Annual report pursuant to Section 13 and 15(d)

Net Income Per Share

v3.10.0.1
Net Income Per Share
12 Months Ended
Dec. 31, 2018
Earnings Per Share [Abstract]  
Net Income Per Share
Net Income per Share
Basic net income per share is computed by dividing the net income by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by using the weighted average number of common shares outstanding, after giving effect to all potential dilutive common shares outstanding during the period. Included within net income per share is the dilutive effect of outstanding stock options and restricted stock using the treasury stock method. Weighted average shares from common share equivalents in the amount of 286,449, 193,274, and 220,473 were excluded from the dilutive shares outstanding because their effect was anti-dilutive for the years ended December 31, 2018, 2017, and 2016, respectively.
For purposes of considering the Convertible Notes in determining diluted net income per share, it is our current intent to settle conversions of the Convertible Notes through combination settlement, which involves repayment of the principal portion in cash and any excess of the conversion value over the principal amount (the “conversion premium”) in shares of our common stock. Therefore, only the impact of the conversion premium is included in total dilutive weighted average shares outstanding using the treasury stock method. The dilutive effect of the conversion premium is shown in the table below.
The Warrants sold in connection with the issuance of the Convertible Notes are considered to be dilutive when the average price of our common stock during the period exceeds the Warrants’ strike price of $57.58 per share. The effect of the additional shares that may be issued upon exercise of the Warrants is included in total dilutive weighted average shares outstanding using the treasury stock method and is shown in the table below. The Note Hedges purchased in connection with the issuance of the Convertible Notes are considered to be anti-dilutive and therefore do not impact our calculation of diluted net income per share. Refer to Note 8 for further discussion regarding the Convertible Notes.
We exclude common shares subject to a holdback pursuant to business combinations from the calculation of basic weighted average shares outstanding where the release of such shares is contingent upon an event not solely subject to the passage of time. As of December 31, 2018, there were approximately 196,000 contingently returnable shares related to our acquisitions of ClickPay and BluTrend, which were excluded from the computation of basic net income per share as these shares are subject to sellers’ indemnification obligations and are subject to a holdback. There were no contingently returnable shares as of December 31, 2017, and 2016. Dilutive common shares outstanding include the weighted average contingently issuable shares discussed above that are subject to a holdback, as well as the weighted average contingently issuable shares to be issued subject to a holdback on the first anniversary dates of the ClickPay and BluTrend acquisitions. These shares are subject to release to the sellers on the first and second anniversary dates of the acquisitions but are contingent on the sellers’ indemnification obligations. Refer to Note 3 for further discussion regarding the ClickPay and BluTrend acquisitions.
The following table presents the calculation of basic and diluted net income per share attributable to common stockholders:
 
 
Year Ended December 31,
 
 
2018
 
2017
 
2016
 
 
(in thousands, except per share amounts)
Numerator:
 
 
 
 
 
 
Net income
 
$
34,725

 
$
377

 
$
16,650

Denominator:
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
Weighted average shares used in computing basic net income per share:
 
87,290

 
79,433

 
76,854

Diluted:
 
 
 
 
 
 
Add weighted average effect of dilutive securities:
 
 
 
 
 
 
Stock options and restricted stock
 
2,032

 
2,884

 
989

Convertible Notes and Warrants
 
1,948

 
81

 

Contingently issuable shares in connection with our acquisitions
 
261

 

 

Weighted average shares used in computing diluted net income per share:
 
91,531


82,398


77,843

Net income per share:
 
 
 
 
 
 
Basic
 
$
0.40

 
$
0.00

 
$
0.22

Diluted
 
$
0.38

 
$
0.00

 
$
0.21