Canva Cuts 22% of Staff and Lowers Growth Forecast as AI Costs Drive Valuation Down to $35 Billion
Canva lays off 1,271 employees and reduces its revenue growth forecast from 30% to 20% due to rising AI costs, leading early investors to cut its valuation to approximately $35 billion.
Australian design software company Canva has announced it is cutting 22% of its workforce, totaling 1,271 people, to address a slowdown in business growth experienced for the first time in a decade. Co-founder and CEO Melanie Perkins stated in a note to employees that while the company has achieved success over the past thirteen years, it must change to tackle slowing growth.
The restructuring includes merging product, growth, and platform teams to reduce communication friction, decreasing "subspecialisation," and requiring employees to work from the office a few days a week. Perkins described this as the company's "hardest year yet."
Canva has been deploying its own AI models to reduce reliance on third-party models and lower costs, but still had to cut its revenue growth forecast from 30% to 20% to address ballooning AI expenses. This adjustment led early investors to cut the company's valuation to approximately $35 billion earlier this year.
Additionally, Canva faces increasing competition from AI startups and general-purpose chatbots like ChatGPT and Gemini, whose image generation capabilities allow users to easily create posters and presentations.