Canva Executes Massive Restructuring Amid Growth Slowdown and AI Competition
Australia's most valuable startup cuts 22 percent of its workforce to refound operations.
1Historic Workforce Reduction
Canva has initiated the largest restructuring in its history, cutting or modifying 1,271 roles, which represents 22 percent of its total workforce. This move follows a period of declining morale and significant macroeconomic uncertainty. Co-founders Melanie Perkins and Cliff Obrecht are now focused on the difficult task of refounding the company.
2Strategic Operational Changes
The company is consolidating its product, growth, and platform teams into a single unit to streamline operations. Specialists are being integrated into broader roles, and more product teams are being relocated to the Sydney headquarters. Additionally, staff will be required to work from the office two to three days per week starting January.
3Generous Severance Packages
Canva’s redundancy package has gained global attention for its generosity, exceeding legal requirements under the Fair Work Act. Departing employees receive a minimum of six months' salary, which is three to four times the legal minimum. They were also granted continued access to internal systems for a week to facilitate professional goodbyes.
4Revenue Growth Deceleration
Canva’s revenue growth has been sliding for two years, dropping from 45 percent in 2024 to a forecasted 20 percent this year. The company hit the brakes on new AI product development because the high cost of serving over 200 million free users began significantly eating into the firm's overall profit margins.
5Rising AI Competitive Pressure
The company faces intense pressure from new AI rivals like Anthropic, whose Claude Design tool is effectively poaching Canva’s free user base. To counter this, Canva has launched its own AI models, Craft and Brush, while simultaneously tightening its strategic partnership with OpenAI to maintain its competitive edge in the design software market.
6Investor and Market Outlook
Early investors and venture funds, including Blackbird and Airtree, remain optimistic about Canva’s long-term potential despite the recent challenges. However, a planned sharemarket float remains distant. Analysts note that Canva is restructuring from a weaker starting point compared to peers like Atlassian, which cut roles while in a stronger financial position.
7Foundational Leadership Philosophy
Founders Perkins and Obrecht were personally involved in every layoff decision, rejecting automated processes to ensure a more human approach. They opted for one-to-one conversations with team leaders rather than mass notifications. This reflects their long-term goal of building a valuable company while maintaining a commitment to ethical business practices and transparency.
8Impact on Australian Tech
As Australia’s most valuable startup, Canva’s performance is viewed as a bellwether for the broader local technology sector. The success of this restructuring will determine whether the company can return to a growth trajectory. Investors are closely watching how the firm balances product innovation with the need for sustainable, long-term profitability.
9Future Path and Uncertainty
Canva now faces the challenge of proving it can grow again rather than simply shrinking. While early backers like Lars Rasmussen continue to support the founders, the company must navigate a difficult macroeconomic environment. The upcoming all-hands meeting will be a critical moment for leadership to restore confidence among the remaining staff.