In a landscape where many legacy SaaS companies face challenges from AI advancements, some HR tech startups are flourishing. One such company is Gusto, a payroll provider for small businesses that recently announced it has surpassed $1 billion in revenue within the last year. This milestone is based on actual earnings rather than the projected annualized recurring revenue (ARR) that many startups typically report.
Gusto, which has been valued at over $9 billion, reached this significant revenue threshold, positioning itself favorably against its competitors. In June 2025, the company initiated a $200 million tender offer for its employees, maintaining a valuation consistent with its early 2022 figures.
In comparison, Gusto's peers are also making waves in the industry. Deel, which caters to larger international clients, reported over $1 billion in ARR last year and was valued at $17.3 billion following a $300 million funding round. Similarly, Rippling, another competitor, achieved $1 billion in ARR and was valued at $16.8 billion after raising $450 million in May 2025.
By reaching the billion-dollar revenue mark, Gusto is demonstrating its financial strength and competitive edge. The company has also been proactive in its strategic growth, having acquired Guideline, a startup specializing in retirement plans for small and medium businesses, for approximately $600 million.
Under the leadership of Anthropic CTO Rahul Patil, who joined Gusto's board in December, the company has reported significant improvements in efficiency. AI technology now contributes to half of all new code generation and manages an equal portion of customer support inquiries.
With a valuation still relatively low compared to its revenue, Gusto is poised for potential fundraising opportunities or even an initial public offering (IPO) that could elevate its market standing. Notably, while rivals Deel and Rippling are entangled in high-profile legal disputes, Gusto has maintained a focus on its core business without attracting negative headlines.
Although Gusto has long been viewed as a candidate for an IPO, the timing remains uncertain, especially given the current market conditions. CEO and co-founder Josh Reeves has expressed that his priority lies in enhancing customer service and scaling operations, rather than fixating on a public listing.
As Gusto continues to thrive and innovate, its recent achievements may not only bolster its market position but also set the stage for future advancements in the HR tech landscape.