Ribbon Communications Inc. Earnings Per Share Disclosure
(4) EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares outstanding during the period. For periods in which the Company reports net income, diluted net earnings per share is determined by using the weighted average number of common and dilutive common equivalent shares outstanding during the period, unless the effect is antidilutive.
The shares used to compute loss per share were as follows (in thousands):
Year ended December 31, | ||||||
| 2025 | | 2024 | | 2023 | |
Weighted average shares outstanding—basic |
| 176,199 |
| 174,044 |
| 170,408 |
Potential dilutive common shares |
| 3,623 |
| — |
| — |
Weighted average shares outstanding—diluted |
| 179,822 |
| 174,044 |
| 170,408 |
Options to purchase the Company’s common stock and unvested restricted and performance-based stock units aggregating 0.7 million shares, 7.6 million shares, and 13.5 million shares were excluded from the computation of diluted loss per share for the years ended December 31, 2025, 2024 and 2023, respectively, because their effect would have been antidilutive.
As of December 31, 2025, 2024 and 2023, the potential number of dilutive shares from the Warrants totaled 4.7 million, 4.9 million and 4.9 million shares, respectively. However, there was no impact on weighted average shares outstanding from these Warrants for the years ended December 31, 2025, 2024 and 2023 as the average share price of the Company’s common stock was below the exercise price of $3.77 per share and their effect would have been antidilutive.
Dividends accrued on the Preferred Stock were not an adjustment to net income (loss) used for the calculation of diluted earnings (loss) per share as these dividends are included in the fair value adjustment of the Preferred Stock which was reflected in Other expense, net until the redemption of the Preferred Stock on June 25, 2024.
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.