Canva cuts 1,271 jobs in its first mass layoff as AI costs bite and growth stalls

Canva's recent workforce reduction, affecting 22% of its staff, is a consequence of AI's financial and competitive pressures, rather than direct job displacement by artificial intelligence. The reporting clarifies that AI is primarily impacting Canva through its operational costs and as a market competitor, rather than by taking over the work of the affected staff.

The cost side is specific to Canva's business model, which serves hundreds of millions of users, many of whom are free. Every AI image or design generated by a non-paying user incurs a cost to the company, a factor Canva reportedly underestimated. This led to a cut in its 2026 revenue growth forecast from 30% to 20% and early investors marking down the valuation to about $35 billion from $42 billion. The company's adjustments to AI allowances and subscription prices, described as "pricing whiplash," further illustrate the challenge of managing these expenses.

Simultaneously, AI tools, including general-purpose chatbots, are offering design capabilities that Canva traditionally sold, intensifying market pressure. This competitive squeeze, combined with the operational costs of its own AI features, has contributed to the company's first growth slowdown in a decade. The restructuring involves merging product, growth, and platform teams and centralising work in Sydney, with the new structure taking effect in January 2027.