Net Income per Share

9 Months Ended

Sep. 30, 2023

Earnings Per Share Reconciliation [Abstract]

Basic net income per share is computed using the weighted average number of common shares outstanding during the applicable period. Diluted net income per share is computed using the weighted average number of common shares outstanding during the period, plus the dilutive effect of potential common stock. Potential common stock consists of shares issuable pursuant to stock options, stock awards (which include restricted stock units, restricted stock awards and deferred stock units), convertible senior notes and warrants issued by the Company. The dilutive effect of outstanding awards is reflected in diluted earnings per share by application of the treasury stock method and the dilutive effect of the convertible securities is reflected in diluted earnings per share by application of the if-converted method.

The components used in the computation of basic and diluted net income per share for the three and nine months ended September 30, 2023 and 2022 were as follows (in thousands, except per share data):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator:
Net income	$	160,542	$	123,694	$	386,464	$	394,910
Denominator:
Shares used for basic net income per share	151,359		158,715		153,020		159,749
Effect of dilutive securities:
Stock options	—		1		5		17
Stock awards	3,073		352		1,649		746
Convertible senior notes (1)	544		—		181		960
Warrants related to issuance of convertible senior notes	—		—		—		—
Shares used for diluted net income per share	154,976		159,068		154,855		161,472
Basic net income per share	$	1.06	$	0.78	$	2.53	$	2.47
Diluted net income per share	$	1.04	$	0.78	$	2.50	$	2.45

(1) These shares are included in shares used for diluted net income per share for the three and nine months ended September 30, 2023, and for the nine months ended September 30, 2022, as the Company's average stock price was in excess of $95.10, which is the initial conversion price of the convertible senior notes due in 2025.

For the three and nine months ended September 30, 2023 and 2022, certain potential outstanding shares from service-based stock awards and warrants were excluded from the computation of diluted net income per share because the effect of including these items was anti-dilutive. Additionally, certain market- and performance-based stock awards were excluded from the computation of diluted net income per share because the underlying market and performance conditions for such awards had not been met as of these dates. The number of potentially outstanding shares excluded from the computation of diluted net income per share for the three and nine months ended September 30, 2023 and 2022 were as follows (in thousands):


	For the Three Months Ended September 30,		For the Nine Months Ended September 30,
	2023	2022	2023	2022

Service-based stock awards	1,501	2,478	3,842	2,313
Market- and performance-based stock awards	1,250	1,022	1,367	1,032

Warrants related to issuance of convertible senior notes	32,006	21,991	25,329	21,991
Total shares excluded from computation	34,757	25,491	30,538	25,336