PayPal (PYPL) reported strong third-quarter results for fiscal year 2025, surpassing Wall Street expectations on both revenue and earnings. However, the highlight of the report wasn’t purely financial — it was strategic: the announcement of a groundbreaking partnership with ChatGPT, marking PayPal’s official entry into the fast-expanding world of AI-powered payments.

Financial Performance: Efficiency and Profitability

Revenue for the quarter reached $8.4 billion, up 7% year over year, exceeding analyst forecasts by $170 million. Adjusted earnings per share came in at $1.34, above the $1.20 consensus estimate. Net income rose to $1.3 billion, while management raised full-year EPS guidance to $5.37.

Gross margin expanded to 41%, reflecting improved operational efficiency and cost control. Transaction-based revenues remained the primary growth driver, supported by increased merchant adoption and product diversification.

Activity Metrics: Growing Volume, Lower Engagement

Total Payment Volume (TPV) climbed 8% year over year to $458 billion, demonstrating the strength of PayPal’s global network. Active accounts rose modestly to 438 million, but transactions per active user fell by 6%, suggesting that engagement remains a key challenge.

Despite this, the company continues to show resilience, leveraging scale and technology to sustain growth across its ecosystem.

Strategic Shift: Integrating with ChatGPT

The most significant announcement came with PayPal’s agreement to embed its digital wallet directly into ChatGPT. This integration will allow users to make payments, purchases, and subscriptions seamlessly within the AI platform, without switching apps or systems.

The move signals PayPal’s evolution into the AI era — positioning it not just as a payment processor but as a core enabler of intelligent digital transactions.