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As of May 2024, Canva's annual recurring revenue (ARR) stands at $2.3 billion, a significant increase from the $1.7 billion ARR reported in October 2023. The company's ARR has grown consistently over the past few years, from $325 million in 2020 to $750 million in 2021, representing a 100% year-over-year growth.

In the following year, Canva's ARR reached $1.1 billion, a 54% increase from the previous year.

Canva is a subscription SaaS company that primarily prices based on the number of professional/enterprise and productivity features that a team needs—cloud storage, SSO, premium stock photos, post scheduling, and more.

Canva has a strong organic acquisition engine founded on SEO—they rank #1 or near #1 on Google for terms like "ai image generator", "graph maker", "resume templates", "logo maker", "photo editor", "business cards", "tier list maker", and "gif maker".

Farming the free individual users that they acquire through this SEO engine and upselling them to paid plans contracts has been a powerful growth tactic for Canva. With its focus on ease of use and increasingly broad range of use cases, now including videos, Powerpoint-like presentations, and websites, Canva is well set up to bring in free users from every part of the organization—and create maximally fertile ground for upsells.

Most of Canva's user base is on free, which is by design—Canva wants as many people as possible to use the product.

The Pro plan ($119 per year for one person) is mainly for people that want access to the advanced content library and want to collaborate with more than one fellow creator, or that need more storage—it's mainly a plan for SMBs.

Canva's enterprise offering is where they offer things like account management, access control, SSO, and bulk pricing. Canva's enterprise adoption, however, is still relatively nascent—about 10% of Canva's revenue came from enterprise plans, though we estimate that to have grown to roughly ~20% as of 2023.

Overall, Canva's CAC is expected to go up over time with more capital inflows in the space and saturation of the early adopter segment, but Canva expects it to average down with high retention, viral effects, and using their large base of free users as lead generation.

Canva was founded in 2013 by Melanie Perkins and Cliff Obrecht during the rapid rise of image-based social media.

As Facebook (2004) and Twitter (2006) grew and aggregated audiences in their feeds, digital marketers trying to stand out and win traffic started going multimedia, crafting preview images, infographics, and other visual collateral to go out with every new blog post, case study, or announcement.

This multimediaification of the feed created a need for companies to do some basic graphic design work for each new post—frequent but unsophisticated work that companies didn’t want to spend a $30/hour designer on.

The basic feature of being able to throw text on top of images became Canva’s “sepia filter”—the feature that, like Instagram’s filters, got them product-market fit (5 million users in 2 years) by helping marketers create quick, branded social media graphics using free, browser-based tools.

Other products like Unsplash (2013) followed Canva by giving marketers access to high-quality, free stock photography, while on the other hand, Buffer launched Pablo (2015) to use a free social media graphic builder as lead gen for their post scheduling product.

Since then, Canva has grown to 150M monthly active users, with support for all kinds of graphic design tasks outside social media—presentations, docs, videos, posters, billboards, business cards, and more.

Canva has been steadily diversifying its product offerings beyond basic design tools. In 2023, the company launched Canva Docs, a collaborative document creation tool that competes with Google Docs and Microsoft Word.

Canva has also expanded into video editing, website creation, and data visualization tools. This product diversification strategy aims to position Canva as a comprehensive visual communication platform, capable of meeting a wide range of business and personal creative needs.

Adobe's Creative Suite, including Photoshop and Illustrator, remains the industry standard for professional designers. While these tools offer more advanced capabilities, they require significant training and are often prohibitively expensive for casual users or small businesses. Canva has positioned itself as a more accessible alternative, focusing on speed and ease of use rather than advanced editing features. This approach has allowed Canva to capture a large segment of the market that was previously underserved by complex professional tools.

Microsoft Office and Adobe Creative Cloud—which 100M+ organizations already pay for—which are aggressively investing in generative AI via Bing Image Generator (1 billion images created so far) and Firefly (3 billion images created) to own graphic design and image creation.

