Canva restructures 22% of its workforce after a costly push into AI

Canva, the Sydney-based design platform that spent a decade as the friendly alternative to Adobe, told staff this week that 1,271 employees—about 22% of the company—will be laid off, moved into different roles or asked to relocate. Fast Company describes it as the first major layoff in Canva's 13-year history. In her memo, co-founder and CEO Melanie Perkins wrote that small changes would not be enough and that the company needs to "refound Canva."

The memo, as quoted by several outlets, says "our growth has slowed for the first time in a decade," and coverage frames the overhaul as an adjustment to technology that is changing how people make content. None of the passages quoted publicly singles out AI costs. But what Canva told its own investors earlier this year points to a more specific problem than generic tech-industry change: the cost of serving generative AI to a user base that mostly does not pay.

What Canva announced, and what it left out

The headline 22% figure is not a layoff count. It bundles three outcomes—job loss, a changed role, or a request to move—and Canva has not said how many people fall into each bucket. Because Canva has teams in 37 countries, the timing and final numbers will vary with local consultation rules. If 1,271 people represent 22% of staff, total headcount is roughly 5,800.

The structural changes are familiar from other 2026 reorganizations. Product, growth and platform teams are being merged into a single product organization. Management layers are being thinned and narrow specialist roles folded into broader ones. More product teams will be centered in Sydney, and from January most hybrid employees are expected in the office two to three days a week. A company-wide meeting on November 10 is supposed to fill in details.

Departing staff get at least six months of salary regardless of location, 12 months of continued health coverage where Canva already provides it, removal of the one-year vesting cliff for recent hires, and $10,000 grants for anyone who starts a business or community project. That is a generous package by industry standards, and it is also a signal: this is a company with cash, not one cutting to survive.

The AI bill behind the growth slowdown

In an early-August update to shareholders covering the June quarter, Canva cut its 2026 revenue growth forecast from 30% to 20% after deciding to delay product releases to get AI costs under control. Perkins told investors the platform had been "relying too heavily on frontier models" and that the "average cost of serving an AI task was too high." She also said demand for the new AI features had significantly exceeded expectations—a good problem in theory, an expensive one when much of that demand comes from free accounts.

The numbers explain why. Canva reported more than 265 million monthly active users at the end of 2025 and more than 31 million paying users. Every image generation or design-agent request from the free majority is compute that Canva buys, often from the same model labs that are building rival products. That is the structural squeeze facing any freemium software business that wraps third-party models: usage scales faster than revenue.

Canva says it has since gone after those unit costs. Perkins told Fortune that cost per task has fallen 90% since Canva 2.0 launched in April, and Canva says Canva Brush, a product released in October, cut cost per task by 46% compared with its previous design agent. Those are company figures. Canva is private, so it is not bound by public-company disclosure rules, and no outside party has verified the unit-cost claims. The fact that a restructuring followed anyway suggests the savings have not yet restored the margins or growth rate investors want.

It is worth keeping the slowdown in proportion. Revenue in the June quarter still rose about 25% year on year, to roughly $922 million, and Canva said it held $1.47 billion in cash and has been profitable for nine years. Cutting a 30% growth forecast to 20% is a problem of valuation, not solvency.

Squeezed by suppliers and the market

Canva's competitive position has shifted beneath it. Canva now competes with AI startups and with general-purpose chatbots such as ChatGPT and Gemini, which users can ask for design work directly. Canva also told Fast Company that it had helped Anthropic develop Claude Design, which Anthropic launched earlier this year as its own entry into the design market. It is an awkward example of a model supplier becoming a competitor.

Private markets have already repriced the company. In August, external valuers for early backers Blackbird and AirTree marked Canva down about 17%, to roughly $34.9 billion, from a $42 billion peak in 2025. An independent valuation for Canva's employee share issue landed near $31 billion, and the broker Hiive was reportedly offering shares at an implied valuation of about $30 billion. Some investors have been blunter: SaaS investor Jason Lemkin argued on the 20VC podcast that a company growing 20% at Canva's scale might be worth closer to $12 billion, and Scale Venture's Rory O'Driscoll noted that Adobe, growing around 12%, trades at three to four times revenue. Figma's shares, meanwhile, have fallen more than 70% from their post-IPO high.

That backdrop matters because a Canva IPO has been rumored for years, and in 2024 the company hired CFO Kelly Steckelberg, who guided Zoom through its IPO. A 2027 IPO had been floated; the markdowns and the reorganization make that timeline look like an open question rather than a plan.

How to read the cut

Much of the 2026 layoff wave has come with claims that AI lets companies do the same work with fewer people. Canva's case runs closer to the reverse: AI is primarily showing up as a cost of goods sold that grew faster than paying customers, and headcount is the lever management can pull fastest to protect margins while it re-engineers the product. The flatter, more generalist structure may well be justified on its own terms, but it is not evidence that AI has replaced the people leaving.

The useful signals over the next few months are concrete ones: how many of the 1,271 actually lose their jobs once country-by-country processes finish, whether Canva's next shareholder update shows unit AI costs and gross margin improving alongside the lower headcount, and whether conversion of free users to paid plans moves at all. Without those, "refounding" is a slogan. With them, it becomes a test of whether a consumer software company can afford to give away frontier-grade AI.