Canva cuts 22% of staff as AI costs bite; Adobe trades at 13.6 times earnings
The challenger to Adobe's Creative Cloud is cutting, moving or relocating 1,271 people, 22% of its staff, after the cost of serving AI features forced a growth downgrade and a $7.1 billion valuation markdown. The incumbent still grows 12% a year and trades at 13.6 times earnings.
Vincent Jiang · 3 min read
Canva, the Australian challenger to Adobe's+0.49% — Adobe, up 0.49 percent today Creative Cloud, told staff on Wednesday that 1,271 people, 22% of its workforce, face layoffs, role changes or relocation to hubs centred on Sydney 12. Chief executive Melanie Perkins, who co-founded the company, called it "refounding Canva" 2 and "the hardest moment in our 13-year history" 3, in a note dated November 3 4 that never once uses the word AI, crediting only "new technology" 1.
Those leaving keep their laptops and at least six months of pay 1. Squarespace announced 19% cuts a day earlier 2; trackers count 139,004 tech jobs gone across 344 companies this year 5.
Too popular to afford
The August paper trail explains the omission. Canva cut its 2026 growth forecast from 30% to 20% after second-quarter revenue of $921.9 million, up 25.2%, missed internal guidance, on the soaring cost of running AI features on frontier models 6. Demand, Perkins told Fortune, "significantly exceeded" expectations; Canva slowed the rollout rather than ship broadly "before the underlying economics were ready" 6.
Its longest-standing backers, Blackbird and Airtree, marked the company down 17% to $34.9 billion, and Canva's internal mark, the price at which staff can sell shares, fell from $38.9 billion to $31 billion 6. PitchBook analyst Derek Hernandez gave the sector diagnosis: "AI is making SaaS no longer a zero marginal cost solution" 6.
The incumbent bleeds in its multiple, not its sales
Adobe's filings show no collapse. Revenue rose in each of the past twelve quarters to a record $6.76 billion in the quarter ended August 28, up 12.9% 89, and $9.3 billion of stock was bought back in four quarters 7. The market still prices an AI threat the numbers do not show: 13.6 times earnings against a 22.8 median for the S&P 500, after a one-year fall of 25.9% while the index returned 11.8% 7.
Adobe's revenue has risen every quarter for three years, to a record $6.76 billion
Sales set records all year while the shares lost 29.7%
Data
| Revenue | |
|---|---|
| Q4 '23 | $5.05B |
| Q1 '24 | $5.18B |
| Q2 '24 | $5.31B |
| Q3 '24 | $5.41B |
| Q4 '24 | $5.61B |
| Q1 '25 | $5.71B |
| Q2 '25 | $5.87B |
| Q3 '25 | $5.99B |
| Q4 '25 | $6.19B |
| Q1 '26 | $6.4B |
| Q2 '26 | $6.62B |
| Q3 '26 | $6.76B |
Adobe trades at 13.6 times earnings, a third of its 2021 multiple and below the S&P 500 median
Priced like a value stock while sales grow 12%
Data
| Value | |
|---|---|
| Adobe, Sept 2021 | 47 |
| S&P 500 median, now | 22.8 |
| Adobe, Nov 2026 | 13.6 |
The crack is real but narrow. AI-first subscription revenue, above $650 million and up more than 150%, is about 2.4% of Adobe's $27.5 billion total 7; contracted-but-unbooked revenue grew 8%, its first single-digit rise since early fiscal 2023 7; and net income rose 3.1% against 12.9% sales growth last quarter 8. Canva, for its part, claims free-cash-flow profitability on $3.5 billion of revenue, and Perkins cited no cash pressure 1. Neither camp is cutting from distress; both are being repriced by the same bill.
December decides
Adobe's December report, its first under Anil Chakravarthy, who becomes chief executive on December 1 as Shantanu Narayen moves to executive chair, tests guided 10.2% growth in subscription value for fiscal 2026 7. Canva's staff all-hands lands November 10 5. Adobe has spent the autumn losing what the multiple was built on: the executive who ran Photoshop left with no successor in September, and OpenAI evicted Adobe from ChatGPT weeks earlier. At Canva, the AI bill is being paid in jobs. At Adobe, so far, only in the multiple.
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