NET INCOME (LOSS) PER SHARE

12 Months Ended

Dec. 31, 2019

During September 2014, the Company completed a holding company reorganization. As part of the reorganization, the Company implemented a multi-class stock structure. The Company presents the impact on net income per share (“EPS”) by

calculating EPS based on the authorized, issued and outstanding shares of Class A and Class B common stock. Holders of all outstanding classes of common stock participate ratably in earnings on an identical per share basis as if all shares were a single class.

The Company has issued RSAs of Class A common stock under the 2015 Omnibus Incentive Plan. The Company considers issued and unvested RSAs to be participating securities as the holders of these RSAs have a non-forfeitable right to dividends in the event of the Company’s declaration of a dividend on shares of Class A and Class B common stock. Subsequent to the issuance of the participating securities, the Company applied the two-class method required in calculating net income per share of Class A and Class B common stock.

Undistributed net income for a given period is apportioned to participating securities based on the weighted-average shares of each class of common stock outstanding during the applicable period as a percentage of the total weighted-average shares outstanding during the same period.

Under the two-class method, net income attributable to common stockholders is determined by allocating undistributed earnings, calculated as net income, less earnings attributable to participating securities. The net income per share attributable to common stockholders is allocated based on the contractual participation rights of the Class A common stock and Class B common stock as if the income for the period has been distributed. As the liquidation and dividend rights are identical for both classes of common stock, the net income attributable to common stockholders is allocated on a proportionate basis. If the Company incurs a loss from continuing operations, losses are not allocated to participating securities.

The Company has issued Class A common stock and Class B common stock. Holders of Class A common stock generally have the same rights, including rights to dividends, as holders of Class B common stock, except that holders of Class A common stock have one vote per share while holders of Class B common stock have ten votes per share. Each share of Class B common stock will convert into one share of Class A common stock immediately upon its sale or transfer. As such, basic and fully diluted earnings per share for Class A common stock and Class B common stock are the same.

Basic net (loss) income per share of common stock is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. All participating securities are excluded from the basic weighted-average shares of common stock outstanding. Unvested RSAs are excluded from the calculation of the weighted-average shares of common stock until vesting occurs, as the restricted shares are subject to forfeiture and cancellation until vested. For purposes of the diluted net income per share attributable to common stockholders calculation, unvested shares of common stock resulting from RSAs are considered to be potentially dilutive shares of common stock.

Diluted net income per share attributable to common stockholders is computed by dividing net income attributable to common stockholders by the weighted-average shares outstanding, including potentially dilutive shares of common stock assuming the dilutive effect of potential shares of common stock for the period determined using the treasury stock method. Potentially dilutive securities also include stock options, restricted stock units, and shares to be purchased under the employee stock purchase plan. Under the treasury stock method, dilutive securities are assumed to be exercised at the beginning of the periods and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Securities are excluded from the computations of diluted net income per share if their effect would be anti-dilutive to earnings per share. If the Company incurs a loss from continuing operations, diluted EPS is computed in the same manner as basic EPS.

The numerators and denominators of the basic and diluted EPS computations, reconciliations of the weighted average shares outstanding, and resulting basic and diluted earnings per share for our common stock are calculated as follows (in thousands, except per share amounts):



	Year Ended December 31,
	2019			2018			2017
Basic
Numerator:
Net income (loss)	$	7,775		$	(39,164	)	$	34,818
Undistributed earnings allocated to participating securities	(237		)	—			(990		)
Net income (loss) attributable to common stockholders—basic	$	7,538		$	(39,164	)	$	33,828
Denominator:
Weighted average shares used in computing net income (loss) per share attributable to common stockholders—basic	148,304			145,389			142,225
Net income (loss) per share attributable to common stockholders—basic	$	0.05		$	(0.27	)	$	0.24
Diluted
Numerator:
Net income (loss) attributable to common stockholders—diluted	$	7,538		$	(39,164	)	$	33,828
Denominator:
Number of shares used for basic EPS computation	148,304			145,389			142,225
Effect of dilutive securities	329			—			512
Weighted average shares used in computing net income per share attributable to common stockholders—diluted	148,633			145,389			142,737
Net income (loss) per share attributable to common stockholders—diluted	$	0.05		$	(0.27	)	$	0.24

The computation of diluted EPS does not include certain awards, on a weighted average basis, for the years ended December 31, 2019, 2018, and 2017, respectively, because their inclusion would have an anti-dilutive effect on EPS. The awards excluded because of their anti-dilutive effect are as follows (in thousands):



	Year Ended December 31,
	2019	2018	2017
Awards excluded from the computation of diluted net income per share because their inclusion would have been anti-dilutive	1	89	88