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COMMON STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY
 9 Months Ended
Sep. 30, 2023
Equity [Abstract]  
COMMON STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY
NOTE 13: COMMON STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY
Preferred Stock
As of September 30, 2023, no terms of the preferred stock were designated and no shares of preferred stock were outstanding.
Common Stock
We have three authorized classes of common stock: Class A, Class B, and Class C. Holders of our Class A common stock are entitled to one vote per share on all matters to be voted upon by our stockholders, holders of our Class B common stock are entitled to 10 votes per share on all matters to be voted upon by our stockholders and, except as otherwise required by applicable law, holders of our Class C common stock are not entitled to vote on any matter to be voted upon by our stockholders. The holders of our Class A common stock and Class B common stock vote together as a single class, unless otherwise required by our Amended and Restated Certificate of Incorporation (our “Charter”) or applicable law.
Warrants
As of September 30, 2023, warrants outstanding consisted of warrants to purchase 14.3 million shares of Class A common stock with a strike price of $26.60 per share. The warrants expire on February 12, 2031 and can be exercised with cash or net shares at the holder’s option. In aggregate, the maximum purchase amount of all warrants is $380 million. As of September 30, 2023, the warrants have not been
exercised and are included as a component of additional paid in capital on the unaudited condensed consolidated balance sheets.
Share Repurchase and Retirement
On August 30, 2023, we entered into a Share Purchase Agreement (the “Share Purchase Agreement”) with the United States Marshal Service (the “USMS”), for and on behalf of the United States, pursuant to which we agreed to repurchase 55,273,469 shares of the Company's Class A common stock from the USMS for $10.96 per share. The transaction closed on August 31, 2023. We repurchased, and subsequently retired, all of the shares for an aggregate amount of $608 million, recorded entirely in additional paid-in capital on the unaudited condensed consolidated balance sheet in absence of retained earnings, which included $2 million in transaction costs. As of September 30, 2023, we have accrued $3 million, also recorded in additional paid-in capital, related to the 1% excise tax on net share repurchases as a result of the Inflation Reduction Act of 2022.
Equity Incentive Plans
Amended and Restated 2013 Stock Plan and 2020 Equity Incentive Plan
Our Amended and Restated 2013 Stock Plan, as amended (the “2013 Plan”), and our 2020 Equity Incentive Plan, as amended (the “2020 Plan”), provided for share-based awards to eligible participants, granted as incentive stock options (“ISOs”), non-statutory stock options (“NSOs”), restricted stock units (“RSUs”), stock appreciation rights (“SARs”) or restricted stock awards (“RSAs”). Our 2013 Plan was terminated in connection with adoption of our 2020 Plan, and our 2020 Plan was terminated in connection with the adoption of our 2021 Omnibus Incentive Plan (the “2021 Plan“) but any awards outstanding under our 2013 Plan and 2020 Plan remain in effect in accordance with their terms. Any shares that were or otherwise would become available for grant under the 2013 Plan or 2020 Plan will be available for grant under the 2021 Plan. No new awards may be granted under our 2013 Plan or 2020 Plan.
2021 Omnibus Incentive Plan
Our 2021 Plan became effective on July 27, 2021, and provides for the grant of share-based awards (such as options, including ISOs and NSOs, SARs, RSAs, RSUs, performance units, and other equity-based awards) and cash-based awards.
As of September 30, 2023, an aggregate of 405 million shares had been authorized for issuance under the 2013 Plan, 2020 Plan, and 2021 Plan, of which 122 million shares had been issued under the plans, 82 million shares were reserved for issuance upon the exercise or settlement of outstanding equity awards under the plans, and 201 million shares remained available for new grants under the 2021 Plan.
Time-Based RSUs
We grant RSUs that vest upon the satisfaction of a time-based service condition (“Time-Based RSUs”). The following table summarizes the activity related to our Time-Based RSUs for the nine months ended September 30, 2023, which is the period we grant our company-wide annual refresh grants:
Number of RSUsWeighted- average grant date fair value
Unvested at December 31, 202256,116,782 $18.55 
Granted22,985,696 9.80 
Vested(23,319,956)13.63 
Forfeited(10,788,897)20.06 
Unvested at September 30, 202344,993,625 $15.05 
Market-Based RSUs
In 2019 and 2021, we granted to our founders RSUs under which vesting is conditioned upon both the achievement of share price targets and the continued employment by each recipient over defined service periods (“Market-Based RSUs”).
In February 2023, we cancelled the 2021 Market-Based RSUs of 35.5 million unvested shares (the “2021 Founders Award Cancellation”). We recognized $485 million share-based compensation (“SBC”) expense related to the cancellation during the nine months ended September 30, 2023, which was included in the general and administrative expense in our unaudited condensed statement of operations. No further expense associated with these awards was recognized after the cancellation. No other payments, replacement equity awards or benefits were granted in connection with the cancellation.
The following table summarizes the activity related to our Market-Based RSUs for the nine months ended September 30, 2023:
Eligible to Vest(1)
Not Eligible to Vest(2)
Total Number of RSUsWeighted- average grant date fair value
Unvested at December 31, 2022806,858 57,650,926 58,457,784 $23.67 
Granted— — — 
Vested(345,796)— (345,796)2.34 
Cancelled— (35,520,000)(35,520,000)22.68 
Unvested at September 30, 2023461,062 22,130,926 22,591,988 $25.55 
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(1)Represents RSUs that became eligible to vest upon achievement of share price targets and vest upon satisfaction of time-based service requirements.
(2)Represents RSUs that have not yet become eligible to vest because share price targets have not yet been achieved.
Share-Based Compensation
The following table presents SBC on our unaudited condensed consolidated statements of operations for the periods indicated:
Three Months Ended
September 30,		Nine Months Ended
September 30,
(in millions)2022202320222023
Brokerage and transaction$2 $2 $4 $6 
Technology and development 25 51 166 161 
Operations — 3 5 6 
Marketing— 1 3 3 
General and administrative83 26 316 614 
Total(1)(2)
$110 $83 $494 $790 
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(1) For the three and nine months ended September 30, 2023, SBC expense primarily consisted of $10 million and $563 million related to Market-Based RSUs and $70 million and $218 million related to Time-Based RSUs, compared to $79 million and $245 million and $27 million and $235 million for the same periods in the prior year.
(2) The April 2022 Restructuring and the August 2022 Restructuring resulted in a net reduction of $24 million and $53 million in SBC expense, which was recognized in the three months ended June 30, 2022 and September 30, 2022. Both reductions were substantially all related to Time-Based RSUs. The net reductions were primarily recognized in technology and development expense, $16 million and $22 million, and general and administrative expense, $6 million and $28 million.
We capitalized SBC expense related to internally developed software of $5 million and $12 million during the three and nine months ended September 30, 2023 and $4 million and $21 million during the three and nine months ended September 30, 2022.
As of September 30, 2023, there was $0.5 billion of unrecognized SBC expense that is expected to be recognized over a weighted-average period of 1.1 years.