eBay (EBAY -2.31%) is right on track. The online marketplace recently announced solid growth in its core businesses despite a slowdown compared to 2020.

In a conference call with Wall Street analysts, CEO Jamie Iannone and his team broke down those results and explained why they're optimistic about being able to send a flood of cash toward shareholders in 2021 and beyond. Here are three highlights from that presentation.

A smiling woman with her fists in the air sits behind a laptop screen.

Image source: Getty Images.

Staying on target

eBay's 11% sales growth edged past management's prior outlook that called for 8% to 10% revenue gains this quarter. Sure, several key growth metrics turned negative compared to the pandemic spike, including the change in the buyer pool, operating margin, and transaction volume. But executives cast the results in a wider time frame by highlighting organic growth, the slimmer portfolio, and gains in customer satisfaction.

"Our priorities [a year ago] were to grow the core, become the platform of choice for sellers, and to cultivate lifelong trusted relationships with buyers by turning them into enthusiasts," Iannone said. "To date our progress is very encouraging." eBay said it is seeing organic volume growth compared to 2019 while enjoying a lift from its new advertising and payments niches.

Returning more cash

eBay closed its deal to sell its classifieds business at a higher price than initially forecast. That success, plus other financial wins such as booming payments revenue and rising seller fees, has management extolling the benefits of the company's operating model.

"We saw another strong quarter of cash generation," CFO Steve Priest said. Free cash flow came in at a whopping 34% of revenue, up from 33% last quarter. Priest pointed out the "incredible durability of the financial model with ... best-in-class margins [and] incredible free cash flow."

Most of that extra cash is going straight to investors through stock buybacks and an increasing dividend payment.

Growth through the pandemic

The company's updated outlook calls for another growth slowdown in Q3, with sales volumes again falling at a double-digit rate. Management estimates that this will still mark a high-single-digit annual volume increase compared to 2019, before the pandemic scrambled demand trends. At the same time, eBay is benefiting from its growing advertising and payments niches, and from improvements to the platform that allow it to charge higher seller fees.

Overall, operating margin should land at 33% of sales this year, up nearly 2 percentage points since 2019.

Executives say they're even more excited about the company's long-term growth potential. Recent wins in attractive product areas like trading cards, luxury watches, and collectable sneakers provide a framework eBay can use in dozens of other niches.

Keeping buyers happy will be the key to achieving these wins, and that's why investors will want to watch customer satisfaction while following the long-term trend in buyer engagement. In the meantime, look for eBay to significantly ramp up its cash returns as it reallocates windfall gains from its recent divestments. The company is aiming to spend roughly $3.2 billion on stock repurchases over the next six months, compared to $1.7 billion in the first half of 2021.