NET INCOME PER SHARE
The following is a reconciliation of the numerators and denominators of the basic and diluted net income per share computations for the periods presented below.
| | | | | | | | | | | | | | | | | |
| | Years Ended October 31, |
| | 2025 | | 2024 | | 2023 |
| | (in millions) |
| Numerator: | | | | | |
| Net income | $ | 1,303 | | | $ | 1,289 | | | $ | 1,240 | |
| Denominators: | | | | | |
| Basic weighted average shares | 284 | | | 290 | | | 294 | |
| Potential common shares — stock options and other employee stock plans | 1 | | | 1 | | | 2 | |
| Diluted weighted average shares | 285 | | | 291 | | | 296 | |
The dilutive effect of share-based awards is reflected in diluted net income per share by application of the treasury stock method, which includes consideration of unamortized share-based compensation expense and the dilutive effect of in-the-money options and non-vested restricted stock units. Under the treasury stock method, the amount the employee must pay for exercising stock options and unamortized share-based compensation expense collectively are assumed proceeds to be used to repurchase hypothetical shares. An increase in the fair market value of the company's common stock can result in a greater dilutive effect from potentially dilutive awards.
We exclude stock options with exercise prices greater than the average market price of our common stock from the calculation of diluted earnings per share because their effect would be anti-dilutive. In addition, we exclude from the calculation of diluted earnings per share, stock options, ESPP, LTPP and restricted stock awards whose combined exercise price and unamortized fair value collectively were greater than the average market price of our common stock because their effect would also be anti-dilutive.
In 2025, 2024 and 2023, we issued share-based awards of approximately 1.3 million, 1.5 million and 1.5 million, respectively. For the year ended 2025, 1 million potential common shares were excluded from the diluted earnings per share calculation, as the impact of their inclusion would have been anti-dilutive. For the years ended 2024 and 2023, the impacts of the anti-dilutive potential common shares that were excluded from the calculation of diluted earnings per share were not material.
About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.