Shares of PayPal Holdings Inc. (NASDAQ:PYPL) surged more than 15% in premarket U.S. trading on Tuesday after the digital payments company announced a major partnership with OpenAI to integrate its wallet directly into the ChatGPT platform.
The announcement, first reported by CNBC, came just hours before PayPal released its latest quarterly results and raised its full-year earnings outlook.
Under the deal, finalized over the weekend, users will be able to complete purchases for items discovered within ChatGPT using PayPal’s digital wallet, CNBC said. PayPal CEO Alex Chriss told CNBC that, starting next year, PayPal users will be able to buy goods through ChatGPT, while merchants will also gain the ability to sell their products directly on the platform.
In a statement, PayPal said the partnership will create “a platform for tens of millions of small businesses and the largest brands in the world to sell within ChatGPT.”
The company, which is seeking to cement its role in a future AI-powered commerce ecosystem, will handle merchant routing, payment validation and “orchestration behind the scenes” of transaction processing for sellers using ChatGPT.
As part of the collaboration, PayPal will also broaden its AI strategy by purchasing access to ChatGPT’s enterprise services for more than 24,000 of its employees, the company noted.
The news accompanied a stronger-than-expected third-quarter earnings report. PayPal posted adjusted earnings per share of $1.34, beating consensus estimates compiled by Bloomberg L.P., helped by a solid increase in total payment volume. Net revenue came in at $8.42 billion, exceeding forecasts.
Transaction margin dollars — a key profitability metric measuring earnings after direct costs per transaction — climbed 5.9% year-on-year to $3.87 billion, above the $3.78 billion analysts had anticipated.
Given “another strong quarter,” Chriss said, PayPal raised its full-year earnings guidance. Adjusted EPS is now expected between $5.35 and $5.39, up from the previous range of $5.15 to $5.30 and above Bloomberg’s consensus of $5.25.
Full-year transaction margin dollars are now projected at $15.45 billion to $15.55 billion, slightly above prior estimates.
In another key move, PayPal’s board approved the launch of a quarterly cash dividend program and declared an initial dividend of $0.14 per share, payable on December 10 to shareholders of record as of November 19.
“The Company intends to pay a cash dividend on its common stock on a quarterly basis going forward, subject to and contingent upon market conditions and approval by the Board in its sole discretion,” PayPal said in the statement.