Co-host Australia finished at the top of group B followed by Nigeria – both sides advancing to the round of 16 on Monday.
Overall, they finished third in their group.
It was an uphill battle for the Olympic champions against the 10th-ranked Australian side, as they went down a goal early in the first half.
Hayley Raso scored twice for Australia at the 9th and 39th minute mark. In the second half, Mary Fowler extended her side’s lead at the 58th minute.
A penalty kick in extra time sealed the deal for the Matildas and ended Canada’s World Cup run.
This is the first time Canada has failed to advance out of the group stage since they went winless in 2011.
Off the field, Canada’s national women’s soccer team have been fighting for equal pay to the men’s team and negotiating a new contract with Canada Soccer.
On Friday, Canada Soccer confirmed to Global News that it had reached an interim compensation agreement with the women’s team on July 24, that includes prize money allocation from the FIFA Women’s World Cup.
The Canadian women’s team had been without a labour deal since the last one expired in 2021.
“This is another important step forward for equalizing the standard of care and pay equity for our players,” a Canada Soccer spokesperson told Global News in an emailed statement Friday.
“We have been working collaboratively to find sustainable resolutions, and while there is more work to do, this deal ensures equal pay between both of our two national teams.”
The players had hoped for an interim pay agreement before they went to Australia for the World Cup.
The women’s team released a statement on social media Friday, saying they were “deeply disappointed” to find themselves without a “more complete agreement at this crucial stage” in their calendar.
The interim deal ensures “at minimum” equal pay with the men’s team, the statement said. But there are “many more important items” that still have to be settled, the women said.
— With files from the Canadian Press.