Adeia Inc. Earnings Per Share Disclosure
NOTE 11 – NET INCOME PER SHARE
The following table sets forth the computation of basic and diluted shares (in thousands):
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Years Ended December 31, |
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2025 |
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2024 |
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2023 |
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Numerator: |
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Net income |
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$ |
111,075 |
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$ |
64,623 |
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$ |
67,372 |
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Denominator: |
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Weighted average common shares outstanding |
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108,845 |
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108,647 |
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106,554 |
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Add: Effect of dilutive securities associated with options |
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2 |
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1 |
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— |
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Add: Effect of dilutive securities associated with restricted stock awards and units |
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3,891 |
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4,404 |
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6,293 |
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Add: Effect of dilutive securities associated with employee stock purchase program |
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9 |
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9 |
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2 |
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Weighted average common shares - dilutive |
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112,747 |
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113,061 |
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112,849 |
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Basic net income per share |
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$ |
1.02 |
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$ |
0.59 |
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$ |
0.63 |
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Diluted net income per share |
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$ |
0.99 |
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$ |
0.57 |
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$ |
0.60 |
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Anti-dilutive employee stock-based awards, excluded |
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899 |
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688 |
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616 |
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Basic net income (loss) per share is computed using the weighted average number of shares of common stock outstanding during the period, excluding any unvested restricted stock awards that are subject to repurchase. Diluted net income (loss) per share is computed using the treasury stock method to calculate the weighted average number of shares of common stock and, if dilutive, potential common shares outstanding during the period. Potentially dilutive common shares include unvested restricted stock awards and incremental common shares issuable upon the exercise of stock options, less shares repurchased from assumed proceeds. The assumed proceeds calculation includes actual proceeds to be received from the employee upon exercise and the average unrecognized stock compensation cost during the period.
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.