Zynga 2015 Annual Report Download - page 107

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Table of Contents
11. Net Income (Loss) Per Share of Common Stock
We compute net income (loss) per share of common stock using the two-class method required for participating securities. Prior to the date of the initial
public offering, we considered all series of our convertible preferred stock to be participating securities due to their non-cumulative dividend rights. Additionally,
we consider shares issued upon the early exercise of options subject to repurchase and unvested restricted shares to be participating securities, because holders of
such shares have non-forfeitable dividend rights in the event we declare a dividend for common shares. In accordance with the two-class method, net income
allocated to these participating securities, which include participation rights in undistributed net income, is subtracted from net income (loss) to determine total net
income (loss) to be allocated to common stockholders.
Basic net income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of
common shares outstanding during the period. In computing diluted net income (loss) attributable to common stockholders, net income (loss) is re-allocated to
reflect the potential impact of dilutive securities, including stock options, warrants, unvested restricted stock and unvested ZSUs. Diluted net income (loss) per
share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding, including
potential dilutive securities. For periods in which we have generated a net loss or there is no income attributable to common stockholders, we do not include stock
options, warrants and unvested ZSUs in our calculation of diluted net income (loss) per share, as the impact of these awards is anti-dilutive.
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