock held in escrow do not have to participate in losses.

Additionally, since the Company was in a loss position for each of the periods presented, diluted net loss per share is the same as basic net loss per share for each period, as the inclusion of all potential common shares outstanding would have been anti-dilutive. Potentially dilutive securities that were excluded from the diluted per share calculation because they would have been antidilutive were as follows:

	As of March 31,
	2015	2014
	(in thousands)
Stock options to purchase common stock	4,969	6,166
Employee stock purchase plan	120	124
Common stock held in escrow	159	137
Common stock subject to repurchase	39	104
Restricted stock units and market stock units	3,359	1,471
	8,646	8,002