As Wall Street punishes software stocks over AI concerns, Canva gets more acquisitive

In recent weeks, software stocks have faced significant declines as investors express concerns over the impact of artificial intelligence. Despite this trend, Canva has emerged as a strong performer in the startup landscape, particularly favored by designers. However, the competitive environment is shifting, with larger rival Adobe experiencing a 30% drop in stock value this year. In response to the evolving market dynamics, Canva has announced its intent to expand through acquisitions. The company revealed on Monday that it has acquired two startups, Cavalry and MangoAI, as part of its strategy to better compete with Adobe. Cavalry, a small startup specializing in software for two-dimensional animations, has garnered attention among designers as a viable alternative to Adobe's After Effects. Meanwhile, MangoAI operates in stealth mode, focusing on technology for producing short video advertisements. Details regarding the financial terms of these acquisitions have not been disclosed. Cameron Adams, Canva's co-founder and product chief, shared insights with CNBC regarding customer interest in motion graphics capabilities. Canva has already utilized Cavalry's offerings for its projects and plans to keep the company operational for independent use, while also integrating the animation technology into Canva's core product and its Affinity application designed for professional use. Canva previously acquired Affinity in 2024 and made it free to users in October. The acquisition of MangoAI is intended to enhance the Canva Grow advertisement generator, which is accessible through the business tier priced at $250 per user annually. The technology from MangoAI is designed to optimize video performance and provide actionable recommendations. Adams emphasized the complexity involved in creating effective videos, noting the importance of analyzing performance data across campaigns to refine content strategies. As of 2025, Canva reported an impressive annualized revenue of over $4 billion, reflecting a 36% increase from the previous year. In comparison, Adobe’s revenue for the November quarter was reported at $6.2 billion, up 10%. Adobe's market capitalization was approximately $101 billion, whereas Canva was valued at $42 billion in August during a secondary share offering, prior to the recent downturn in the software sector. Adams acknowledged the use of generative AI by users for content creation, such as slide presentations and social media posts, but he emphasized the limitations of AI. "AI is great at getting you to 80%," he stated. "The last 20% is crucial for ensuring content truly represents your brand and resonates with your audience." Currently, Canva, which boasts a workforce of over 5,000 employees, is not pursuing a new funding round, as Adams noted steady growth in both revenue and user base, along with continuous improvements to its product offerings through AI integration.