Net Income (Loss) Per Share

9 Months Ended

12 Months Ended

Sep. 30, 2021

Dec. 31, 2020

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 September 30,						Nine Months Ended September 30,
	2020			2021			2020			2021
Basic EPS
Numerator:
Net income (loss) attributable to AppLovin	$	(89,688	)	$	178		$	(106,415	)	$	4,080
Less:
Income attributable to convertible preferred stock		—			—			—			(499	)
Income attributable to options exercised via promissory notes		—			(1	)		—			(49	)
Income attributable to unvested early exercised options		—			—			—			(13	)
Income attributable to unvested RSA’s		—			—			—			(7	)
Net income (loss) attributable to common stock—Basic	$	(89,688	)	$	177		$	(106,415	)	$	3,512
Denominator:
Weighted-average shares used in computing net income (loss) per share—Basic		214,638,272			368,427,532			212,998,263			309,353,304
Net income (loss) per share attributable to common stock—Basic	$	(0.42	)	$	0.00		$	(0.50	)	$	0.01

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2021			2020			2021
Diluted EPS
Numerator:
Net income (loss) attributable to AppLovin	$	(89,688	)	$	178		$	(106,415	)	$	4,080
Less:
Income attributable to convertible preferred stock		—			—			—			(475	)
Income attributable to options exercised via promissory notes		—			(1	)		—			(47	)
Income attributable to unvested early exercised options		—			—			—			(12	)
Income attributable to unvested RSA’s		—			—			—			(7	)
Net income (loss) attributable to common stock—Diluted	$	(89,688	)	$	177		$	(106,415	)	$	3,539
Denominator:
Weighted-average shares used in computing net income (loss) per share—Basic		214,638,272			368,427,532			212,998,263			309,353,304
Weighted-average dilutive stock options, RSUs, warrants and other convertible securities		—			15,897,253						18,073,488
Weighted-average shares used in computing net income (loss) per share—Diluted		214,638,272			384,324,785			212,998,263			327,426,792
Net income (loss) per share attributable to common stock—Diluted	$	(0.42	)	$	0.00		$	(0.50	)	$	0.01

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

	As of September 30,
	2020		2021
Convertible preferred stock		109,090,908		—
Stock options exercised for promissory notes		7,862,499		2,884,999
Shares issuable upon conversion of Athena convertible security		—		334,946
Early exercised stock options		19,800		879,600
Unvested RSAs		1,908,687		242,316
Stock options		20,439,544		23,736
Unvested RSUs		—		2,828
ESPP		—		223,448
Total antidilutive potential common shares		139,321,438		4,591,873

14. Net Income (Loss) Per Share

The following table sets forth the computation of basic and diluted net income (loss) per share attributable to common stockholders for the years ended December 31, 2018, 2019 and 2020 (in thousands, except share and per share data):

	Year Ended December 31,
	2018			2019			2020
Basic EPS
Numerator:
Net income (loss)	$	(259,995	)	$	119,040		$	(125,187	)
Less:
Income attributable to convertible preferred stock		—			(39,500	)		—
Income attributable to options exercises by promissory notes		—			(1,088	)		—
Income attributable to unvested early exercised options		—			(39	)		—
Income attributable to unvested RSA’s		—			(2,037	)		—
Net income (loss) attributable to common stock	$	(259,995	)	$	76,376		$	(125,187	)
Denominator:
Weighted-average shares used in computing net income (loss) per share: Basic		189,533,630			210,937,147			214,936,545
Net income (loss) per share attributable to common stock: Basic	$	(1.37	)	$	0.36		$	(0.58	)
Diluted EPS
Numerator:
Net income (loss)	$	(259,995	)	$	119,040		$	(125,187	)
Less:
Income attributable to convertible preferred stock		—			(39,329	)		—
Income attributable to options exercises by promissory notes		—			(1,083	)		—
Income attributable to unvested early exercised options		—			(39	)		—
Income attributable to unvested RSA’s		—			(2,028	)		—
Net income (loss) attributable to common stock	$	(259,995	)	$	76,561		$	(125,187	)
Denominator:
Weighted-average shares used in computing net income (loss) per share: Basic		189,533,630			210,937,147			214,936,545
Weighted-average dilutive stock options		—			1,428,282			—
Weighted-average shares used in computing net income (loss) per share: Diluted		189,533,630			212,365,429			214,936,545
Net income (loss) per share attributable to common stock: Diluted	$	(1.37	)	$	0.36		$	(0.58	)

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

	Year Ended December 31,
	2019		2020
Convertible preferred stock		109,090,908		109,090,908
Options exercised for promissory notes		5,760,000		8,022,499
Early exercised options		11,337		19,800
Unvested RSAs		3,924,414		1,236,771
Options		7,439,700		20,754,985

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.