Net Income Per Share
The components and computation of basic and diluted net income per share were as follows:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| (in thousands, except per share amounts) | 2025 | | 2024 | | 2023 |
| Numerator | | | | | |
| Net income | $ | 93,339 | | | $ | 77,054 | | | $ | 65,824 | |
| Denominator | | | | | |
| Weighted average common shares outstanding, basic | 37,881 | | | 37,306 | | | 36,646 | |
| Options to purchase common stock and ESPP | 61 | | | 150 | | | 265 | |
| PSUs, RSUs, RSAs, and DSUs | 50 | | | 400 | | | 564 | |
| Weighted average common shares outstanding, diluted | 37,992 | | | 37,856 | | | 37,475 | |
| Net income per share | | | | | |
| Basic | $ | 2.46 | | | $ | 2.07 | | | $ | 1.80 | |
| Diluted | $ | 2.46 | | | $ | 2.04 | | | $ | 1.76 | |
The number of outstanding potential common shares that were excluded from the calculation of diluted net income per share as they were anti-dilutive was as follows:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| (in thousands) | 2025 | | 2024 | | 2023 |
| Anti-dilutive shares | 511 | | | 55 | | | 36 | |
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.