eBay (NASDAQ:EBAY) isn't being left out of the e-commerce rally. Yes, the online marketplace's sales volumes aren't soaring like Amazon.com's (NASDAQ:AMZN). But eBay's holiday-quarter earnings report still showed a significant improvement in its growth rate while pointing to more acceleration ahead.

The company also demonstrated how its marketplace approach can deliver far higher profits than vertically integrated e-commerce retailers can hope for.

With that bigger picture in mind, let's take a closer look at eBay's latest results.

Keeping buyers and sellers happy

eBay added 2 million active buyers to its global base of engaged users. That translated into a healthy 5% increase and marked the fourth straight quarter of 5% gains on this metric following the prior year's 4% uptick.

A man enters his credit card information into a laptop.

Image source: Getty Images.

Sellers followed those buyers onto the platform over the holidays, and together their transactions produced a record quarter for the marketplace. Sales volumes spiked 8% in the U.S. market and 6% in the international geographies that make up 60% of eBay's business. Overall volume rose 7%. While that was far below the 38% spike Amazon recently posted, it was a great result for eBay, matching the marketplace's best expansion rate in over a year.

Other highlights

eBay's other businesses chipped in solid growth, too. StubHub managed a 15% spike in volume on strength across ticket sales for concerts and sporting events. That jump followed a 2% increase in the prior quarter and a 5% drop in the fiscal second quarter, which suggests management has made good progress at getting this segment back on track. Classified platforms also enjoyed their fastest gains in over a year, with sales up 21% to over $244 million .

A shipping supervisor surveys boxes to be sent.

Image source: Getty Images.

The company's take rate, or the percentage fee that it charges sellers for completed transactions, dipped slightly in both the StubHub and the core marketplace segments. StubHub's fee fell to 21.4% from 23.5% last quarter, and the marketplace rate ticked down to 7.5% from 7.8%. Volatility is nothing to worry about in these fees, but it will be worth watching whether the take rate strengthens again in the coming quarters or keeps trending lower. Ideally the business can manage healthy sales volume growth in the context of steady or expanding take rate fees.

Finances and outlook

eBay's asset-light operating model produced impressive financial wins over the holiday season. The $796 million of free cash flow it generated was a whopping 30% of its sales base. Operating margin trounced the comparable figure from its vertically integrated, and faster-growing, peers. At 30% of sales, eBay is far more profitable than Amazon and its 2% operating margin.

eBay forecasts that this market-crushing profitability will tick down a bit, falling to 28% of sales in 2018 because of targeted investments in the business. More importantly, the sales growth rebound is expected to continue.

CEO Devin Wenig and his executive team predict that currency-neutral revenue gains will stop at 8% this year, up from 7% in 2017 and 6% in the prior year. eBay again expects to turn a huge portion of its revenue into cash, with $2.2 billion of free cash flow likely on the way for the full year. That forecast implies improving market share trends and strengthening finances, and so investors understandably celebrated the results by sending shares higher immediately following the quarterly announcement.

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