eBay (NASDAQ:EBAY) investors had pushed the stock higher in recent months on hopes that the e-commerce giant might achieve an operating rebound or announce a flood of direct cash returns as part of its restructuring plan. The clarity that shareholders were seeking on these two points did not appear in the company's third-quarter earnings report.

Instead, eBay's core growth trends worsened slightly in the third quarter while management delayed a decision on what to do with the StubHub and classified business segments.

Let's jump right in.

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Sales growth

eBay's intermediary role in online selling ensures that sales gains are well below the double-digit growth that fully integrated rivals like Amazon.com and Walmart enjoy. Yet growth was sluggish even by eBay's standards.

Sales volumes sank by 6% in the U.S. market and ticked higher by just 1% internationally. Each of those metrics was among the worst that eBay has reported in the past year. Combined, the marketplace delivered 3% lower volume this quarter compared to a flat result in each of the prior four quarters. For context, Walmart's e-commerce segment jumped 37% in the most recent quarter.

The U.S. struggle wasn't a surprise. Executives pointed out back in July that state tax law changes are pressuring results and that this headwind was likely to accelerate through the rest of the year. eBay executives weren't shocked to see international growth slow for a fourth consecutive quarter, either. "We performed in line with expectations," interim CEO Scott Schenkel said in a press release, "while improving the marketplace experience ... and maintaining momentum in advertising and payments."

Bright spots

eBay's capital-light selling model continued to shine, with operating expenses falling as a percentage of sales. Cash flow was strong at $1 billion, and operating margin landed at 27% compared to roughly 4% for Walmart and 6% for Amazon. These successes gave management plenty of resources it could direct toward improving the selling infrastructure, returning cash to shareholders, and paying down debt.

The company announced more encouraging metrics on the small but important payments processing and advertising businesses. On payments, the addressable market continues to grow following a successful launch into Germany, its second market. The ad business more than doubled as sellers paid for over 300 million promoted listings.

Looking ahead

eBay affirmed its full-year outlook that calls for organic growth of 2% to 3%, including a roughly flat result during the critical fourth quarter. Management had positive things to say about profitability, both in the short term and over the next few years, as an efficiency program is likely to push operating margin closer to 30% of sales by 2022.

Yet investors will have to wait for signs of a stronger sales uptick, and for updates on the tech stock's attempts to sell or spin off the StubHub and Classifieds business. Management is still reviewing the options here and expects to have an update before eBay announces its fourth-quarter results in early 2020. Any move to part with these non-core segments will likely add to the company's already strong cash position, but it's not clear yet what that will mean for direct shareholder returns or for eBay's earnings power.

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