Basic and Diluted Net Loss Per Share

9 Months Ended

Sep. 30, 2020

Basic and Diluted Net Loss Per ShareBasic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potential shares of common stock, stock options, restricted stock units, ESPP, and convertible senior notes, to the extent dilutive. For the three and nine months ended September 30, 2020 and 2019, all such common stock equivalents have been excluded from diluted net loss per share as the effect to net loss per share would be anti-dilutive.

The following table sets forth the computation of the Company’s basic and diluted net loss per share of common stock (in thousands, except per share data):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Numerator
Net loss	$	(20,957)	$	(12,749)	$	(81,169)	$	(28,350)
Denominator:
Weighted-average common shares outstanding for basic and diluted net loss per share	89,173		83,283		88,259		82,348




Basic and diluted net loss per share	$	(0.24)	$	(0.15)	$	(0.92)	$	(0.34)

The following table summarizes the potentially dilutive common shares that were excluded from diluted weighted-average common shares outstanding because including them would have had an anti-dilutive effect (in thousands):


	Three Months Ended September 30,		Nine Months Ended September 30,
	2020	2019	2020	2019
Shares of common stock issuable under equity incentive awards outstanding	4,590	6,677	5,000	7,146
Shares of common stock related to convertible senior notes	1,378	2,139	1,963	1,587
Potential common shares excluded from diluted net loss per share	5,968	8,816	6,963	8,733

Since the Company expects to settle the principal amount on its outstanding 2023, 2025, and 2026 Notes in cash and any excess in cash or shares of the Company’s Class A Common Stock, the Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. The conversion spread will have a dilutive impact on diluted net income per share of common stock when the average market price of the Company’s Class A Common Stock for a given period exceeds the conversion price of $81.45, $360.43, and $424.03 per share for the 2023, 2025, and 2026 Notes, respectively.

The denominator for diluted net income per share does not include any effect from the capped call transactions the Company entered into concurrently with the issuance of the 2023, 2025, and 2026 Notes as this effect would be anti-dilutive. In the event of conversion of a 2023, 2025, or 2026 Note, if shares are delivered to the Company under the capped call, they will offset the dilutive effect of the shares that the Company would issue under the Notes.