Earnings Per Share

12 Months Ended

Dec. 31, 2021

Basic earnings per share is calculated by dividing income available to stockholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share is computed using the weighted-average number of common and dilutive common share equivalents outstanding during the period. Dilutive common share equivalents consist of shares issuable upon the exercise or settlement of stock awards and shares issuable under the employee stock purchase plan (calculated using the treasury stock method) during the period they were outstanding and potential dilutive common shares from the conversion spread on the Convertible Notes and the warrants during the period they were outstanding.

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share information):


	Year Ended December 31,
	2021		2020		2019
Numerator:
Net income	$	307,499	$	504,446	$	681,813
Denominator:
Denominator for basic earnings per share - weighted-average shares outstanding	124,113		123,575		130,853
Effect of dilutive employee stock awards	2,146		2,577		2,196
Effect of dilutive Convertible Notes	—		—		1,422
Effect of dilutive warrants	—		—		1,024
Denominator for diluted earnings per share - weighted-average shares outstanding	126,259		126,152		135,495

Basic earnings per share	$	2.48	$	4.08	$	5.21

Diluted earnings per share	$	2.44	$	4.00	$	5.03

For the years ended December 31, 2021 and 2020, there were no weighted-average number of shares outstanding used in the computation of diluted earnings per share for the warrants, as they expired on November 18, 2019. For the year ended December 31, 2019, the weighted-average number of shares outstanding used in the computation of diluted earnings per share includes the dilutive effect of the warrants, as the average stock price during the year was above the weighted-average warrant strike price of $94.42 per share. For the year ended December 31, 2021, anti-dilutive stock-based awards excluded from the

calculations of diluted earnings per share were 1.8 million shares. For the years ended December 31, 2020 and 2019, stock-based awards excluded from the calculations of diluted earnings per share were not material.

The Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on its Convertible Notes on diluted earnings per share because upon conversion the Company paid cash up to the aggregate principal amount of the Convertible Notes converted and delivered shares of common stock in respect of the remainder of the Company’s conversion obligation in excess of the aggregate principal amount of the Convertible Notes converted. The conversion spread had a dilutive impact on diluted earnings per share when the average market price of the Company’s common stock for a given period exceeded the conversion price. For the years ended December 31, 2021 and 2020, there was no dilution as the Convertible Notes matured on April 15, 2019. For the year ended December 31, 2019, the average market price of the Company's common stock exceeded the conversion price; therefore, the dilutive effect of the Convertible Notes was included in the denominator of diluted earnings per share.