Whereas AI disruption looms over many legacy SaaS firms, a number of HR tech startups appear to be thriving.
One among these firms is small-business payroll supplier Gusto. The 14-year-old firm, final valued at over $9 billion, simply introduced that it surpassed $1 billion in income earlier this 12 months. Not like many startups that report annualized recurring income (ARR) — an estimate of the worth of their contracts within the upcoming 12 months — Gusto’s determine represents precise income earned over the earlier 12 months. What’s extra, the startup has been cash flow positive for a number of years. Its income progress has additionally accelerated in every of the final 5 quarters, Gusto CEO and co-founder Josh Reeves instructed TechCrunch.
Gusto was final valued at $9.3 billion, Fortune reported, when it launched a $200 million tender supply for its workers in June 2025. The deal valued the corporate about the place it was valued in early 2022.
That’s a cut price for Gusto traders in comparison with its decacorn opponents. For example, Deel, which serves giant worldwide companies, crossed $1 billion in ARR final 12 months. The corporate was final valued at $17.3 billion when it raised a $300 million spherical co-led by Ribbit Capital and Andreessen Horowitz in October.
In the meantime, Deel’s main rival, Rippling, which final month introduced that it additionally hit $1 billion in ARR, was final valued at $16.8 billion after elevating $450 million in Could 2025.
By crossing the $1 billion income threshold, Gusto is clearly displaying its monetary may in opposition to its friends.
The corporate has been making different massive strikes, too. Final 12 months, it accomplished the acquisition of Guideline, a startup providing retirement plans to small and medium companies, for about $600 million, as we reported.
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Following the December board appointment of Anthropic CTO Rahul Patil, Gusto is already reporting large effectivity good points. In accordance with the corporate, AI now accounts for 50% of all new code era and handles an equal share of buyer assist circumstances.
Given its comparatively modest valuation in comparison with its income, Gusto is well-positioned for an additional fundraise, and even an IPO, at a better valuation. The corporate has one other key consider its favor. Whereas rivals Deel and Rippling stay embroiled in a high-profile corporate espionage lawsuit, Gusto has stayed out of these sorts of headlines and centered on its enterprise.
Gusto has lengthy been thought-about an IPO candidate. Even so, a public debut seems iffy in 2026 whereas the IPO market nonetheless stays so frosty.
When TechCrunch interviewed Reeves in December, he insisted he doesn’t spend a lot time excited about an IPO, preferring as a substitute to deal with serving clients and scaling the enterprise.
As for if that’s modified given the income milestone, the corporate received’t say. A Gusto spokesperson tells us: “Nothing to share on the IPO timeline entrance.”
Be aware: This story was up to date to incorporate extra particulars on monetary well being from CEO Josh Reeves.
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