Basic net income (loss) per share is calculated by dividing the net income (loss) attributable to common shares by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is calculated by dividing the net income (loss) attributable to common shares by the weighted average number of common shares outstanding plus dilutive potential common shares outstanding during the period.

ASU 2020-06 was adopted on January 1, 2022 and requires the Company to use the if-converted method to calculate the number of potentially dilutive shares for convertible debt. Under the if-converted method, adjustments are made to the diluted net income (loss) per common share calculation as if the Company had converted the convertible debt on the first day of each period presented. Adjustments to the numerator are made to add back the interest expense associated with the convertible debt on a post-tax basis. Adjustments to the denominator reflect the number of shares assumed to be convertible at the beginning of the period. For additional information regarding ASU 2020-06, see Note 2, Summary of Significant Accounting Policies. Prior to January 1, 2022, the Company used the treasury stock method to calculate dilutive shares on its convertible debt.

Potential common shares include the shares of common stock issuable upon the exercise of outstanding stock options, the vesting of RSUs and the purchase of shares from the ESPP (using the treasury stock method), if applicable.

Potential common shares are excluded from the diluted net income (loss) per share computation to the extent they would be antidilutive. As the Company reported a net loss for the three months ended September 30, 2022, no potentially dilutive securities have been included in the computation of diluted net loss per share for that period.

The following table sets forth the computation of basic and diluted net income (loss) per common share for the three and nine months ended September 30, 2022 and 2021 (in thousands, except per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Numerator:
Net (loss) income—basic	$	(693)	$	17,660	$	26,011	$	47,110
ASU 2020-06 convertible notes if-converted method adjustment	—		—		3,112		—

Adjusted net (loss) income—diluted	(693)		17,660		29,123		47,110





Denominator:
Weighted average common shares outstanding—basic	45,831		44,476		45,400		44,151
Computation of diluted securities:
ASU 2020-06 convertible notes if-converted method adjustment	—		—		5,608		—
Dilutive effect of stock options	—		827		937		1,132
Dilutive effect of RSUs	—		160		272		337
Dilutive effect of conversion premium on the 2022 Notes	—		—		—		51
Dilutive effect of ESPP purchase options	—		—		3		3

Weighted average common shares outstanding—diluted	45,831		45,463		52,220		45,674
Net (loss) income per share:
Basic net (loss) income per common share	$	(0.02)	$	0.40	$	0.57	$	1.07
Diluted net (loss) income per common share	$	(0.02)	$	0.39	$	0.56	$	1.03