Canva juggles cost crunch amid AI switch as it eyes 2027 IPO

Canva co-founder Cliff Obrecht said high costs forced the company to slow the rollout of AI features in its graphic design apps, as the Sydney-based company, valued at US$42bn, cut its annual revenue growth forecast to about 20% from 30% ahead of a planned 2027 IPO. Obrecht told the Stripe technology summit that Canva reduced AI serving costs by about 90% to make the economics work for its 200 million free users and 30 million paying users.

Canva juggles cost crunch amid AI switch as it eyes 2027 IPO By Perry Williams, chief business correspondent Canva co-founder Cliff Obrecht said high costs slowed down a planned rollout for delivering artificial intelligence models in its graphic design applications, as it juggles the conversion of fans into paying customers. The Sydney-based company cut its annual revenue forecast earlier in August https://www.theaustralian.com.au/business/technology/canva-forced-to-slash-growth-forecast-after-revealing-high-cost-of-new-ai/news-story/e409c8197305fecb5082d51fdd89637e after conceding it could not afford to run the AI suite it spent the year building. Canva, which is valued at $US42bn, now expects growth of about 20% for the full year. It had previously expected 30% top-line growth. Obrecht, Canva’s chief operating officer, said it was learning lessons as it rolled out more extensive AI features throughout its design products. The US$42bn $59bn Canva declared itself an AI company four months ago https://www.theaustralian.com.au/business/technology/inside-canvas-biggest-evolution-as-it-bets-its-future-on-artificial-intelligence/news-story/92ec2b20e2276568e716cdfb0b372239 as it mounts an aggressive challenge to established software titans, while fending off AI armageddon ahead of a much-hyped public listing slated for 2027. “In April we launched with a lot of frontier intelligence: third-party image models, third-party LLMs, and they were amazing at what they did. But they’re also very expensive, and if you’re to deploy AI to hundreds of millions of people, you need to really insource a lot of that model development, particularly core competencies around image and design generation,” Obrecht told the Stripe technology summit. “So since we launched in April we actually had to really slow down that rollout whilst we get those costs in check, but while also hitting quality and latency goals as well.” The Canva co-founder said the combination of quality, cost and latency was the “holy trinity” which allowed it to give both a quality free and paid product to users. “At our scale, when we’ve got sort of 200 plus million free users and say 30 plus million paying users, the paying users need to subsidise the free users as well as get a generous product themselves,” Obrecht said. “So to serve 200 plus million users a very generous free AI product comes with a huge cost. And so, we needed to get that cost down, and we’ve managed to do that by about 90 per cent. Which means we can really scale a lot more.” Canva chief executive Melanie Perkins, Obrecht’s wife, has described Canva AI 2.0 as the company’s “biggest evolution” since it launched in 2013. However, in August, Perkins described the guidance miss as a “deliberate decision to get the economics right for Canva’s unique scale before broadly distributing Canva AI”. Asked about what advice he would give people who work with their spouse, Obrecht said not to quibble over details. “If you disagree with something your wife says, like you don’t have to argue the point to win right there and then. Generally, they say something you disagree with. You can maybe say, ‘Yeah, well, I disagree with that’, but don’t die on that hill. Just kind of like leave it, and then an hour later or the next day, it’s probably fine.” This article first appeared in The Australian as Canva’s Cliff Obrecht juggles cost crunch amid AI switch . Related Topics UNLOCK INSIGHTS Discover the untold stories of emerging ASX stocks. Daily news and expert analysis, it's free to subscribe. By proceeding, you confirm you understand that we handle personal information in accordance with our Privacy Policy https://stockhead.com.au/privacy-policy/ .