Credit: Canva
Emma Rapaport and Paul Smith reported the markdown for the Australian Financial Review on 14 August.
The figure appears two ways and both are correct. It is $7.1bn in US dollars, and A$10bn, which is the number most headlines carried.
The cut takes Blackbird and Airtree’s mark from $42bn to $34.9bn, a drop of 17%. Both firms are among Canva’s longest-standing backers.
The bigger cut came from inside
Canva’s own independent valuation has moved further than its investors’ did. The AFR notes that the internal downgrade surpasses theirs.
That number matters because it is not an opinion. It is the price employees can sell shares at, and it has gone from $38.9bn to $31bn over the past year.
So the write-down is $7.1bn on one measure and $7.9bn on the other. Two separate valuers, moving the same way.
Neither is a transaction. Nobody bought or sold Canva at these prices, and that distinction matters for what follows.
The downgrade that started it
The markdown came a week after the revenue news. The AFR reported on 3 August that Canva had cut its expected growth rate by a third, to 20%.
Its headline for that story named the cause directly. Canva had an AI bill shock.
The company found it difficult to roll out AI tools given the soaring cost of using frontier models. Second-quarter revenue reached $921.9m, up 25.2%, and missed its internal guidance.
Melanie Perkins says demand was the problem rather than the absence of it. Appetite for the new AI features “significantly exceeded” expectations.
Perkins on the decision to slow down
Her account to Fortune, by email, is the clearest statement of what happened. It is also unusually candid about sequencing.
The launch “validated the demand, but also showed us we needed to reduce the cost of completing an AI task to support a broad rollout”, she said.
Then the decision. “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.”
Cost per task has since fallen by nearly 90% since Canva AI 2.0 launched in April, she says. Users are creating three times as many designs, so the saving does not land where the percentage suggests.
What actually broke
Derek Hernandez, a senior research analyst at Pitchbook covering SaaS and AI, gave Fortune the structural version. Software’s economics are the casualty.
“AI is making SaaS no longer a zero marginal cost solution, which has really been what I would call a lot of software’s secret sauce up until now,” he said.
His analogy is the useful part. Building a Ford F-150 is training, and the petrol and the mechanic are inference, “because that’s the point of using the product”.
Serving one more user of a design tool used to cost almost nothing. Every AI-assisted image now arrives with a compute bill attached.
Five days apart
Hernandez also supplied the line connecting this to the listed markets. “Canva and Figma both hit the same wall about five days apart, but they cited it in different places,” he said.
Figma grew 48% and raised its outlook, and its stock fell 16% on margins.
Its free cash flow margin fell to 14% in the second quarter from 27% in the first. It has guided third-quarter growth to 36%, down from 48%.
One company is public and got repriced in a day. The other is private and got repriced by its shareholders. Same wall.
The same bill is arriving elsewhere
Large buyers are hitting it too. Amazon ran a Claude job that went 860% over budget before failing.
The responses are converging. Microsoft has put spending limits on internal AI use.
EY built an AI router to send tasks to cheaper models rather than defaulting to the frontier. That is close to what Perkins describes rebuilding.
Rory O’Driscoll of Scale Venture Partners put the timing argument on the 20VC podcast. “There’s going to be a lot of people paying the bill in 26 and 27 for a certain amount of hesitancy in 23 and 24,” he said.
Why Canva could not sit it out
AI is not a feature here, it is the expansion plan. Canva has been pushing beyond design into enterprise workflows, adding tools including Canva Code.
Perkins told Fortune in 2023 that the AI market was too fragmented. The strategy since has been to bring those pieces inside one platform.
That is the dilemma Fortune sets out for the whole sector. Companies cannot afford to skip the AI boom, and embracing it can undermine the economics they are protecting.
Europe has an entrant on the same premise, and no comparable margin history yet. Lovable reached $500m of revenue with 146 employees.
The listing is the reason for the brakes
Canva was valued at $42bn in an employee share sale, and expected to list in 2026. Hernandez now suggests next year.
He reads the slowdown as investor-facing. “I’m sure they’re trying to protect their profitability, especially if they want to go to public investors,” he said.
Growth of 20% with repaired margins is a different pitch to growth of 30% with a cost problem. Figma suggests public markets punish the second one immediately.
What would settle it
Three things, and the first is the next revenue print. Canva has guided to about 20%, and whether that holds shows if the cost problem is fixed or deferred.
The second is the 90% claim. A cost per task falling that far while usage triples is testable over a couple of quarters.
The third is who else gets marked down for this reason. Hernandez calls Canva and Figma the biggest signals so far, which implies more are coming.
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