Gusto hits $1B in revenue and edges closer to a SaaS IPO
Gusto, a payroll and HR services platform for small businesses, has reached $1 billion in revenue over the last 12 months, a major milestone that puts the company closer to the public markets. At a time when many software-as-a-service companies are under pressure with the rise of artificial intelligence, this move shows that some HR techs are still gaining traction and growing consistently.
The key point here is that this $1 billion figure refers to actual revenue realized over a 12-month period, not just ARR, or annual recurring revenue estimated based on contracts. While many startups highlight ARR as a primary metric, Gusto chose to emphasize real top-line revenue, which is generally seen by investors as a sign of maturity and greater predictability.
Gusto’s valuation and comparison with decacorn competitors
Founded around 14 years ago, Gusto was last valued at approximately $9.3 billion, according to Fortune, when it launched a $200 million tender offer for employee shares in June 2025. That valuation puts the company in a very significant tier, but still below some of its direct competitors in HR and payroll solutions for global businesses.
This latest liquidity event for employees kept the company’s valuation close to where it was in early 2022, a period when the tech market was still riding a wave of abundant capital and higher multiples for unicorn startups. In practice, this means that even after growing and crossing the $1 billion revenue mark, Gusto still has not pushed its private valuation into decacorn territory.
The contrast becomes clear when you look at competitors:
- Deel: focuses on large international companies, offering global hiring and workforce management across multiple countries. It surpassed $1 billion in ARR last year, a figure based on future contracts, and was valued at about $17.3 billion after raising $300 million in a round led by Ribbit Capital and Andreessen Horowitz in October.
- Rippling: widely seen as Deel’s main rival, also announced it had reached $1 billion in ARR. The company was valued at around $16.8 billion after raising $450 million in May 2025.
While Deel and Rippling are considered decacorns, Gusto is valued significantly lower by comparison, even though it has now achieved a similar level of traction in revenue terms. This mismatch between revenue and private market valuation raises an interesting point in venture capital circles: that Gusto, despite being a robust business, may be trading at more modest multiples than its peers, leaving room for a repricing in a future initial public offering.
Receive the best innovation content in your email.
All the news, tips, trends, and resources you're looking for, delivered to your inbox.
By subscribing to the newsletter, you agree to receive communications from Método Viral. We are committed to always protecting and respecting your privacy.
Billion-dollar revenue and Gusto’s competitive strength
By crossing the symbolic $1 billion revenue threshold, Gusto is sending a clear message to the market: it now plays in the same revenue league as other big SaaS names in HR and related services, but with a very different customer base. Its main focus is small and mid-sized businesses, a segment that typically runs on thin margins, has little time for bureaucracy, and depends heavily on simple, stable, and reliable tools.
This model brings some important competitive advantages:
- High switching costs: moving to a new payroll and benefits system is a complex and delicate process. That reduces churn and helps stabilize revenue.
- Mission-critical, mandatory services: the platform handles legal obligations, payroll taxes, and regulatory compliance, items that do not disappear during downturns.
- Product expansion opportunities: starting from payroll, the company can add modules for benefits, retirement plans, and other financial services.
This combination makes the top line less volatile and reinforces the idea that the company does not rely solely on aggressive marketing or deep discounts to keep growing. For investors evaluating potential IPOs, this level of predictability is a central piece of the puzzle.
Guideline acquisition for around $600 million
On top of the billion-dollar revenue milestone, another move that stirred the market was Gusto’s acquisition of Guideline, a company specializing in retirement plans for small and mid-sized businesses. The deal was completed last year and was worth around $600 million, according to reports from the press.
Guideline had been gaining traction by making employer-sponsored retirement plans simpler and more accessible, something that has historically been complex and expensive for smaller companies in the United States. By bringing that player in-house, Gusto can offer a more complete set of services, tying together:
- Payroll;
- Benefits administration;
- Retirement plans.
