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PayPal Stock Surges on OpenAI Partnership. Oh Yeah, It Reported Earnings, Declares Dividend, Too.

Oct 28, 2025 07:01:00 -0400 by Mackenzie Tatananni | #Fintech #Earnings Report

PayPal Holdings reported adjusted earnings and net revenue that topped expectations in its third quarter. (Photograph David Paul Morris/Bloomberg)

Key Points

PayPal Holdings topped Wall Street’s expectations for earnings and revenue in the third quarter and raised its guidance for the year, citing “broad-based profitable growth” across its various lines of business.

There was even more to digest from Tuesday’s report, including a dividend and a partnership with OpenAI.

Shares of PayPal rose 12% to $78.38, on pace for its largest same-day percentage increase since July 27, 2022, according to Dow Jones Market Data. Fintech peers Affirm Holdings and Block traded mixed—Affirm fell 1.8% and Block rose 0.9%.

PayPal’s latest results broadly beat projections. Adjusted earnings of $1.34 a share topped analysts’ calls for $1.20 a share. Net revenue grew 6% to $8.4 billion, surpassing the $8.2 billion Wall Street had expected.

Total payment volume, corrected for foreign exchange effects, grew 7% to $458.1 billion in the quarter. The metric is seen as a representation of the company’s ability to monetize its platform.

Branded experiences, a category that comprises online branded checkout as well as in-store payment methods like debit and tap-to-pay, made up 31% of total payment volume in the quarter.

Online-only branded checkout volume increased 5% “despite mixed global macro trends.” No surprises there: PayPal told investors earlier this month to expect another quarter of mid-single-digit growth.

There were some blemishes. Payment transactions declined 5% to 6.3 billion in the quarter. Excluding payment service provider transactions, or unbranded card processing transactions and accounts, this metric increased 7%.

Similarly, payment transactions per active account, recorded on a trailing 12-month basis, fell 6% to 57.6. The metric rose 5% excluding PSP transactions.

The declines are evidence of PayPal’s focus on higher-value volume rather than transaction count as part of its “price to value” strategy. Lower revenue and lower-volume transactions are a trade-off for better transaction margin dollars.

Coming into earnings, PayPal shares were down 17% this year, reflecting concerns about the company’s stagnation over the past few years as investors wait for a meaningful improvement in fundamentals.

Management recognizes this. CEO Alex Chriss, who took the helm in 2023, is piloting a turnaround strategy that involves doing away with low-profit, unbranded businesses.

The company noted that growth was “coming from more diversified and profitable drivers than in the past,” stressing the impact of Venmo and PSP profitability on the makeup of its performance.

PayPal boosted its full-year guidance, saying it now expects adjusted earnings in the range of $5.35 to $5.95 a share, up from $5.15 to $5.30 previously. Analysts were looking for $5.25 a share.

The company also expects transaction margin dollars of $15.45 billion to $15.55 billion, up slightly from $15.35 billion to $15.5 billion. The range still represents roughly 5% to 6% growth.

J.P. Morgan noted that transaction margin dollar growth in the quarter was partially offset by higher transaction losses, which were probably because of an outage in Germany at the end of August.

Along with its financial results, PayPal declared a cash dividend of 14 cents a share, which will be payable on Dec. 10 to stockholders of record as of Nov. 19. The amount represents a targeted payout ratio of 10% of adjusted net income.

Also on Tuesday, the company unveiled a collaboration with OpenAI that will allow users to check out through ChatGPT using PayPal. The company will also support payment processing for merchants who use OpenAI’s Instant Checkout feature.

The collaboration is part of a broader push into “building for an agentic future,” Chriss said.

It’s unclear whether the latest results will assuage analysts’ concerns. Citi Research initiated coverage on shares of PayPal at Neutral last week. Industry peers Mastercard, Visa , and Affirm Holdings, meanwhile, received Buy ratings.

The Citi analysts said that PayPal’s two-sided network and strong brand “make it a key player in the payment ecosystem.” However, branded growth continues to be “the key metric to watch,” Citi wrote, noting that a meaningful improvement “has failed to materialize so far.”

Branded growth continues to be a sticking point. Shares tumbled on the heels of July’s otherwise strong second-quarter earnings report when branded checkout volumes came in softer than expected.

Certain hurdles remain. The company faces a challenging growth environment in Europe, specifically Germany, while the U.S.-China corridor “may also need more time to recalibrate upward following this year’s tariff changes,” analysts wrote.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com