LONDON — Australian graphic design company Canva believes it is in a “uniquely strong position” to withstand industry headwinds as it embarks on a European expansion.
The Sydney-based software company opened its new Europe headquarters in London last month as it competes with tech heavyweights Adobe and Microsoft to attract individual and enterprise users to its design suite.
It comes as higher borrowing costs and a weakening economic outlook have prompted tech firms to slash jobs over the past year. But co-founder and CEO Melanie Perkins said the nine-year-old company is well-placed amid wider pressures.
“Being profitable for the last six years, having a strong cash balance, all of those things have been extraordinarily important,” Perkins told CNBC.
Canva, which offers both free and paid tools for designing websites, presentations and social content, had annualized revenues of $1.5 billion in the year to May. It also has $700 million in cash reserves, the company said.
Of its 135 million global users, 16% are in Europe. Overall, around 15% are paid subscribers, of which 14 million are individuals and 6 million are businesses such as WPP, Unilever and Rolls Royce. It is now targeting growth in both those areas.
“We’ve made our paid products extremely affordable, so regardless of what’s happening in the macroeconomic environment, people are moving to Canva rather than away,” Perkins said of the service.
“We’ve certainly seen that happen and play out over the last couple of years as that economic uncertainty has kicked in,” she added.
Betting on ‘magic’ AI
Canva, a 2023 CNBC Disruptor, has not been immune from industry setbacks, however.
Despite reaching a peak valuation of $40 billion in 2021, the private company has since seen investors cut their valuations amid the darkening outlook. It also narrowly avoided implication in the collapse of start-up financer Silicon Valley Bank in March.
Meantime, growing scrutiny around artificial intelligence has coincided with the firm’s rollout of a new suite of AI-powered editing, publishing and design features, which attracted 10 million new users in the space of a month. Amid the fanfare surrounding the burgeoning technology, it has preferred to euphemistically dub the tools “magic.”
“That term ‘magic’ has been what we’ve referred to things as for almost a decade, and so that branding has been something we’ve carried through,” Perkins said.
Canva has partnered with OpenAI for its Magic Write tool, which auto-generates full bodies of text for presentations and blogposts based on prompts of a few words. But Perkins said the company is moving ahead cautiously, “over-indexing towards trust and safety.”
“There’s a lot of terms you can’t do in Magic Write. There’s no medical, no political, there’s a lot of categories that we’ve actually said it’s too risky at this point in time. We’re erring on the side of caution because this industry is so in its infancy,” she said.
An evolving creative industry
The creative industry is among those thought to be at risk of disruption by forthcoming tech advancements, with some platforms already capable of producing images and content previously produced by designers.
Still, Perkins said the tools are intended to streamline and simplify design processes, which she believes will “supercharge” what people can do.
“Every industry goes through radical transformations. Certainly, our industry’s not been distant from that,” Perkins said. “As new technology becomes available, the whole industry has to adapt and everyone has to learn new skills. I think that’s just happened time and time again.”
“When we launched Canva, people were like ‘oh, is this going to be the end of graphic design’ and it certainly hasn’t been the case. I think we’ve seen a much more prolific spread and demand for graphic design and visual communication across all organizations,” she added.
As the business approaches its 10th anniversary in August, it is hoping that continued adoption could fuel their ambitions to amass 1 billion users and become one of the world’s most valuable companies.
Asked whether that user target could occur within the next decade, Perkins said she was hopeful. However, on the prospect of a potential initial public offering, she was less forthcoming. “There’s nothing to speak of at this point,” she said.