Gusto’s $1 Billion Revenue Milestone Signals Potential IPO
In an era where artificial intelligence is reshaping the software-as-a-service (SaaS) landscape, certain human resources technology firms are not only surviving but thriving. A prime example is Gusto, a 14-year-old company specializing in payroll services for small businesses. Recently, Gusto announced it has surpassed $1 billion in actual revenue over the past 12 months, a significant achievement that underscores its robust financial health and positions it favorably for potential public market entry.
A Closer Look at Gusto’s Financial Performance
Unlike many startups that report annualized recurring revenue (ARR)—a projection of future earnings based on current contracts—Gusto’s reported figure reflects actual revenue earned. This distinction highlights the company’s solid financial foundation. CEO and co-founder Josh Reeves revealed that Gusto has been cash flow positive for several years, with revenue growth accelerating over the past five quarters.
In June 2025, Gusto initiated a $200 million tender offer for its employees, valuing the company at approximately $9.3 billion. This valuation remains consistent with its early 2022 assessment, presenting a more conservative figure compared to competitors like Deel and Rippling. Deel, catering to large international businesses, reached $1 billion in ARR last year and was valued at $17.3 billion following a $300 million funding round co-led by Ribbit Capital and Andreessen Horowitz. Similarly, Rippling announced hitting $1 billion in ARR last month, with a valuation of $16.8 billion after a $450 million raise in May 2025.
Strategic Moves and Technological Advancements
Gusto’s growth trajectory is marked by strategic acquisitions and technological integration. In 2025, the company acquired Guideline, a startup offering retirement plans to small and medium-sized businesses, for approximately $600 million. This acquisition expanded Gusto’s service offerings and client base.
The appointment of Rahul Patil, CTO of Anthropic, to Gusto’s board in December 2025, signaled a commitment to technological innovation. The company reports that artificial intelligence now contributes to 50% of new code generation and handles an equal share of customer support cases, enhancing operational efficiency and customer satisfaction.
Positioning for Public Markets
With a valuation that appears modest relative to its revenue, Gusto is well-positioned for future fundraising or an initial public offering (IPO) at a higher valuation. Unlike competitors Deel and Rippling, which have faced high-profile corporate espionage lawsuits, Gusto has maintained a focus on business operations, avoiding such controversies.
While Gusto has long been considered a candidate for public listing, the current IPO market remains uncertain. In a December interview, CEO Josh Reeves emphasized a focus on customer service and business scaling over IPO considerations. As of now, the company has not disclosed any updates regarding its IPO timeline.
