Canva’s largest institutional backers have collectively marked down the design platform’s valuation by approximately $10 billion over recent weeks, dropping it from its August 2025 high of $42 billion toward the low-$30 billion range, according to the Australian Financial Review.
The writedowns follow Canva’s decision to cut its 2026 revenue growth forecast from 30% to 20% after discovering that the AI features it aggressively rolled out were far more expensive to operate than management had projected.
The timing could not be worse for the Australian company’s IPO ambitions, which had been building momentum throughout the first half of 2026. Blackbird Ventures, Australia’s largest venture capital firm and an early Canva backer, told its investors earlier this year that Canva was “ready” for a second-half 2026 listing. That timeline now appears to be slipping into 2027, with Fortune reporting that the company may be targeting next year instead.
The root cause is straightforward and instructive for every software company racing to embed AI into its products right now. CEO Melanie Perkins told investors in her Q2 2026 shareholder letter that Canva had been “relying too heavily on frontier models” from third-party providers.
Several of Canva’s first-party AI models were not ready for release when the company launched Canva AI 2.0 four months ago. Pricing, consumption controls, and usage limits had not caught up with the outsized demand users generated once AI features went live. Some AI features reportedly cost six times more to serve than what users pay for them.
Rather than continuing to burn cash on unsustainable unit economics, Canva chose to slow the rollout deliberately while rebuilding the underlying architecture. Perkins framed the decision as protecting long-term viability over short-term growth numbers.
“Rather than broadly rolling out a product before the underlying economics were ready, we decided to slow the rollout while we rebuilt the architecture, reduced unit costs and strengthened the business model,” she wrote.
The cost reduction effort has already produced dramatic results despite the valuation hit taking place alongside them. Canva has slashed AI servicing costs by approximately 90% through two strategies: developing proprietary in-house models and acquiring AI startups like Leonardo.AI. The company’s video model now runs 17 times cheaper than comparable frontier models, while its image model costs 30 times less. Over 200 researchers, engineers, and platform specialists now work on Canva’s internal AI capabilities, building the infrastructure that should eventually eliminate the dependency on expensive third-party inference.
The financial foundation remains strong underneath the valuation markdown and the narrative damage it carries. Canva closed 2025 with roughly $4 billion in annualized revenue and $1.47 billion in cash on hand. Q2 2026 revenue landed at $921.9 million, up 25.2% year-on-year. The company has maintained profitability for nine consecutive years, a distinction that separates it from the vast majority of venture-backed software companies globally. Users now create more than one billion designs every month across 265 million monthly active users.
The broader lesson extends well beyond a single Australian company’s valuation adjustment and touches every SaaS business integrating AI today. Canva is a category leader with $4 billion in revenue, nine years of profitability, and $1.47 billion in cash. If a company with those resources discovers that AI inference costs can outrun its pricing power, every smaller software company running the same playbook with fewer reserves should take notice immediately.
