Net Income Per Share

Basic and diluted net income per common share is presented in conformity with the two-class method required for participating securities. Immediately prior to the consummation of the Company’s IPO in September 2019, all outstanding shares of convertible preferred stock and common stock were converted into shares of Class B common stock. As a result, Class A and Class B common stock are the only outstanding equity in the Company.

Basic and diluted net income per share is computed using the weighted-average number of shares of common stock outstanding during the period. The undistributed earnings are allocated based on the contractual participation rights of the Class A and Class B common stock as if the earnings for the year have been distributed. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis. Further, as the conversion of Class B common stock is assumed in the computation of the diluted net income per share of Class A common stock, the undistributed earnings are equal to net income for that computation.

The following table presents the calculation of basic and diluted net income per share (in thousands, except per share data):


	Year Ended December 31,
	2025				2024				2023
	Class A		Class B		Class A		Class B		Class A		Class B
Basic net income per share:
Numerator:
Net income	$	99,843	$	7,898	$	169,503	$	14,243	$	44,684	$	3,884
Denominator:
Weighted average shares used in calculating net income per share, basic	321,848		25,461		310,113		26,059		298,116		25,918
Basic net income per share	$	0.31	$	0.31	$	0.55	$	0.55	$	0.15	$	0.15

Diluted net income per share:
Numerator:
Allocation of distributed income, net of interest expense and related tax	$	103,313	$	8,173	$	173,585	$	14,586	$	44,684	$	3,884
Reallocation of undistributed income as a result of conversion of Class B to Class A shares	8,173		—		14,586		—		3,884		—
Allocation of undistributed income	$	111,486	$	8,173	$	188,171	$	14,586	$	48,568	$	3,884
Denominator:
Number of shares used in basic calculation	321,848		25,461		310,113		26,059		298,116		25,918
Weighted average effect of diluted securities:
Conversion of Class B to Class A common shares outstanding	25,461		—		26,059		—		25,918		—
Employee stock options	4,432		—		9,128		—		14,828		—
Employee stock purchase plan	44		—		25		—		15		—
Restricted stock units and performance stock units	5,071		—		4,701		—		2,731		—
Unvested restricted stock in connection with acquisitions	383		—		327		—		586		—
Shares issuable upon conversion of the 2025 Notes	1,637		—		8,032		—		8,098		—
Shares issuable upon conversion of the 2029 Notes	4,596		—		251		—		—		—
Number of shares used in diluted calculation	363,472		25,461		358,636		26,059		350,292		25,918
Diluted net income per share	$	0.31	$	0.32	$	0.52	$	0.56	$	0.14	$	0.15

Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows (in thousands):


	Year Ended December 31,
	2025	2024	2023

Shares subject to outstanding stock options and RSUs	648	350	2,248
Unvested early exercised stock options and restricted shares of common stock	—	—	31
Shares subject to the employee stock purchase plan	—	15	—

Total	648	365	2,279

The Company uses the if-converted method for calculating any potential dilutive effect of the conversion options embedded in the Notes on diluted net income per share.

The Company entered into Capped Calls in connection with the issuance of the Notes. The effect of the Capped Calls was excluded from the calculation of diluted net income per share as the effect of the Capped Calls would have been anti-dilutive. The Capped Calls are expected to partially offset the potential dilution to the Company’s Class A common stock upon any conversion of the Notes.

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.

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