Basic earnings per share is computed by dividing net income for the period by the weighted average number of common shares outstanding during the period, without consideration for common stock equivalents. Outstanding stock options, unvested RSUs, unvested PSUs, common shares expected to be issued under our ESPP and the Convertible Notes are considered common stock equivalents and are only included in the calculation of diluted earnings per common share when net income is reported and their effect is dilutive.

Potentially dilutive common shares issuable upon vesting of stock options, RSUs and PSUs are determined using the average share price for each period under the treasury stock method. Potentially dilutive common shares issuable upon conversion of the Convertible Notes are determined using the if-converted method. Since we have committed to settle the principal amount of the Convertible Notes in cash upon conversion only, the number of shares for the conversion spread will be included as a dilutive common stock equivalent.

A reconciliation of the numerators and the denominators of the basic and diluted earnings per share computations is as follows (in thousands, except per share amounts):


	Three Months Ended
	March 31,
	2026		2025
Numerator
Net income	$	150,049	$	118,095
Denominator
Weighted average common shares outstanding for basic earnings per share	118,144		123,215
Dilutive potential common stock outstanding
Stock options	1,934		2,071
RSUs, PSUs and ESPP	1,074		900
Convertible Notes	1,723		458
Weighted average common shares outstanding for diluted earnings per share	122,875		126,644
Earnings per share
Basic	$	1.27	$	0.96
Diluted	$	1.22	$	0.93

Shares which have been excluded from the calculation of diluted earnings per common share because their effect was anti-dilutive include the following (shares in millions):

(1) The anti-dilutive securities include outstanding stock options, unvested RSUs, unvested PSUs, common shares expected to be issued under our ESPP and Convertible Notes.