Net Income (Loss) Per Share

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Net Income (Loss) Per Share

11. Net Income (Loss) Per Share

Basic and diluted net income (loss) per share attributable to common stockholders is computed in conformity with the two-class method required for participating securities. The Company considers its convertible preferred stock, options exercised in exchange for nonrecourse promissory notes, early exercised unvested stock options and unvested restricted stock awards to be participating securities. Under the two-class method, the net loss attributable to common stockholders is not allocated to convertible preferred stock, options exercised in exchange for nonrecourse promissory notes, early exercised unvested common stock options and unvested restricted stock awards as the holders of these instruments do not have a contractual obligation to share in the Company’s losses. Net income is attributed to common stockholders and participating securities based on their participation rights. Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share attributable to common stockholders adjusts basic earnings per share for the potentially dilutive impact of stock options.

The following table sets forth the computation of basic and diluted net income (loss) per share attributable to common stockholders (in thousands, except share and per share data):

	Three Months Ended March 31,
	2021			2020
Basic EPS
Numerator:
Net income (loss) attributable to AppLovin	$	(10,521)		$	4,664
Less:
Income attributable to convertible preferred stock		—			(1,545	)
Income attributable to options exercises by promissory notes		—			(82	)
Income attributable to unvested early exercised options		—			—
Income attributable to unvested RSA’s		—			(50	)
Net income (loss) attributable to common stock—Basic	$	(10,521	)	$	2,987
Denominator:
Weighted-average shares used in computing net income (loss) per share—Basic		222,408,568			210,898,346
Net income (loss) per share attributable to common stock—Basic	$	(0.05	)	$	0.01
Diluted EPS
Numerator:
Net income (loss) attributable to AppLovin	$	(10,521	)	$	4,664
Less:
Income attributable to convertible preferred stock		—			(1,530	)
Income attributable to options exercises by promissory notes		—			(81	)
Income attributable to unvested early exercised options		—			—
Income attributable to unvested RSA’s		—			(49	)
Net income (loss) attributable to common stock—Diluted	$	(10,521	)	$	3,004
Denominator:
Weighted-average shares used in computing net income (loss) per share—Basic		222,408,568			210,898,346
Weighted-average dilutive stock options		—			3,155,094
Weighted-average shares used in computing net income (loss) per share—Diluted		222,408,568			214,053,440
Net income (loss) per share attributable to common stock—Diluted	$	(0.05	)	$	0.01

The following table presents the forms of antidilutive potential common shares:

	Three Months Ended March 31,
	2021		2020
Convertible preferred stock		109,090,908		109,090,908
Stock options exercised for promissory notes		3,874,999		5,709,999
Early exercised stock options		458,499		—
Unvested RSAs		782,895		3,252,519
Stock options		19,581,567		1,902,237
Total antidilutive potential common shares		133,788,868		119,955,663

The table above does not include the convertible security issued in 2020. This security is convertible into the Company’s common stock starting 61 days following the effective date of an initial public offering of the Company. The convertible security may be converted, at the option of the holder, into a number of shares of the Company’s Class A Common Stock equal to $40.0 million divided by a conversion price equal to (i) the preceding 20-day volume-weighted average trading price per share of Class A Common Stock multiplied by (ii) 0.8.