A.I. Wave Hits Canva as Design Giant Cuts More Than 1,000 Jobs

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Once the darling of the start-up world, now the next big casualty of the A.I. wave: Canva, the Australian design giant, has just announced a sweeping overhaul. The restructuring affects 1,271 roles, or 22 percent of its workforce. Some employees will lose their jobs, while others will be asked to relocate to central hubs. It is the first company-wide round of layoffs in Canva’s 13-year history.

“This is without doubt the hardest moment in our thirteen-year history,” Melanie Perkins, Canva’s co-founder and chief executive, wrote in a note to staff. “After exploring a wide range of alternatives, I’ve come to the difficult conclusion that small changes won’t be enough. To set ourselves up for the next decade, we need to refound Canva, getting back to our roots of small, empowered teams with the freedom to make decisions, take ownership, and focus on what matters most for our community.”

Fewer Layers, More Sydney

The overhaul is mostly about structure. Canva is merging its product, growth and platform teams into a single product organization and cutting layers of management. Sydney is set to become the home of more product teams. Starting in January, hybrid employees will be expected in the office two to three days a week.

Canva has employees in 37 countries, and the timing of conversations with affected staff will vary depending on local rules. Those leaving will receive at least six months’ salary regardless of location, may keep their company MacBooks and can receive a $10,000 grant (about €9,000) toward starting their own company, according to Canva. They will keep access to Slack and Gmail until the end of the week. An all-hands meeting is scheduled for next week.

When A.I. Suddenly Costs Money

Ms. Perkins did not directly tie the cuts to A.I. She wrote only that new technology was transforming what people create and what they expect from the products they use. The numbers tell a clearer story. This year, Canva’s growth slowed for the first time in a decade. Instead of the 30 percent it had planned, the company now expects revenue to grow about 20 percent in 2026, after 38 percent in 2025 and 45 percent the year before.

Part of the reason lies in the business model. For a long time, a design cost Canva next to nothing. With A.I. features offered to more than 200 million free users, every request now comes with a computing bill. “Historically, the cost to create a design cost us essentially nothing,” Cliff Obrecht, Canva’s co-founder, said in August. “The cost of goods to serve a user has gone from cents per month to many, many more cents.” As a result, the company had to slow the rollout of its big A.I. update, Canva AI 2.0.

Pressure is also coming from outside. Investors fear that A.I. tools will make traditional software companies obsolete, and design software has been hit especially hard. In August, Blackbird, Canva’s largest backer, cut its valuation of the company 17 percent to $34.9 billion (about €31.4 billion), down from $42 billion in 2025. Canva’s own internal valuation now stands at just $31 billion (about €27.9 billion). An I.P.O. once expected in 2027 has reportedly been shelved.

Figma, Lovable and the A.I. Labs

Canva is not alone. Shares of its rival Figma have fallen about 44 percent this year despite strong revenue growth. At the same time, newcomers are pushing into the market: The Swedish vibe-coding start-up Lovable builds websites and apps from prompts, and A.I. labs such as Anthropic are going straight after the design market with tools like Claude Design. How hard the A.I. wave is hitting established software companies also became clear with Miro: The whiteboard company sold to Bending Spoons for $1.4 billion after being valued at $17.5 billion in 2022.

In Australia, the wave of layoffs is spreading as well. Atlassian cut 1,600 jobs this year, and WiseTech Global announced plans to eliminate 2,000 positions, nearly a third of its workforce. In Europe, the A.I. translation company DeepL cut a quarter of its staff.

Canva Bets on Its Own Models

Canva itself still intends to profit from A.I., and it is increasingly relying on its own models to do so. The goal is to become less dependent on expensive partner models at a time when users can already prompt images, infographics and entire designs in ChatGPT or Claude.

Canva recently introduced Craft, its first in-house image-generation model, which the company says ranks second on the DesignArena leaderboard. A week later came Brush, a vision-language model that analyzes designs and edits them on request, from a single line of copy to every slide in a deck. Both were developed by Canva Research, the company’s 160-person A.I. lab. Brush is built on a leading open-weights model that Canva post-trained on real design tasks and with reinforcement learning. Compared with Canva’s previous design agent, Brush is up to 69 percent faster on general editing tasks and costs 46 percent less per task, according to the company. “With hundreds of millions of people creating billions of designs on Canva, even a few extra cents per task adds up quickly,” Canva wrote.

The company had already cut the cost of serving its A.I. products by about 90 percent, Mr. Obrecht said in August, according to Forbes Australia. “We’ve managed to do that by about 90 per cent, which means we can really scale it up now,” he said. Since the launch of Canva AI 2.0, users have been creating three times as many designs. With 265 million monthly users and more than $1.5 billion (about €1.35 billion) in the bank, Canva has said it is in no rush to go public.

For its investors, however, the wait is getting long. Airtree, an Australian venture capital firm, has asked its backers to extend the life of its first fund, raised in 2014, to July 2028 in the hope of an exit at Canva. Most of Canva’s employees also hold shares in the company.