Australian Canva expands its AI-based design business to Europe

LONDON — Australian graphic design company Canva believes it is in a “particularly strong position” to weather industry headwinds as it embarks on a European expansion.

The Sydney-based software company opened its new European headquarters in London last month as it competes with tech heavyweights Adobe And Microsoft to attract individual and business users to its design suite.

It comes as higher borrowing costs and a weaker economic outlook have prompted tech companies to cut jobs over the past year. But co-founder and CEO Melanie Perkins said the nine-year-old company was well placed amid wider pressures.

“Being profitable over the last six years, having a strong cash balance, all of those things have been extremely important,” Perkins told CNBC.

Canva, which offers free and paid tools for designing websites, presentations and social content, had annualized revenue 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. In total, about 15% are paid subscribers, including 14 million individuals and 6 million businesses such as WPP, Unilever and Rolls-Royce. He is now targeting growth in both of these areas.

“We’ve made our paid products extremely affordable, so regardless of what’s happening in the macro environment, people are turning to Canva rather than walking away from it,” Perkins said of the service.

“We’ve certainly seen this happen and play out over the past two years as this economic uncertainty has taken hold,” she added.

Canva, a 2023 CNBC disruptor, hasn’t been immune to industry setbacks, however.

Although it reached a peak valuation of $40 billion in 2021, the private company has since seen investors slash valuations amid a darkening outlook. He also narrowly avoided being involved in the collapse of financial start-up Silicon Valley Bank in March.

Meanwhile, the growing focus on artificial intelligence has coincided with the company’s rollout of a new suite of AI-powered editing, publishing and design features, which has attracted 10 million new users within a month. Amid the fanfare surrounding the burgeoning technology, he preferred to euphemistically dub the tools “magic.”

“That term ‘magic’ is what we’ve been calling things for almost a decade, and so that branding is something that we’ve driven,” Perkins said.

Tech pundits have increasingly sounded the alarm over the threats AI poses to society, with Tesla CEO Elon Much and Sam Altman, CEO of ChatGPT maker OpenAI, among those raising concerns .

Canva has partnered with OpenAI for its Magic Write tool, which automatically generates full body text for presentations and blog posts based on prompts of a few words. But Perkins said the company is treading cautiously, “over-indexing towards trust and security.”

“There’s a lot of terms you can’t do in Magic Write. There’s no medical, no politics, there’s a lot of categories that we actually said were too risky at this point. stadium. We err on the side of caution because this industry is still in its infancy,” she said.

The creative industry is among those at risk of being disrupted by upcoming technological advances, with some platforms already capable of producing images and content previously produced by designers.

Still, Perkins said the tools are meant to streamline and simplify design processes, which she says will “invigorate” what people can do.

“Every industry goes through dramatic transformations. Certainly our industry has not been far from it,” Perkins said. “As new technologies become available, the whole industry has to adapt and everyone has to learn new skills. I think that’s 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 wasn’t. I think we have seen a much more prolific spread and demand for graphic design and visual communication across organizations,” she added.

As the company nears its 10th anniversary in August, it hopes continued adoption could fuel its ambitions to amass 1 billion users and become one of the most valuable companies in the world.

When asked if this user target could happen in the next decade, Perkins said she was hopeful. However, on the prospect of a possible IPO, she was less communicative. “There’s nothing to say at this point,” she said.