Gusto, a 14-year-old small-business payroll provider, has surpassed $1 billion in revenue earlier this year. The company's actual revenue earned over the previous 12 months is a significant milestone for the startup, which was last valued at over $9 billion. Gusto CEO and co-founder Josh Reeves said the company's revenue growth has accelerated in each of the last five quarters.
The startup's financials are notable compared to its peers. Deel, another HR tech company, crossed $1 billion in annualized recurring revenue (ARR) last year, but was valued at a significantly higher $17.3 billion after raising funds in October. Rippling, which also hit $1 billion in ARR last month, was valued at $16.8 billion after its own funding round in May.
Gusto's success can be attributed to several factors, including its use of AI to improve efficiency and its focus on serving customers and scaling the business rather than seeking high-profile deals or headlines. The company has been cash flow positive for several years and has made significant acquisitions, including the purchase of Guideline, a startup offering retirement plans to small and medium businesses, for about $600 million last year.
Reeves has stated that he doesn't spend much time thinking about an initial public offering (IPO), but Gusto's financials suggest that it may be well-positioned for another fundraise or even an IPO at a higher valuation in the future.
