PDF SOLUTIONS INC Earnings Per Share Disclosure
12. NET INCOME (LOSS) PER SHARE
The following is a reconciliation of the numerators and denominators used in computing basic and diluted net income (loss) per share (in thousands, except per share amount):
| Year Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Numerator: | ||||||||||||
| Net income (loss) | $ | (640 | ) | $ | 4,057 | $ | 3,105 | |||||
| Denominator: | ||||||||||||
| Basic weighted average common shares outstanding | 39,317 | 38,602 | 38,015 | |||||||||
| Effect of dilutive stock options, unvested restricted stock units, and shares of common stock expected to be issued under employee stock purchase plan | — | 445 | 922 | |||||||||
| Diluted weighted average common shares outstanding | 39,317 | 39,047 | 38,937 | |||||||||
| Net income (loss) per share: | ||||||||||||
| Basic | $ | (0.02 | ) | $ | 0.11 | $ | 0.08 | |||||
| Diluted | $ | (0.02 | ) | $ | 0.10 | $ | 0.08 | |||||
For the year ended December 31, 2025, because the Company was in a loss position, basic net loss per share was the same as diluted net loss per share as the inclusion of the potential common shares would have been anti-dilutive.
The following table summarizes the potential shares of common stock that are not included in the diluted net income (loss) per share calculation above because to do so would be anti-dilutive for the periods presented (in thousands):
| Year Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Non-vested restricted stock units | 2,005 | 843 | 351 | |||||||||
| Outstanding stock options | 20 | — | — | |||||||||
| Shares issuable under employee stock purchase plan | 71 | 69 | — | |||||||||
| Total | 2,096 | 912 | 351 | |||||||||
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.