Earnings (Loss) Per Share

Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) by the weighted-average number of common shares outstanding. Diluted EPS is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares consist of shares issuable from stock options, unvested RSUs and the 3.25% Convertible Senior Notes. Potentially dilutive common shares from outstanding stock options and unvested RSUs are determined using the average share price for each period under the treasury stock method. Potentially dilutive shares from the Convertible Senior Notes are determined using the if-converted method. Under the provisions of the if-converted method, the Convertible Senior Notes are assumed to be converted and the resulting commons shares are included in the denominator of the EPS calculation and the interest expense, net of tax, recorded in connection with the Convertible Senior Notes is added back to net income (loss).

The Convertible Senior Notes have a dilutive impact when the average market price of the Company’s common stock exceeds the applicable conversion price of the notes. The Convertible Senior Notes became convertible on March 31, 2018 and remained convertible through December 31, 2018.

The following table reconciles net income (loss) and the weighted-average shares used in computing basic and diluted earnings per share in the respective periods (in thousands):



	Twelve months ended December 31,
	2018		2017			2016
Numerator:
Net income (loss) used for basic earnings per share	$	74,183	$	(8,165	)	$	(13,808	)
Interest expense on Convertible Senior Notes, net of tax	4,927		—			—
Net income (loss) used for diluted earnings per share, if-converted method	$	79,110	$	(8,165	)	$	(13,808	)

Basic weighted-average common shares outstanding	37,995		33,734			32,708
Potentially dilutive shares issuable from Convertible Senior Notes, if-converted	2,850		—			—
Potentially dilutive shares issuable from stock options and unvested RSUs	1,709		—			—
Diluted weighted-average common shares outstanding, if-converted	42,554		33,734			32,708
Potentially dilutive shares excluded from calculation due to anti-dilutive effect	161		37			2,770

Potentially dilutive shares excluded from the calculation above represent stock options when the combined exercise price and unrecognized stock-based compensation are greater than the average market price for the Company’s common stock because their effect is anti-dilutive.

The number of potentially dilutive shares issuable under the Convertible Senior Notes that would have been included in the diluted EPS calculation if the Company had earnings amounted to 1.4 million for the year ended December 31, 2017. Stock options and RSUs that would have been included in the diluted EPS calculation if the Company had earnings amounted to 1.4 million and 0.8 million for the years ended December 31, 2017 and 2016. No conversion premium existed on the Convertible Senior Notes as of December 31, 2016; therefore, there was no dilutive impact from the Convertible Senior Notes to diluted EPS during the year ended December 31, 2016.