PayPal raises earnings guidance after announcing OpenAI deal
The company reports 37% surge in Q3 transaction, credit losses to US$483m
[NEW YORK] PayPal Holdings raised its full-year earnings guidance and announced a tie-up with OpenAI to embed its digital wallet into ChatGPT, sending its shares soaring in early New York trading.
With consumers continuing to show spending strength, PayPal raised its 2025 adjusted earnings-per-share forecast to US$5.35 to US$5.39, up from the US$5.15 to US$5.30 it reported in July. The firm also announced a dividend programme that will pay 14 cents a share this quarter.
“This is a stronger company today than we were two years ago,” chief executive officer Alex Chriss said in a statement on Tuesday (Oct 28).
“With differentiated competitive advantages, clear strategic direction and building execution momentum, we believe we are exceptionally well-placed to win into the future.”
Shares of PayPal, which had slumped almost 18 per cent this year through Monday, surged 14 per cent in early New York trading.
Hundreds of millions of OpenAI users already use the startup’s generative artificial intelligence to find products, and the new tie-up will mean PayPal provides the payment technology to turn those searches into actual purchases.
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Third quarter
PayPal’s third-quarter transaction and credit losses exceeded analysts’ estimates, jumping more than 37 per cent from a year earlier to US$483 million, compared with the US$479 million expected.
Total payment volume beat expectations of US$450.3 billion, increasing 8 per cent to US$458.1 billion. Transaction margin US dollars, which represents how much the company earns from processing transactions after expenses, were US$3.87 billion.
During the period, the private credit firm Blue Owl Capital agreed to buy about US$7 billion of PayPal’s buy-now, pay-later loans over the next two years – another example of how the US$1.7 trillion private credit market continues to expand.
PayPal will handle all customer-facing activities for the loans, including underwriting and servicing, but will not have to hold the assets on its balance sheet. BLOOMBERG
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