Basic and Diluted Net Loss Per Share

9 Months Ended

Sep. 30, 2023

(12) Basic and Diluted Net Income (Loss) per Share

The following table summarizes the computations of basic net income (loss) per share and diluted net loss per share. Basic net income (loss) per share is computed by dividing net income (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 dilutive shares of common stock. The Company uses the if converted method for convertible senior notes for calculating any potential dilutive effect on diluted net loss per share. (In thousands, except share and per share data).


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Net income (loss)	$	1,683		$	(22,080	)	$	(28,015	)	$	(77,335	)
Dilutive effect of convertible notes, net of tax		(11,611	)		—			(10,132	)		—
Adjusted net loss	$	(9,928	)	$	(22,080	)	$	(38,147	)	$	(77,335	)

Weighted-average common stock outstanding — basic		40,782,696			39,746,242			40,537,922			39,583,684
Dilutive potential common shares related to convertible notes		3,061,638			—			3,196,507			—
Weighted-average common stock outstanding — diluted		43,844,334			39,746,242			43,734,429			39,583,684

Basic net income (loss) per share	$	0.04		$	(0.56	)	$	(0.69	)	$	(1.95	)
Diluted net loss per share	$	(0.23	)	$	(0.56	)	$	(0.87	)	$	(1.95	)

The following common equivalent shares were excluded from the diluted net loss per share calculation because their inclusion would have been anti-dilutive:


	As of September 30,
	2023		2022
Convertible senior notes		—		6,080,480
Stock-based compensation grants		3,405,200		3,995,619
Total		3,405,200		10,076,099

In connection with the issuance of the 2026 Notes in March 2021, the Company paid $35.1 million to enter into capped call option agreements to reduce the potential dilution to holders of the Company’s common stock upon conversion of the 2026 Notes. In connection with the issuance of the 2024 Notes in December 2019, the Company paid $44.9 million to enter into capped call option agreements to reduce the potential dilution to holders of the Company’s common stock upon conversion of the 2024 Notes. The capped call option agreements are excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is antidilutive.

Reserve for Unissued Shares of Common Stock

The Company is required to reserve and keep available out of its authorized but unissued shares of common stock such number of shares sufficient for the exercise of all shares granted and available for grant under the Company’s 2008 Equity Incentive Plan, 2016 Plan, 2016 ESPP and 2022 Inducement Plan. The amount of such shares of the Company’s common stock reserved for these purposes at September 30, 2023 was 7.2 million shares. Additionally, the Company is required to reserve and keep available out of its authorized but unissued shares of common stock shares that become issuable pursuant to the terms of the 2026 Notes and 2024 Notes.