Canva’s B2B suite product has 16 million paying users, but lacks the primary access to a company’s workflows and design library that Microsoft and Adobe have.

The rise of multimodal LLMs like Google’s Gemini and OpenAI’s GPT-Vision that can process both text and images threatens graphic design tools like Canva by drastically undercutting human designers on price (at roughly $0.005 per image) and replacing WYSIWYG editing with natural language prompts.

Where Canva consists of a core editing technology applied to different sizes of rectangles to make everything from business cards to billboards, Gamma and Tome are forging a new interactive, responsive “mini-website” form factor that breaks free from the dimensions of physical paper and fixed screen sizes.

While ChatGPT generates text and Midjourney generates images, Gamma’s AI editor is multimodal, allowing users to generate rich cards with text, images, tables, timelines, 2x2 diagrams, and more.

Figma is a browser-based online design tool used to build mock-ups, wireframes, product diagrams, and other visual collateral primarily focused around the designer and product manager roles.

Figma's lack of direct substitutes makes it hard for teams to stop using it once they've become accustomed to its workflow. Teams use Figma for brainstorming, prototyping, user research, and to hand off the design system to developers—other tools don't do all of that.

Figma is relatively easy to self-serve into even for bigger companies because IT departments that centralize purchasing on software like Salesforce or Hubspot will devolve buying decisions on tools like Figma to the design team thanks to (1) the lower, more flexible pricing, and (2) the less sensitive files involved.

While both are bucketed as design products, only about 20% of Canva's use cases ultimately overlap with Figma's. Canva differentiates with features like video editing, presentations, and print—and from our research, teams will frequently pay for both tools with Figma being used more on the product side of the organization and Canva being used more on the marketing side.

Canva's primary competition in the free, easy-to-use, and web-native category of graphic design tools comes from companies like Visme and Snapseed offer similar drag-and-drop interfaces and template libraries for creating graphics, presentations, and social media content.

However, Canva differentiates itself through its extensive template library (over 500,000 designs) and intuitive user interface that requires minimal learning curve. Canva's Brand Kit feature, which allows users to save brand assets and apply them consistently, is a key advantage for small business users.

As Canva expands its offerings to include content planning and scheduling tools, it increasingly competes with content marketing platforms like Hootsuite and Buffer.

While these platforms offer more advanced social media management features, Canva's integrated design capabilities give it an edge for users who prioritize visual content creation. The recent acquisition of content planning tool Zeetings further strengthens Canva's position in this space.

Canva's expansion and transition from simple graphic design tool to enterprise productivity suite has them on a collision course not just with Adobe's Creative Cloud ($275B market cap), but Microsoft Office ($2.23T), Wix ($10B) and others.

Canva is betting big on the primacy of the rectangle, drilling down into different industries like education and different rectangle types—collaborative whiteboards competing with Figma ($400M ARR) and Miro ($17.5B valuation), slides competing with Google Slides (2B+ Workspace users), and one-page websites competing with Squarespace ($931M revenue).

Canva is stitching together this suite of rectangle-designing tools into a full suite of products, leveraging their ownership of companies’ brand assets and marketing workflows to own the entire productivity suite.

Their long-term goal is to displace the traditional productivity suite of email, word processor, and spreadsheet with the visual communication tools—slides, images, and videos—that have become essential for every role in an organization, from sales & marketing and product to HR.

Canva's long-term upside hinges on how well it can sell this platform into the enterprise with Microsoft Office ($35B ARR) and GSuite (3B+ users) standing in the way.

Canva has been aggressively pursuing international expansion, with a focus on localizing its product for different markets. The company now operates in over 190 countries and supports over 100 languages. Canva has been particularly successful in emerging markets, where it often serves as the first design tool many users encounter. This global approach has been key to Canva's rapid user growth and its ability to tap into diverse market opportunities

The company has been expanding rapidly in countries like Brazil, India, Indonesia, and the Philippines. Canva's goal is to reach 1 billion users in the coming years, which would represent a substantial expansion of its total addressable market.