10. Net Income (Loss) Per Share of Common Stock

We compute net income (loss) per share of common stock using the two-class method required for participating securities. Prior to the date of the initial public offering, we considered all series of our convertible preferred stock to be participating securities due to their non-cumulative dividend rights. Additionally, we consider shares issued upon the early exercise of options subject to repurchase and unvested restricted shares to be participating securities, because holders of such shares have non-forfeitable dividend rights in the event of our declaration of a dividend for common shares. In accordance with the two-class method, earnings allocated to these participating securities, which include participation rights in undistributed earnings, are subtracted from net income to determine total undistributed earnings to be allocated to common stockholders.

Basic net income (loss) per common share is computed by dividing total undistributed earnings attributable to common stockholders by the weighted-average number of common shares outstanding during the period. In computing diluted net income (loss) attributable to common stockholders, undistributed earnings are re-allocated to reflect the potential impact of dilutive securities, including stock options, warrants and unvested ZSUs. Diluted net income (loss) per share attributable to common stockholders is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding, including potential dilutive common shares including outstanding stock options, warrants and ZSUs.

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


	Three Months Ended March 31,
	2012									2011
	Class			Class			Class			Class		Class		Class
	A			B			C			A		B		C
	(unaudited)
BASIC:
Net income (loss)	$	(15,208	)	$	(67,668	)	$	(2,475	)	$	—	$	15,426	$	1,332
Net income attributable to participating securities		—			—			—			—		14,191		1,225

Net income (loss) attributable to common stockholders	$	(15,208	)	$	(67,668	)	$	(2,475	)	$	—	$	1,235	$	107

Weighted-average common shares outstanding		126,102			561,074			20,517			—		237,651		20,517

Basic net income per share	$	(0.12	)	$	(0.12	)	$	(0.12	)	$	—	$	0.01	$	0.01

DILUTED:
Net income (loss) attributable to common stockholders	$	(15,208	)	$	(67,668	)	$	(2,475	)	$	—	$	1,235	$	107
Reallocation of net income attributable to participating securities		—			—			—			—		259		—
Reallocation of net income (loss) as a result of conversion of Class C shares to Class B and Class A shares		(2,475	)		—			—			—		107		—
Reallocation of net income (loss) as a result of conversion of Class B shares to Class A shares		(67,668	)		—			—			—		—		—
Reallocation of net income (loss) to Class B and Class C shares		—			—			—			—		—		(15	)

Net income (loss) attributable to common stockholders for diluted net income (loss) per share	$	(85,351	)	$	(67,668	)	$	(2,475	)	$	—	$	1,601	$	92

Number of shares used in basic computation		126,102			561,074			20,517			—		237,651		20,517
Conversion of Class C to Class A common shares outstanding		20,517			—			—			—		—		—
Conversion of Class C to Class B common shares outstanding		—			—			—			—		20,517
Conversion of Class B to Class A common shares outstanding		561,074			—			—			—		—		—
Weighted-average effect of dilutive securities:
Employee stock options		—			—			—			—		88,488		—
Warrants		—			—			—			—		11,656		—

Number of shares used in diluted net income (loss) per share		707,693			561,074			20,517			—		358,312		20,517

Diluted net income (loss) per share	$	(0.12	)	$	(0.12	)	$	(0.12	)	$	—	$	—	$	—

The following weighted-average employee equity awards were excluded from the calculation of diluted net income (loss) per share attributable to common stockholders because their effect would have been anti-dilutive for the periods presented (in thousands):


	Three Months Ended March 31,
	2012		2011
	(unaudited)
Stock options		99,458		940
Warrants		695		—
Restricted shares		19,424		—
ZSUs		75,003		—

Total		194,580		940