Australian design software giant Canva is undertaking the first major round of job cuts in its 13-year history, with 22 per cent of its workforce affected as the company restructures amid mounting competition and financial pressure from artificial intelligence.

The Sydney-based technology company, valued at approximately US$31 billion (A$44 billion), has confirmed that 1,271 employees will be affected by the changes, although not all will lose their jobs.

Some employees will be offered different roles or required to relocate as Canva moves to simplify its operations and return to the leaner structure of a technology start-up.

In a letter to employees, Canva co-founder and chief executive Melanie Perkins said the company needed to make significant changes to remain competitive.

“We’re simplifying layers, consolidating overlapping responsibilities, and ensuring teams have the right mix of skills and experience for the chapter ahead,” Perkins said.

She acknowledged that the restructuring would result in the departure of employees who had helped build Canva into one of Australia’s most successful technology companies.

The announcement follows reports that Canva has struggled to meet ambitious revenue targets, with annualised revenue reportedly remaining close to levels recorded earlier this year.

The company has also faced rising costs associated with integrating advanced AI models into its design platform, while competition from other AI-powered creative tools continues to intensify.

In August, Canva reportedly reduced its revenue growth expectations from 30 per cent to 20 per cent, triggering a US$7.1 billion (A$10 billion) reduction in its valuation.

Perkins said Canva had become increasingly fragmented as it expanded, creating additional management layers and slowing decision-making.

She said the company wanted to return to smaller, more independent teams capable of developing products and responding quickly to customer needs.

Employees leaving the business will receive redundancy packages including six months’ salary and changes to equity vesting arrangements.

Canva co-founders

Canva will also provide US$10,000 in equity-free funding to departing employees interested in pursuing their own business ideas.

The restructuring comes amid a broader wave of job losses across Australia’s technology sector as companies increasingly adopt AI to automate software development and other business functions.

Atlassian announced 1,600 job cuts in March, including approximately 480 positions in Australia, while WiseTech Global and Afterpay owner Block have also announced substantial workforce reductions.

Canva’s restructuring also raises questions about its long-anticipated initial public offering, which has been viewed as an important opportunity for employees and early investors to realise the value of their holdings.

Founded by Perkins, Cliff Obrecht and Cameron Adams, Canva has grown from a small Australian start-up into a global design platform.

However, its latest restructuring highlights the growing pressure on established software businesses to adapt as artificial intelligence reshapes the technology industry.