Canva has spent years proving it can achieve what many high-growth startups struggle with: rapid growth alongside profitability. However, the rise of generative AI is now challenging the company's financial foundations.
Growth Forecasts and the Price of AI
The design-software company has cut its expected revenue growth rate by a third to 20% after the unexpectedly high cost of delivering AI features prompted a strategic slowdown. Canva CEO and co-founder Melanie Perkins noted that user demand for new AI tools "significantly exceeded" the company’s internal projections.
“This validated the demand, but also showed us we needed to reduce the cost of completing an AI task to support a broad rollout,” Perkins said. Rather than scaling a product before its underlying economics were sustainable, Canva chose to slow the rollout, rebuild its architecture, and reduce unit costs.
The End of Zero Marginal Cost
This situation illustrates a growing dilemma across the software industry. Derek Hernandez, a senior research analyst at Pitchbook, notes that AI is breaking the "secret sauce" of traditional SaaS: the zero marginal cost model. Inference expenses—the recurring cost of processing AI requests—are becoming a significant burden.
Canva’s experience mirrors that of its competitor, Figma. Figma reported a drop in its free-cash-flow margin from 27% in the first quarter to 14% in the second, while forecasting a deceleration in revenue growth from 48% to 36%.
Eyes on the IPO
The decision to slow the AI rollout is likely a calculated move to protect margins ahead of a potential IPO. Currently valued at approximately $42 billion, Canva may be targeting a public debut next year or in 2026. Protecting profitability is essential for appealing to public market investors who prioritize sustainable business models over growth at any cost.
