Canva Cuts Growth Forecast by a Third Due to AI Costs

Canva, a design software company that had previously demonstrated success in achieving rapid growth alongside profitability, has revised its expected revenue growth rate downward by one-third, setting a new forecast of 20%. This adjustment stems from the unexpectedly high costs associated with providing generative AI features, prompting the company to decelerate the rollout of these capabilities. Canva CEO and co-founder Melanie Perkins communicated to Fortune that user demand for new AI functionalities "significantly exceeded" the company's projections. Perkins explained that while this demand validated the market's interest, it also highlighted the necessity for the company to reduce the cost of executing an AI task to enable a widespread deployment. Consequently, Canva opted to slow the product rollout to first rebuild its underlying architecture, decrease unit costs, and fortify its business model, rather than releasing a product before its economic viability was secured. This challenge arrives at a critical juncture for Canva, as artificial intelligence is integral to its strategic objective of evolving into a comprehensive workplace software platform. Previously, Perkins had indicated to Fortune that the AI market was characterized by fragmentation, and Canva has since introduced tools such as Canva Code in its pursuit of expanding beyond design into enterprise workflows. This situation reflects a broader industry-wide dilemma where software companies face the imperative to engage with the AI boom, yet doing so risks undermining the profitability of their existing businesses. Derek Hernandez, a senior research analyst at Pitchbook specializing in the intersection of SaaS and AI, noted that AI is transforming Software as a Service (SaaS) from a zero marginal cost solution, which had been a significant advantage for many software companies, into a model where the cost of usage is becoming a global concern for all businesses. Hernandez elaborated that users desire more capable products and solutions, and current technology dictates that increased usage leads to higher costs. Perkins further stated via email that Canva has achieved a nearly 90% reduction in cost per task since the introduction of Canva AI 2.0 in April, an upgrade that enhanced the Canva platform with agentic capabilities. Despite this significant cost reduction, the company is prioritizing a sustainable economic model before a broad release.