Gusto Reaches $1 Billion in Annual Revenue

Gusto has reached more than $1 billion in revenue, the company confirmed to Fortune. The figure represents cash received over the preceding 12 months through February. Gusto CEO and cofounder Josh Reeves said the company is accelerating growth and is now higher on annual recurring revenue.

The company began in 2011 as ZenPayroll, founded by Reeves, Eddie Kim and Tomer London. The three started building the service from a house in Palo Alto. They did not pay themselves until they could process payroll through their own product. One of their earliest customers was Christina Stembel of Farmgirl Flowers, who needed to set up payroll for her first employee.

m. She has remained a customer for more than 13 years. "I don’t know anybody else who would come to a flower mart and set up payroll for a small business like mine with one employee," said Stembel. Gusto reached $1 million in revenue in 2014 with about 5,000 customers.

At that stage the focus was proving the business could build a useful product and acquire customers efficiently. The company saw rapid growth, adding 500 customers in one January after starting the month with 1,000, then reaching 6,000 the following year and adding another 3,000.

The period from $1 million to $100 million in revenue marked a significant shift for the company. Gusto hit $100 million in 2019 with about 95,000 customers. Reeves said the milestone required changes in forecasting, planning, communication and operations.

"When you get to one million in ARR, you don’t know every customer anymore," said London. Reeves described reaching $100 million as moving from having an engine to operating a factory. The company had to learn how to run, fine-tune and expand that operation.