Design software company Canva is laying off 22% of its workforce, affecting 1,271 employees, as the business copes with decelerating growth and rising operational expenses tied to artificial intelligence. The announcement marks a sharp turn for one of the technology sector's most successful visual design platforms, highlighting the financial pressures traditional software providers face as they attempt to integrate generative AI features while maintaining profitability.
In an internal note sent to staff, Canva co-founder and Chief Executive Officer Melanie Perkins acknowledged that while the business has scaled significantly over the past decade, fundamental changes are necessary to address the company's changing financial reality.
"Over the past thirteen years, we’ve turned a dream in a pitch deck into a platform used by hundreds of millions of people. None of it would have been possible without the talent, imagination, and care of every single person who has been part of this journey. Yet success in our first chapter doesn’t guarantee success in the next. This has been our hardest year yet, and as we shared earlier this year, our growth has slowed for the first time in a decade," Perkins wrote.
What led to the layoffs?
The headcount reductions follow a broader slowdown in Canva's financial performance after years of rapid global expansion. To adapt to higher operational expenses, the company recently cut its annual revenue growth forecast to 20%, down from a previous target of 30%.
A major factor behind this margin compression is the steep cost of deploying artificial intelligence features across a user base of hundreds of millions. While Canva has been actively developing and shipping its own internal AI models to decrease reliance on expensive third-party providers, the computing infrastructure required to serve millions of generative design requests has weighed heavily on profits.
The financial recalibration has also impacted the company's standing among private market investors. Earlier this year, major early-stage investors wrote down Canva's valuation to approximately $35 billion, reflecting broader recalibrations across late-stage software companies navigating higher interest rates and slower corporate spending.
Internal restructuring and shift to hybrid work
Alongside the job cuts, Canva is executing a significant internal reorganization aimed at streamlining operations and eliminating redundant workflows. The company is merging its product, growth, and platform teams into consolidated units designed to reduce internal communication friction and accelerate feature deployment.
As part of this structural transition, Canva is reducing job "subspecialisation," signaling that remaining employees will likely be expected to take on broader responsibilities across multiple product domains.
The company is also altering its workplace flexibility policies. After operating with flexible remote policies for several years, Canva is transitioning to a structured hybrid work model, requiring staff to report to physical offices several days each week.
A changing competitive landscape in visual software
Canva's structural shift comes at a moment when the design software market is undergoing rapid disruption. For years, Canva built a dominant market position by simplifying complex graphics tools, making visual design accessible to non-professional creators, social media managers, and small businesses.
However, the rapid maturity of generative AI tools has altered consumer expectations and lowered technical barriers even further. Canva now faces competition on multiple fronts:
- Specialized AI design platforms: Emerging startups like Gamma are building native AI workflows specifically tailored for presentation decks, documents, and marketing graphics.
- General-purpose AI chatbots: Multimodal models behind platforms such as OpenAI's ChatGPT and Google's Gemini allow users to draft text, generate customized imagery, and layout visual assets directly through conversational prompts.
- Legacy creative suites: Established industry players continue to embed deep AI integrations into professional visual creative tools, intensifying competition for enterprise design budgets.
As conversational AI systems gain stronger image generation and layout capabilities, many casual users can generate basic presentations, posters, and visual assets without opening dedicated design software.
What to watch next
Canva's decision to downsize highlights a core challenge facing software-as-a-service (SaaS) platforms: balancing the high capital costs of generative computing against slowing top-line revenue growth. Developing custom AI models can lower long-term vendor fees, but the initial engineering and infrastructure investments remain substantial.
Moving forward, industry analysts and software leaders will watch closely to see whether Canva's consolidated organizational structure can deliver faster product iteration while keeping operating costs under control. How effectively Canva differentiates its ecosystem from fast-evolving chatbot interfaces will likely dictate its trajectory as it begins what leadership calls its next chapter.
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