Strategically, this integration reinforces Gusto’s ambition to be the central HR and finance platform for small businesses, not just a payroll system. The deal also included a reorganization of Guideline’s customer base, with plans to shed accounts connected to competitors, as reported at the time. That move strengthens Gusto’s positioning as a more closed and attractive ecosystem for customers who already rely on the platform as the operational core of their HR stack.
The role of artificial intelligence inside Gusto
Another important chapter in this phase of the company is the adoption of artificial intelligence across several internal processes. In December, Anthropic’s CTO, Rahul Patil, joined Gusto’s board, adding even more weight to the company’s AI strategy.
According to Gusto, the results are already clear:
- About 50% of all new code written at the company today is generated with the help of AI tools;
- A similar share, roughly 50% of support interactions, is also handled by AI-powered solutions.
These numbers show how automation is being used not just as a PR talking point, but as a real efficiency lever. By reducing the amount of manual work, the company can:
- Accelerate the development of new features;
- Lower customer support costs;
- Increase consistency in support responses;
- Improve average resolution times for issues.
For a platform that deals with sensitive data, complex calculations, and tax rules, using AI carefully and with human oversight is a meaningful differentiator. These operational gains directly influence margin and profitability metrics, which matter a lot when preparing for a potential IPO.
Indirect rivalry with Deel and Rippling
Even though Gusto does not have the same global-first pitch as Deel and Rippling, it still tends to be compared with these two giants whenever the conversation is about HR tech and high-growth SaaS companies. That’s because all three are competing, in different ways, for budget in payroll, benefits, and people management inside organizations.
But there is a key difference in the atmosphere surrounding these companies. While Deel and Rippling are locked in a fierce legal battle over an alleged corporate espionage case that recently made headlines, Gusto has managed to stay far from that type of controversy. The company has not been implicated in that dispute and continues to occupy a different space in the public conversation, more focused on growth, acquisitions, and efficiency.
This reputation factor helps a lot in relationships with regulators, potential institutional investors, and its base of small business customers, which tends to be more conservative when choosing tools to handle employee data and company finances.
IPO: close in numbers, distant on the calendar
Gusto has been seen for years as a strong IPO candidate. The topic gained more weight now that the company has passed the $1 billion revenue mark and consolidated major acquisitions like Guideline. Still, despite the obvious fit with the public markets, the exact timing for going public remains uncertain.
When CEO and cofounder Josh Reeves spoke to the press in December, he stressed that he does not spend much energy thinking about an IPO in day-to-day operations. The stated focus remains on growing, serving customers better, and scaling the business in a healthy way. This stance is fairly common among founders of late-stage companies who prefer to avoid creating public expectations around specific listing dates or IPO windows.
When asked again after announcing it had hit $1 billion in revenue, the company stuck to a cautious message. A spokesperson summed it up by saying there was nothing to share about the IPO timeline. Meanwhile, the market keeps running scenarios. With the IPO window still cold in 2026, any decision will have to consider:
- Investor appetite for software companies in an environment of still-elevated interest rates;
- The performance of other recent tech IPOs;
- The stability of Gusto’s own revenue, margin, and growth numbers.
Even without a date on the calendar, the company’s current scale and the combination of billion-dollar revenue, heavy AI usage, and an expanded portfolio place Gusto among the most closely watched candidates for a potential debut on public markets in the coming cycles.
Gusto’s positioning in a transforming SaaS market
As the debate over AI’s impact on software companies continues, Gusto fits into the group of businesses that have managed to turn this technology into a practical part of operations, not just a talking point. In a sector where many players are still trying to adjust their models, the company shows it is possible to combine:
- Consistent growth in actual realized revenue;
- Tangible AI adoption in development and support;
- Acquisitions aligned with long-term strategy;
- A quieter but solid posture versus higher-valuation competitors.
With the milestone of $1 billion in effective annualized revenue, Gusto is entering a new stage of maturity. It has reached this level while staying focused on small businesses, avoiding scandals, and building a narrative that blends applied technology, operational discipline, and smart product expansion. If the IPO market heats up again, the company’s current numbers and recent moves suggest that Gusto is likely to show up often in conversations about the next big SaaS stories to list on American exchanges.
