NET LOSS PER SHARE
The Company computes net loss per share of common stock, Series A convertible preferred stock, and Series B convertible preferred stock using the two-class method required for multiple classes of common stock and other participating securities. The two-class method is an earnings (loss) allocation method under which earnings (loss) per share is calculated for each class of common stock. The Company has determined that the Series A convertible preferred stock and Series B convertible preferred stock do not have preferential rights when compared to the Company's common stock and therefore it must allocate losses to these other classes of stock, as illustrated in the table below.
Basic and diluted net loss per share is computed by dividing the allocated net loss to each share class by the weighted-average number of shares outstanding during the period. For periods in which the Company generated a net loss, the Company does not include potential shares of common stock in diluted net loss per shares when the impact of these items is anti-dilutive. The Company has generated a net loss for all periods presented, therefore diluted net loss per share is the same as basic net loss per share since the inclusion of potential shares of common stock would be anti-dilutive.
The following table sets forth the computation of basic and diluted net loss per share of common stock, Series A convertible preferred stock, and Series B convertible preferred stock (in thousands, except share and per share amounts):
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2025 |
| Series A Convertible Preferred Stock | | Series B Convertible Preferred Stock | | Common Stock |
| | | | | |
| Numerator: | | | | | |
| Allocation of net loss | $ | (29,892) | | | $ | (30,781) | | | $ | (281,928) | |
| Denominator: | | | | | |
| Weighted-average shares outstanding | 134,864 | | | 138,875 | | | 84,803,355 | |
| Net loss per share, basic and diluted | $ | (221.65) | | | $ | (221.65) | | | $ | (3.32) | |
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2024 |
| Series A Convertible Preferred Stock | | Series B Convertible Preferred Stock | | Common Stock |
| | | | | |
| Numerator: | | | | | |
| Allocation of net loss | $ | (31,718) | | | $ | (29,671) | | | $ | (208,560) | |
| Denominator: | | | | | |
| Weighted-average shares outstanding | 154,856 | | | 144,862 | | | 67,885,831 | |
| Net loss per share, basic and diluted | $ | (204.82) | | | $ | (204.82) | | | $ | (3.07) | |
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2023 |
| Series A Convertible Preferred Stock | | Series B Convertible Preferred Stock | | Common Stock |
| | | | | |
| Numerator: | | | | | |
| Allocation of net loss | $ | (45,421) | | | $ | (17,306) | | | $ | (175,007) | |
| Denominator: | | | | | |
| Weighted-average shares outstanding | 174,226 | | | 66,385 | | | 44,755,475 | |
| Net loss per share, basic and diluted | $ | (260.70) | | | $ | (260.69) | | | $ | (3.91) | |
There are no potentially dilutive securities to Series A convertible preferred stock or Series B convertible preferred stock. Potentially dilutive securities to the common stock include the following:
| | | | | | | | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 | | 2023 |
| Series A convertible preferred stock, as converted to shares of common stock | 8,991,383 | | | 8,991,383 | | | 11,495,724 | |
| Series B convertible preferred stock, as converted to shares of common stock | 5,308,265 | | | 9,677,817 | | | 9,568,181 | |
| Options to purchase common stock | 14,468,627 | | | 11,348,519 | | | 11,533,484 | |
| Warrants to purchase common stock | 29,446 | | | 248,277 | | | 249,883 | |
| Restricted stock units | 1,064,375 | | | 314,075 | | | 804,947 | |
| Total | 29,862,096 | | | 30,580,071 | | | 33,652,219 | |
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.