Investors had low expectations heading into eBay's (EBAY 0.32%) fourth-quarter earnings release last week. While integrated e-commerce giants like and Walmart have been enjoying robust sales growth, the online marketplace has struggled with losses, in part due to state tax law changes that effectively raised prices on many of its products.

Last week, eBay announced results that did little to change that overall weak operating picture. The company also projected another year of sluggish growth, but robust cash generation.

Let's dive right in and see what the report had to say.

A woman shops using a smartphone.

Image source: Getty Images.

Sales trends weakened

eBay remained a powerful force in e-commerce during the holiday season, with its marketplace ranking second in online retailing traffic. Yet the business failed to improve on the weak operating trends that shareholders witnessed through most of 2019. Growth in its buyer pool fell to just 2%, in fact, after having held at 4% through the last four quarters.

Sales volumes declined in both the U.S. and international segments, too, with the 8% domestic slump representing a new low. On a global basis, organic growth slowed to 1%, versus 3% in the prior quarter and 5% a year ago. Major pressures included the rollout of new state tax collection requirements and eBay's decision to scale back on inefficient marketing channels.

On the bright side, the company achieved good growth in its promoted listings program and its payments processing. These wins offset the falling sales volumes to keep revenue inching higher.

Solid profit trends

The news was better on the financial side of the business. eBay managed to reach its profitability goal for the year, with operating margin ticking up to 29.3% of sales from 29.2%. That success was supported by steadily increasing seller fees as the company capitalized on its many improvements to the selling experience.

Cost cuts played a big role, too, with marketing expenses diving to 28% of sales in Q4 compared with 32% a year ago. "I am proud of how well our teams have executed," interim CEO Scott Schenkel said in a press release, "and the innovative solutions we have provided for our buyers and sellers." Executives also highlighted the fact that eBay's robust cash flow supported the return of $5.5 billion to shareholders through stock buybacks and dividend payments.

A busy year ahead

eBay is still hunting for a permanent CEO to lead the company through its next growth phase, and investors can count on its $4 billion sale of StubHub to close around mid-2020. In the meantime, the tech giant's operating outlook is conservative. The company predicts organic growth between 1% and 3%, which implies continued struggles with negative volumes, especially in the U.S. market.

Its financial outlook is a testament to its efficient, asset-light sales model. Earnings are projected to rise by 4% to 8% this year as eBay generates around $2.3 billion of free cash flow representing over 20% of its revenue base.

Those metrics, plus the extra cash raised from its StubHub sale, will give management plenty of resources it can direct toward the business and to stock buybacks and special dividends. But investors aren't likely to gain confidence in this stock until they see concrete signs of stabilizing volume trends in the core marketplace business.