Gusto vs Mercury
Jan-Erik Asplund
TL;DR: After decelerating through 2024, Gusto is re-accelerating, with its 500K+ SMB customer base now generating 2x the ARPC of 2022 through a bundle of payroll, benefits, 401(k), and compliance as it goes up against incumbents like ADP and new entrants like Mercury Payroll. Sacra estimates Gusto hit $975M in revenue in 2025, up 30% YoY from $750M in 2024, with free cash flow positive since 2023. For more, check out our full report and dataset on Gusto.
We first covered Gusto in August 2022 at $260M revenue growing 58% YoY with 200K SMB customers, competing with Rippling’s compound payroll, HR & IT bundle, Deel’s global payroll push and Check and Zeal on embedded payroll.
Key points from our April 2026 Gusto update via Sacra AI:
- Sacra estimates Gusto generated $975M of trailing twelve months revenue for 2025, up 30% year-over-year from $750M in 2024, with 500K+ SMB customers (up from 200K in 2022) and free cash flow positive since 2023, re-accelerating after the business decelerated in 2024.
- Compare Gusto, valued at $9.3B as of its June 2025 secondary for a ~10x revenue multiple, to public payroll processors & HR platforms ADP (NASDAQ: ADP) at $20.6B in 2025 revenue, up 7% year-over-year, valued at $82B for a ~4x multiple, Paychex (NASDAQ: PAYX) at $5.57B in 2025 revenue, up 6% YoY, valued at ~$34B for a ~6x multiple and Workday (NASDAQ: WDAY) at $9.55B in 2025 revenue, up 13% YoY, valued at ~$33B for a ~3.5x multiple.
- Where Rippling’s ~$1B annualized revenue, up 78% year-over-year serves SMBs, mid-market, and the enterprise across HR, IT, payroll, global employment (vs. Deel), and spend management (vs. Ramp), Gusto has stayed focused on SMBs, bundling in back-office services like benefits, time tracking, & invoicing to expand average revenue per customer (ARPC) by 2x and competing downmarket with Warp and the newly announced Mercury Payroll ($650M annualized revenue as of September 2025).
- Since 2021, Gusto has built out its platform via acquisitions of R&D tax provider Ardius (2021), payroll tax infrastructure provider Symmetry for powering Gusto Embedded (2021), RemoteTeam for Gusto Global’s contractor payments (2021), Mosey to power Gusto Business Compliance (2026), with Gusto’s biggest acquisition being Guideline for $600M (4.3x its $140M ARR), which is now Gusto 401(k), enabling Gusto to compete as a one-stop shop for SMBs against Rippling and PEOs like Justworks.
- Unlike Rippling & Deel which manage their own PEO & EOR offerings, Gusto has chosen to own the payroll system of record, acquire adjacent products that vertically integrate with payroll but not become the actual employer (EOR powered by Remote) or co-employer (no PEO offering), with the upside of having AI agents handle an increasingly large amount of the operational work for time & cash-strapped SMBs while expanding the surface area of coverage over the backoffice pain that SMB owners & operators experience.
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