PayPal announced on Tuesday that it had partnered with OpenAI, allowing ChatGPT users to buy products using the payment firm's wallet, sending its shares up 13% in premarket trading.
The company also raised its financial outlook for the year and announced its first-ever dividend in its 27-year history, signaling confidence in its cash generation and long-term profitability.
PayPal said the OpenAI partnership will connect its global merchant network to ChatGPT, allowing users to sell within the wildly popular generative AI tool.
AI shopping tools are emerging as the next big shift in online retail, as they can autonomously research, compare and purchase products for consumers.
These tools act as digital assistants by understanding user preferences, setting budgets, evaluating reviews and tracking prices over time.
"By partnering with OpenAI and adopting the Agentic Commerce Protocol, PayPal will power payments and commerce experiences that help people go from chat to checkout in just a few taps for our joint customer bases," PayPal CEO Alex Chriss said in a statement.
PayPal said it now expects full-year adjusted EPS between $5.35 and $5.39, versus $5.15 to $5.30 earlier. Analysts had projected $5.24, according to estimates compiled by LSEG.
Its board approved a quarterly dividend of 14 cents per share, representing a targeted payout ratio of 10% of adjusted profit.
The company has overhauled its business under CEO Alex Chriss in recent years by prioritizing profitability over aggressive revenue growth.
Once a pandemic-era favorite, PayPal experienced a downturn as consumers returned to physical stores and spending patterns stabilized, prompting the company to focus on high-margin businesses and cost-cutting measures.
Payment volumes have remained resilient as consumers continue to spend despite inflationary pressures and an uneven economic environment, highlighting the durability of the company's core business.
PayPal posted total payment volume growth of 7% on a FX-neutral basis to $458.1 billion.
