Net Income (Loss) Per Share

9 Months Ended

Sep. 30, 2021

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,
	2021		2020		2021		2020
Basic EPS
Numerator:
Net income (loss) attributable to AppLovin	$	178	$	(89,688)	$	4,080	$	(106,415)
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	$	177	$	(89,688)	$	3,512	$	(106,415)
Denominator:
Weighted-average shares used in computing net income (loss) per share—Basic	368,427,532		214,638,272		309,353,304		212,998,263
Net income (loss) per share attributable to common stock—Basic	$	0.00	$	(0.42)	$	0.01	$	(0.50)
Diluted EPS
Numerator:
Net income (loss) attributable to AppLovin	$	178	$	(89,688)	$	4,080	$	(106,415)
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	$	177	$	(89,688)	$	3,539	$	(106,415)
Denominator:
Weighted-average shares used in computing net income (loss) per share—Basic	368,427,532		214,638,272		309,353,304		212,998,263
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	384,324,785		214,638,272		327,426,792		212,998,263
Net income (loss) per share attributable to common stock—Diluted	$	0.00	$	(0.42)	$	0.01	$	(0.50)

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


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