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Share-Based Awards | 9 Months Ended
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Sep. 30, 2023
Share-Based Payment Arrangement [Abstract] |
Share-Based Awards | Share-Based Awards In addition to the option awards and restricted stock units typically granted under the Zillow Group, Inc. 2020 Incentive Plan (the “2020 Plan”) which vest quarterly over four years, during the first quarter of 2023, the Compensation Committee of the Board approved option and restricted stock unit awards granted under the 2020 Plan in connection with the 2022 annual review cycle that vest quarterly over three years. The exercisability terms of these equity awards are otherwise consistent with the terms of the option awards and restricted stock units typically granted under the 2020 Plan. For additional information regarding our share-based awards, see Note 16 in the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. On August 3, 2022, upon the recommendation of the Compensation Committee, the Board approved adjustments to the exercise price of certain outstanding vested and unvested option awards for eligible employees. The exercise price of eligible option awards was reduced to $38.78, which was the closing market price of our Class C capital stock on August 8, 2022. No other changes were made to the terms and conditions of the eligible option awards. We have accounted for the reprice of the eligible option awards as an equity modification whereby the incremental fair value attributable to the repriced option awards, as measured on the date of reprice, will be recognized as additional share-based compensation expense. The reprice impacted 7 million stock option awards, affected 3,348 employees and was expected to result in incremental share-based compensation expense of $66 million in total over the remaining requisite service period of the original awards. The weighted-average total fair value of options repriced in August 2022 was $67.58. Option Awards The following table summarizes option award activity for the nine months ended September 30, 2023:
| Number of Shares Subject to Existing Options (in thousands) |  | Weighted- Average Exercise Price Per Share |  | Weighted- Average Remaining Contractual Life (Years) |  | Aggregate Intrinsic Value (in millions)
Outstanding at January 1, 2023 | 28,598 |  |  | $ | 44.90 |  |  | 7.1 |  | $ | 15 |
Granted | 6,890 |  |  | 42.63 |  |  |  |  |
Exercised | (1,454) |  |  | 38.84 |  |  |  |  |
Forfeited or cancelled | (892) |  |  | 48.28 |  |  |  |  |
Outstanding at September 30, 2023 | 33,142 |  |  | 44.60 |  |  | 7.0 |  | 173 |
Vested and exercisable at September 30, 2023 | 19,802 |  |  | 44.96 |  |  | 5.8 |  | 113 |
The following assumptions were used to determine the fair value of option awards granted for the periods presented:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Expected volatility | 62% |  | 61% |  | 55% - 62% |  | 55% - 61%
Risk-free interest rate | 4.34% |  | 3.38% |  | 3.75% - 4.34% |  | 1.94% - 3.38%
Weighted-average expected life | 5.3 years |  | 5.0 years |  | 5.3 - 6.5 years |  | 4.5 - 6.0 years
Weighted-average fair value of options granted | $27.26 |  | $18.06 |  | $24.06 |  | $23.75
As of September 30, 2023, there was a total of $384 million in unrecognized compensation cost related to unvested option awards. Restricted Stock Units The following table summarizes activity for restricted stock units for the nine months ended September 30, 2023:
| Restricted Stock Units (in thousands) |  | Weighted-Average Grant Date Fair Value
Unvested outstanding at January 1, 2023 | 10,930 |  |  | $ | 46.85 |
Granted | 8,191 |  |  | 43.27 |
Vested | (4,675) |  |  | 45.96 |
Forfeited | (841) |  |  | 46.58 |
Unvested outstanding at September 30, 2023 | 13,605 |  |  | 45.01 |
As of September 30, 2023, there was a total of $557 million in unrecognized compensation cost related to unvested restricted stock units. Share-Based Compensation Expense The following table presents the effects of share-based compensation expense in our condensed consolidated statements of operations during the periods presented (in millions):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Cost of revenue | $ | 4 |  |  | $ | 5 |  |  | $ | 12 |  |  | $ | 12 |
Sales and marketing | 18 |  |  | 21 |  |  | 53 |  |  | 46 |
Technology and development | 42 |  |  | 57 |  |  | 123 |  |  | 123 |
General and administrative | 45 |  |  | 64 |  |  | 154 |  |  | 142 |
Impairment and restructuring costs | — |  |  | — |  |  | — |  |  | 2 |
Share-based compensation - continuing operations | 109 |  |  | 147 |  |  | 342 |  |  | 325 |
Share-based compensation - discontinued operations | — |  |  | 1 |  |  | — |  |  | 16 |
Total share-based compensation | $ | 109 |  |  | $ | 148 |  |  | $ | 342 |  |  | $ | 341 |

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