Note 4. Net Income per Share

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Basic net income per share is calculated based upon the weighted-average number of shares outstanding during the period. Diluted net income per share gives effect to all potentially dilutive shares outstanding during the period, such as stock options, non-vested restricted stock units, and shares issuable under the Company’s Employee Stock Purchase Plan, or ESPP, and potential shares of common stock issuable upon conversion of Convertible Notes of the Company, due March 2029, or the 2029 Convertible Notes.

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For the three months ended March 31, 2026, options to purchase 3,248,575 shares of stock with a weighted-average exercise price of $34.76 per share were excluded in the computation of diluted net income per share because their effect would be anti-dilutive. The 2029 Convertible Notes had no impact on the computation of diluted net income per share, as the average stock price during the period was less than the conversion price.

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For the three months ended March 31, 2025, options to purchase 2,036,714 shares of stock with a weighted-average exercise price of $38.76 per share were excluded in the computation of diluted net income per share because their effect would be anti-dilutive. The 2029 Convertible Notes had no impact on the computation of diluted net income per share, as the average stock price during the period was less than the conversion price.

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The following table provides the calculation of basic and diluted net income per share for each of the periods presented:

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