Envestnet, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Net Income (Loss) Per Share

Net Income (Loss) Per Share

12 Months Ended

Dec. 31, 2016

15. Net Income (Loss) Per Share

Basic net income per common share is computed by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding for the period. For the calculation of diluted earnings per share, the basic weighted average number of shares is increased by the dilutive effect of stock options, common warrants, restricted stock and Convertible Notes using the treasury stock method.

The Company accounts for the effect of the Convertible Notes on diluted net income per share using the treasury stock method since they may be settled in cash, shares or a combination thereof at the Company’s option. As a result, the Convertible Notes have no effect on diluted net loss per share until the Company’s stock price exceeds the conversion price of $62.88 per share, or if the trading price of the Convertible Notes meets certain criteria as described in Note 12. In the period of conversion, the Convertible Notes will have no impact on diluted net income if the Convertible Notes are settled in cash and will have an impact on basic and diluted net income per share if the Convertible Notes are settled in shares upon conversion.

The following table provides a reconciliation of the numerators and denominators used in computing basic and diluted net income per share attributable to common stockholders:


	Year Ended December 31,
	2016		2015		2014
Basic income (loss) per share calculation:
Net income (loss) attributable to Envestnet, Inc.	$	(55,567)	$	4,436	$	14,174

Basic number of weighted-average shares outstanding		42,814,222		36,500,843		34,559,558
Basic	$	(1.30)	$	0.12	$	0.41

Diluted income (loss) per share calculation:
Net income (loss) attributable to Envestnet, Inc	$	(55,567)	$	4,436	$	14,174

Basic number of weighted-average shares outstanding		42,814,222		36,500,843		34,559,558
Effect of dilutive shares:
Options to purchase common stock		—		1,700,248		2,165,808
Unvested restricted stock units		—		185,782		152,233
Diluted number of weighted-average shares outstanding		42,814,222		38,386,873		36,877,599
Diluted	$	(1.30)	$	0.12	$	0.38

Securities that were anti-dilutive and therefore excluded from the computation of diluted earnings per share are as follows:


	At December 31,
	2016	2015	2014
Options to purchase common stock	3,033,194	297,343	—
Unvested restricted stock units	1,894,759	210,233	90,792
Ungranted unvested restricted stock units related to Upside	—	132,384	—
Convertible Notes	2,743,321	2,743,321	2,743,321
Total	7,671,274	3,383,281	2,834,113