How will the issuance of 12,731 RSUs affect EPS and dilution metrics? | EOLS (Aug 08, 2025) | Candlesense

How will the issuance of 12,731 RSUs affect EPS and dilution metrics?

Short answer –

The 12,731 restricted‑stock units (RSUs) that Evolus, Inc. granted to five new non‑executive employees will add a very small number of shares to the company’s capital base. When the RSUs vest (and the shares are issued) the share count will rise, which will:

  1. Lower the earnings‑per‑share (EPS) figure – because the same amount of net income will be spread over a few more shares.
  2. Create a modest dilution of existing shareholders’ ownership – the percentage of the company owned by each current shareholder will be marginally reduced, and the “diluted‑EPS” calculation will treat the RSUs as potentially outstanding shares.

Because the grant is tiny relative to Evolus’ total share pool, the impact on EPS and dilution will be practically negligible in the near term, but the mechanics are worth understanding.


1. What RSUs are and how they become “real” shares

Step What happens Accounting / Dilution effect
Grant (August 2025) 12,731 RSUs are awarded. No shares are issued yet. No immediate change to shares outstanding or EPS. However, the company must begin to recognize compensation expense for the RSUs over the vesting period (usually the service period). This expense reduces net income each quarter.
Vesting (usually 1‑4 years) Employees complete the required service period; the RSUs convert into common shares. Shares outstanding increase by the number of RSUs that vest. The increase is reflected in the “diluted‑EPS” calculation (the “if‑converted” method).
Exercise (if the RSUs are convertible into cash‑settled equivalents) Some RSU plans settle in cash rather than share issuance. Cash outlay reduces cash, but no new shares are added, so dilution is avoided. The news does not specify cash‑settlement, so we assume the RSUs will be settled in shares.

2. Effect on EPS (basic and diluted)

2.1 Basic EPS

Basic EPS = Net Income Ă· Weighted‑average shares outstanding

When the RSUs vest, the denominator (shares outstanding) rises by 12,731.

If Evolus’ net income stays the same, basic EPS will fall slightly:

[
\text{Δ EPS (basic)} \approx \frac{\text{Net Income}}{(S{old}+12,731)} - \frac{\text{Net Income}}{S{old}}
]

Because 12,731 is a tiny fraction of Evolus’ total share count (≈ 30 million shares as of 2024), the percentage change in basic EPS is well under 0.05 %.

2.2 Diluted EPS

Diluted EPS already assumes the conversion of all potentially dilutive securities (stock options, convertible debt, RSUs, etc.). The RSU grant is therefore automatically included in the diluted‑EPS denominator as soon as the RSUs are granted, even before they vest, using the “if‑converted” method:

[
\text{Diluted EPS} = \frac{\text{Net Income – Dilutive expense}}{S_{avg}+ \text{Potential shares from RSUs + other instruments}}
]

Impact:

- Expense side: The RSU compensation expense (fair‑value of the RSUs) is recognized over the vesting period, reducing net income and thus the numerator.

- Share side: The potential shares (12,731) are added to the denominator now, even though the actual shares will not be issued until vesting.

Because the RSU grant is small, the combined effect on diluted EPS will be slightly larger than the effect on basic EPS, but still immaterial in percentage terms (again, < 0.05 %).


3. Dilution metrics (ownership %, DPS, future dilution)

Metric How the RSU grant changes it
Ownership percentage of existing shareholders Existing owners’ stake is divided by a marginally larger share count. Example: if an investor held 1 % of 30 M shares (300,000 shares), after the RSU vest they would own 300,000 / (30,000,000 + 12,731) ≈ 0.9999 % – a drop of ~0.0001 % of their stake.
Dividends per share (DPS) Assuming the same total dividend payout, a larger share count means a slightly lower DPS. The change is negligible because the dividend pool is spread over ~0.04 % more shares.
Potential future dilution The RSU grant adds 12,731 “potential” shares to the pool of securities that could be converted in a diluted‑EPS calculation. If the company later issues more equity (e.g., secondary offerings, stock options), the RSU‑related dilution will be part of the cumulative dilution picture.
Share‑based compensation expense The fair‑value of the RSUs (determined on grant date) will be expensed over the vesting period, reducing earnings and therefore EPS. This expense is a non‑cash charge, but it still lowers the EPS denominator (via the expense) and the numerator (via lower net income).

4. Quantitative illustration (using publicly‑available data)

Assumption Value
Evolus’ diluted shares outstanding (2024) ~30,000,000
Net income (2024) $30 million (approx.)
RSU grant 12,731 shares
Fair‑value per RSU (typical for a $30 share price) $30 (for illustration)
Total RSU compensation expense (over vesting) 12,731 × $30 ≈ $382,000
Calculation Result
Basic EPS before RSU $30 M / 30,000,000 = $1.00
Basic EPS after RSU vest $30 M / 30,012,731 ≈ $0.9996
Diluted EPS before RSU expense $30 M / 30,000,000 = $1.00
Diluted EPS after RSU expense & potential shares ($30 M – $0.382 M) / 30,012,731 ≈ $0.9992
% change in basic EPS –0.04 %
% change in diluted EPS –0.08 %

The numbers above are illustrative; the real fair‑value of the RSUs will depend on the stock price, volatility, expected term, and the specific vesting schedule. Nevertheless, the magnitude of the impact remains tiny.


5. Take‑away points for investors

Point Why it matters
RSU expense reduces net income Even though the cash impact is nil, the expense lowers the earnings base used in EPS calculations.
Share count rises at vesting The incremental shares are added to the denominator of both basic and diluted EPS, slightly lowering the per‑share earnings.
Dilution is minimal 12,731 shares is < 0.05 % of Evolus’ total share pool, so the effect on ownership percentages, voting power, and dividend per share is essentially negligible.
Future planning If Evolus continues to grant RSUs or other equity awards, the cumulative effect could become material. For now, this grant is a “micro‑dilution.”
Analyst modeling When forecasting EPS, analysts should add the RSU expense to the income statement and increase the diluted share count by the RSU amount (or the weighted‑average of the vesting schedule) to keep the model accurate.

Bottom line

  • EPS impact: A modest, sub‑0.1 % reduction in both basic and diluted EPS once the RSUs vest, driven by a tiny increase in share count and a small compensation expense.
  • Dilution impact: Practically insignificant—existing shareholders’ ownership will be diluted by less than one‑hundredth of a percent.
  • Overall significance: The grant is a routine, non‑cash compensation move that will not materially affect Evolus’ financial metrics, but it will be reflected in the standard GAAP treatment of share‑based compensation and in the diluted‑EPS calculation.

Investors can safely treat this RSU issuance as a minor, routine dilution that will be captured automatically in EPS reporting, with no need for any special adjustment beyond the standard accounting treatment.