Net Income per Share Attributable to Common Stockholders | Net Income per Share Attributable to Common Stockholders We compute net income per share of our Class A and Class B common stock using the two-class method required for participating securities. We consider unvested shares issued upon the early exercise of options to be participating securities as the holders of these shares have a non-forfeitable right to dividends in the event of our declaration of a dividend for common shares. Under the two-class method, net income attributable to common stockholders is determined by allocating undistributed earnings, calculated as net income, less earnings attributable to participating securities. The net income per share attributable to common stockholders is allocated based on the contractual participation rights of the Class A common stock and Class B common stock as if the income for the year has been distributed. As the liquidation and dividend rights are identical, the net income attributable to common stockholders is allocated on a proportionate basis. Basic net income per share of common stock is computed by dividing the net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. All participating securities are excluded from the basic weighted-average shares of common stock outstanding. Unvested shares of common stock resulting from the early exercises of stock options are excluded from the calculation of the weighted-average shares of common stock until they vest as they are subject to repurchase until they are vested. The unvested shares of common stock resulting from early exercises of stock options accounted for all of our participating securities. Diluted net income per share attributable to common stockholders is computed by dividing net income attributable to common stockholders by the weighted-average shares outstanding, including potentially dilutive shares of common equivalents outstanding during the period. The dilutive effect of potential shares of common stock are determined using the treasury stock method. Undistributed net income for a given period is apportioned to participating securities based on the weighted-average shares of each class of common stock outstanding during the applicable period as a percentage of the total weighted-average shares outstanding during the same period. For purposes of the diluted net income per share attributable to common stockholders calculation, unvested shares of common stock resulting from the early exercises of stock options and unvested options to purchase common stock are considered to be potentially dilutive shares of common stock. In addition, the computation of the fully diluted net income per share of Class A common stock assumes the conversion from Class B common stock, while the fully diluted net income per share of Class B common stock does not assume the conversion of those shares. The numerators and denominators of the basic and diluted EPS computations for our common stock are calculated as follows (in thousands, except per share data): Three months ended July 31, Six months ended July 31, 2019 2018 2019 2018 Class A Class B Class A Class B Class A Class B Class A Class B Basic Numerator Net income $ 70,154 $ 9,088 $ 42,326 $ 7,960 $ 133,773 $ 18,918 $ 79,137 $ 15,459 Undistributed earnings allocated to participating securities — — — — — — — — Net income attributable to common stockholders, basic $ 70,154 $ 9,088 $ 42,326 $ 7,960 $ 133,773 $ 18,918 $ 79,137 $ 15,459 Denominator Weighted average shares used in computing net income per share attributable to common stockholders, basic 130,592 16,918 120,994 22,754 128,888 18,228 119,857 23,414 Net income per share attributable to common stockholders, basic $ 0.54 $ 0.54 $ 0.35 $ 0.35 $ 1.04 $ 1.04 $ 0.66 $ 0.66 Diluted Numerator Net income attributable to common stockholders, basic $ 70,154 $ 9,088 $ 42,326 $ 7,960 $ 133,773 $ 18,918 $ 79,137 $ 15,459 Reallocation as a result of conversion of Class B to Class A common stock: Net income attributable to common stockholders, basic 9,088 — 7,960 — 18,918 — 15,459 — Reallocation of net income to Class B common stock — 4,937 — 3,177 — 9,482 — 6,096 Net income attributable to common stockholders, diluted $ 79,242 $ 14,025 $ 50,286 $ 11,137 $ 152,691 $ 28,400 $ 94,596 $ 21,555 Denominator Number of shares used for basic EPS computation 130,592 16,918 120,994 22,754 128,888 18,228 119,857 23,414 Conversion of Class B to Class A common stock 16,918 — 22,754 — 18,228 — 23,414 — Effect of potentially dilutive common shares 11,165 11,165 11,668 11,668 11,223 11,223 11,956 11,956 Weighted average shares used in computing net income per share attributable to common stockholders, diluted 158,675 28,083 155,416 34,422 158,339 29,451 155,227 35,370 Net income per share attributable to common stockholders, diluted $ 0.50 $ 0.50 $ 0.32 $ 0.32 $ 0.96 $ 0.96 $ 0.61 $ 0.61 Potential common share equivalents excluded where the inclusion would be anti-dilutive are as follows: Three months ended Six months ended 2019 2018 2019 2018 Options and awards to purchase shares not included in the computation of diluted net income per share because their inclusion would be anti-dilutive 1,328,474 3,157,436 841,654 3,123,695 |