We continue to anticipate free cash flow for the year to be $2.35 billion to $2.45 billion, in line with prior guidance.

In the fourth quarter, we expect to generate net revenue of $2.02 billion to $2.17 billion, and we anticipate non-GAAP EPS in the range of $0.39 to $0.41.

In summary, it’s been a very busy quarter at eBay. We met our revenue guidance and exceeded EPS guidance despite a strengthening dollar and a tough consumer spending environment. We generated $543 million in free cash flow. We continued to take bold actions in our core eBay business by reducing up-front fees on fixed price, a format that consumers increasingly prefer. We continue to invest in our higher growth platforms -- classifieds, PayPal merchant services, advertising and Stub Hub, which combined grew by 55% in the quarter and we intend to strengthen our portfolio with the acquisitions of DBA and Bill Me Later, acquisitions that are expected to extend our leadership positions in classifieds and at PayPal.

We are lowering our outlook for the fourth quarter in light of the strengthening U.S. dollar, a weak consumer spending environment, and dilution from recently announced acquisitions. However, we are confident in our priorities as we focus our efforts on making it easier and safer for our customers. While we will take more time than we expected, we are confident in our ability to ultimately stimulate GMV growth in our marketplace business.

And now we’d be happy to answer your questions. Operator.

Question-and-Answer Session

Operator

Thank you. If anyone does have a question you can signal at this time by pressing “*1” on your touchtone telephone. If you are on a speakerphone, please make sure your mute function has been turned off to allow your signal to reach our equipment. Once again, if you do have a question, please press “*1” on your touchtone telephone at this time. We’ll pause for just a moment. Once again that is “*1” to ask a question. Our first question comes from James Mitchell with Goldman Sachs.

James Mitchell - Goldman Sachs

Great. Thank you for taking my question. Your fourth quarter guidance seems to imply really no Christmas, which is kind of consistent with my expectations for my own lack of compensation but putting that to one side, do you see the economic cyclicality hurting the marketplace business or do you also see some impact on the PayPal business? And then on slide 18, I think, you referred to more marketing dollars as part of the reason for the earnings guidance revision for the fourth quarter. I think year-to-date, your marketing spend is sort of tracking flat to down. Do you see that turning around sharply in the fourth quarter? Thank you.

Robert H. Swan

Thanks James. First regarding economic cyclicality, you know, what we saw during the course of the second quarter, first I’ll kind of characterize external signs and then internally how it impacted our business. We saw a fairly sharp deceleration in retail sales, in vehicle sales during the course of the quarter. Merchant services, which has a pretty good visibility into what’s going on in e-commerce overall decelerated during the course of the third quarter. And then fourth, e-commerce growth rates -- here in the U.S., we don’t have as good data outside the U.S. but here in the U.S. decelerated rather sharply Q2 to Q3. We felt the effects of that across all aspects of our business. While PayPal had a very strong quarter, it did suffer from decelerating growth rates really starting in the second and third week of August as it exited the third quarter and we expect those dynamics to impact our business in the fourth quarter.

In terms of the question on guidance and marketing spend, we have generated some improvements in our overall marketing spend during the course of the year. We were 400 basis points down in the third quarter; however, as you will remember, we are spending more on buyer retention kind of programs versus acquisition-related programs, through couponing and loyalty programs, and those dollars are impacting revenue in terms of contra revenue as opposed to marketing expense.

We expect in the fourth quarter in this tougher economic environment that we will be spending even more marketing dollars as a percent of revenue than we did in the third quarter that will impact both contra revenue and our marketing -- our sales and marketing expense as a percent of total.

John J. Donahoe

James, it’s John here. The way we are going to spend that is to really fight for our sellers. We envision a tough holiday season and we feel a strong need to get out there and help drive demand on behalf of our sellers, so we’ll increase Internet marketing, we’ll increase our couponing, we’ll increase our cash-back program with Microsoft, promotions, things that we have proven ability to generate returns from.

Mark Rowen

Next question please.

Operator

Before we take our next question let me remind our audience please limit yourself to one question. If you need to ask a follow up please re-queue. Next we’ll hear from Youssef Squali from Jefferies.