NET INCOME (LOSS) PER SHARE

3 Months Ended

Mar. 31, 2020

Basic net income (loss) per share is calculated by dividing the net income (loss) attributable to common shares by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is calculated by dividing the net income (loss) attributable to common shares by the weighted average number of common shares outstanding plus dilutive potential common shares outstanding during the period.

Potential common shares include the shares of common stock issuable upon the exercise of outstanding stock options, the vesting of RSUs, the purchase of shares from the ESPP (using the treasury stock method) and the conversion of the excess conversion value on the 2022 Notes. As discussed in Note 9, Debt, the Company has the option to pay cash for the aggregate principal amount due upon the conversion of its 2022 Notes. Since it is the Company’s intent to settle the principal amount of its 2022 Notes in cash, the potentially dilutive effect of such notes on net income (loss) per share is computed under the treasury stock method.

Potential common shares are excluded from the diluted net income (loss) per share computation to the extent they would be antidilutive. Because the Company reported a net loss for the three months ended March 31, 2019, no potentially dilutive securities have been included in the computation of diluted net loss per share for that period.

The following table sets forth the computation of basic and diluted net loss per share for the three months ended March 31, 2020 and 2019 (in thousands, except per share amounts):


	Three Months Ended March 31,
			2020			2019
Numerator:
Net income (loss)	$	8,159		$	(2,771)







Denominator:
Weighted average common shares outstanding—basic	42,032			41,240
Computation of diluted securities:
Dilutive effect of stock options	585			—
Dilutive effect of RSUs	168			—



Weighted average common shares outstanding—diluted	42,785			41,240
Net income (loss) per share:
Basic and diluted net income (loss) per common share	$	0.19		$	(0.07)

The following outstanding stock options, RSUs and ESPP purchase options are antidilutive in the periods presented (in thousands):


	Three Months Ended March 31,
	2020	2019
Weighted average number of stock options	5,343	5,792
Weighted average number of RSUs	2	559

Weighted average ESPP purchase options	40	37

Total	5,385	6,388