Canva, once the darling of Australia's startup scene, has endured its most challenging year as soaring AI infrastructure costs, a $10 billion valuation markdown, and the indefinite shelving of its IPO plans have combined to slash $10 billion from its worth, according to a detailed report by David Swan published across Nine newspapers.
For years, Canva was the safest bet in Australian tech. The design platform, co-founded by Melanie Perkins, Cliff Obrecht, and Cameron Adams, grew from a campus project into a global software giant, valued at $40 billion in 2021. But the generative AI boom has turned that trajectory upside down.
According to a comprehensive report by David Swan, published in the Sydney Morning Herald, Brisbane Times, and The Age, Canva's valuation has been marked down by $10 billion. The company has also been forced to spend heavily on AI compute power — the "AI bills" — as it races to integrate generative features amid fierce competition from Adobe, Microsoft, and a wave of AI-native startups.
The report indicates that the company's much-anticipated initial public offering, long expected to be the biggest in Australian corporate history, has been pushed back indefinitely. Sources close to the company suggest the board is waiting for more favourable market conditions and a clearer path to profitability.
AI is eating into Canva's margins in two ways. First, the cost of running large language models and image generation models at scale is enormous. Second, the company's core consumer and small-business user base, historically its most profitable segment, is increasingly using free or low-cost AI tools instead of upgrading to paid tiers.
Canva has responded by launching a suite of AI-powered features, including Magic Studio, but these have yet to meaningfully increase average revenue per user. The company has also been cutting costs elsewhere, including a slowdown in hiring and a reduction in marketing spend.
Despite the headwinds, Canva remains profitable and cash-flow positive, a rarity among unicorns. The company has also continued to invest in its enterprise product, Canva Enterprise, and has expanded its acquisitions, including the purchase of Affinity in 2024 to compete with Adobe's Creative Cloud.
However, the report paints a picture of a company under pressure to prove that its AI investments will pay off. The valuation markdown — reported by major investors like Blackbird Ventures and Felicis — reflects a broader recalibration of tech valuations in a higher-interest-rate environment, but the speed and severity of Canva's decline have surprised many in the industry.
A Canva spokesperson declined to comment on the specifics of the report, but pointed to the company's continued user growth — now over 200 million monthly active users — and its expansion into new markets like enterprise and education.
Analysis
Why This Matters
- Canva's struggles signal a broader reckoning for Australian tech startups that grew rapidly during the zero-interest-rate era. If the country's most successful unicorn can lose $10 billion in value, the entire ecosystem feels the chill.
- For Canva's 200 million users, the pressure to monetise AI features could mean more aggressive pricing or restrictive free tiers. The company's AI investments need to pay off, or users may face reduced functionality.
- The delayed IPO affects not just Canva's founders and employees, but also the Australian Stock Exchange, which has been hoping for a marquee listing to attract global capital. A Canva float was expected to be a landmark event for the local market.
Background
Canva was founded in 2013 by Melanie Perkins, Cliff Obrecht, and Cameron Adams. It democratised graphic design by making highly accessible templates and drag-and-drop tools. The company grew rapidly, reaching a $40 billion valuation in 2021 during the tech boom, making it Australia's most valuable private company.
Throughout 2022 and 2023, Canva pushed into enterprise features and AI tools, releasing Magic Studio in 2023. But the AI arms race is expensive. The company spends heavily on cloud compute, especially GPUs, to run its generative models. Meanwhile, macroeconomic headwinds — rising interest rates, inflation, and a slowdown in venture capital — have pressured all tech valuations. Canva's own secondary market transactions have implied a lower valuation for some time, but the $10 billion markdown is the most concrete sign yet.
Key Perspectives
Canva management: The company's leadership remains focused on long-term growth, arguing that AI is a feature, not a threat. They believe that integrating AI will increase user engagement and enterprise uptake, eventually justifying the investment. They point to continued user growth and profitability as proof of resilience.
Investors and analysts: Early backers like Blackbird Ventures and Felicis have marked down their holdings, but most remain supportive. However, some analysts question whether Canva can compete with Adobe's deep AI integration and Microsoft's Copilot ecosystem. The valuation drop reflects a market that is no longer willing to pay for growth at any cost.
Critics and competitors: Rivals like Adobe argue that Canva's AI features are me-too, not market-leading. Some industry observers note that Canva's core user base — non-designers — may not be willing to pay premium prices for AI tools they can get elsewhere. The Affinity acquisition has yet to deliver a clear competitive advantage.
What to Watch
- Canva's next quarterly user and revenue numbers, especially average revenue per user (ARPU) and whether AI features are driving paid upgrades.
- Any announcements of a secondary offering or fundraising round at a new valuation. If major investors reduce their stakes further, it could signal a loss of confidence.
- The timing of the IPO. If Canva does not file by mid-2027, it may indicate that the company is still struggling to find a path to a public market valuation above $30 billion.
- The cost of AI compute. If Nvidia's GPU prices or cloud rental costs fall, Canva's margins could improve quickly. Conversely, an AI price war could force Canva to spend even more.