Quarterly report pursuant to Section 13 or 15(d)

Net Income per Share

v3.10.0.1
Net Income per Share
6 Months Ended
Jun. 30, 2018
Earnings Per Share [Abstract]  
Net Income per Share
Net Income per Share
Basic net income per share is computed by dividing 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 diluted 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 78,968 and 27,422 for the three months ended and 322,234 and 362,522 for the six months ended June 30, 2018 and 2017, respectively, were excluded from the dilutive shares outstanding because their effect was anti-dilutive.
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 for the three and six month periods ended June 30, 2018 is shown in the table below.
The Warrants sold in connection with the issuance of the Convertible Notes will not be considered in calculating the total dilutive weighted average shares outstanding until the price of our common stock exceeds the strike price of $57.58 per share, as described in Note 7. When the price of our common stock exceeds the strike price of the Warrants, the effect of the additional shares that may be issued upon exercise of the Warrants will be included in total dilutive weighted average shares outstanding using the treasury stock method. 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 7 for further discussion regarding the Convertible Notes.
We exclude common shares held in escrow 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 June 30, 2018, there were 187,480 contingently returnable shares related to the ClickPay acquisition which are excluded from the computation of basic net income per share as these shares are subject to sellers’ indemnification obligations and are being held in escrow. There were no contingently returnable shares as of June 30, 2017. Dilutive common shares outstanding include the weighted average contingently issuable shares discussed above that are currently in escrow, as well as the weighted average contingently issuable shares to be issued and placed in escrow on the first anniversary date of the acquisition. These shares are subject to release to the sellers on the first and second anniversary date of the acquisition which are contingent on the sellers’ indemnification obligations. Refer to Note 3 for further discussion regarding the ClickPay acquisition.
 
The following table presents the calculation of basic and diluted net income per share:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
 
(in thousands, except per share amounts)
Numerator:
 
 
 
 
 
 
 
Net income
$
8,479

 
$
6,213

 
$
19,380

 
$
14,408

Denominator:
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
Weighted average common shares used in computing basic net income per share
85,124

 
79,018


83,156


78,642

Diluted:
 
 
 
 
 
 
 
Add weighted average effect of dilutive securities:
 
 
 
 
 
 
 
Stock options and restricted stock
2,474

 
2,907

 
2,310

 
3,002

Convertible Notes
2,116

 

 
1,720

 

Contingently issuable shares in connection with ClickPay acquisition
291

 

 
146

 

Weighted average common shares used in computing diluted net income per share
90,005

 
81,925


87,332


81,644

Net income per share:
 
 
 
 
 
 
 
Basic
$
0.10

 
$
0.08

 
$
0.23

 
$
0.18

Diluted
$
0.09

 
$
0.08

 
$
0.22

 
$
0.18