diff --git a/app/controllers/api/avatars.php b/app/controllers/api/avatars.php
index 6dc31787b5..2a2c73e3e8 100644
--- a/app/controllers/api/avatars.php
+++ b/app/controllers/api/avatars.php
@@ -354,27 +354,20 @@ App::get('/v1/avatars/initials')
     ->param('name', '', new Text(128), 'Full Name. When empty, current user name or email will be used. Max length: 128 chars.', true)
     ->param('width', 500, new Range(0, 2000), 'Image width. Pass an integer between 0 to 2000. Defaults to 100.', true)
     ->param('height', 500, new Range(0, 2000), 'Image height. Pass an integer between 0 to 2000. Defaults to 100.', true)
-    ->param('color', '', new HexColor(), 'Changes text color. By default a random color will be picked and stay will persistent to the given name.', true)
     ->param('background', '', new HexColor(), 'Changes background color. By default a random color will be picked and stay will persistent to the given name.', true)
     ->inject('response')
     ->inject('user')
-    ->action(function (string $name, int $width, int $height, string $color, string $background, Response $response, Document $user) {
+    ->action(function (string $name, int $width, int $height, string $background, Response $response, Document $user) {
 
         $themes = [
-            ['color' => '#27005e', 'background' => '#e1d2f6'], // VIOLET
-            ['color' => '#5e2700', 'background' => '#f3d9c6'], // ORANGE
-            ['color' => '#006128', 'background' => '#c9f3c6'], // GREEN
-            ['color' => '#580061', 'background' => '#f2d1f5'], // FUSCHIA
-            ['color' => '#00365d', 'background' => '#c6e1f3'], // BLUE
-            ['color' => '#00075c', 'background' => '#d2d5f6'], // INDIGO
-            ['color' => '#610038', 'background' => '#f5d1e6'], // PINK
-            ['color' => '#386100', 'background' => '#dcf1bd'], // LIME
-            ['color' => '#615800', 'background' => '#f1ecba'], // YELLOW
-            ['color' => '#610008', 'background' => '#f6d2d5'], // RED
+            ['background' => '#F2F2F8'], // Default
+            ['background' => '#FDC584'], // Orange
+            ['background' => '#94DBD1'], // Green
+            ['background' => '#A1C4FF'], // Blue
+            ['background' => '#FFA1CE'], // Pink
+            ['background' => '#CBB1FC'] // Purple
         ];
 
-        $rand = \rand(0, \count($themes) - 1);
-
         $name = (!empty($name)) ? $name : $user->getAttribute('name', $user->getAttribute('email', ''));
         $words = \explode(' ', \strtoupper($name));
         // if there is no space, try to split by `_` underscore
@@ -393,25 +386,34 @@ App::get('/v1/avatars/initials')
         }
 
         $rand = \substr($code, -1);
+
+        // Wrap rand value to avoid out of range
+        $rand = ($rand > \count($themes) - 1) ? $rand % \count($themes) : $rand;
+
         $background = (!empty($background)) ? '#' . $background : $themes[$rand]['background'];
-        $color = (!empty($color)) ? '#' . $color : $themes[$rand]['color'];
 
         $image = new \Imagick();
+        $punch = new \Imagick();
         $draw = new \ImagickDraw();
         $fontSize = \min($width, $height) / 2;
 
+        $punch->newImage($width, $height, 'transparent');
+
         $draw->setFont(__DIR__ . "/../../../public/fonts/poppins-v9-latin-500.ttf");
         $image->setFont(__DIR__ . "/../../../public/fonts/poppins-v9-latin-500.ttf");
 
-        $draw->setFillColor(new \ImagickPixel($color));
+        $draw->setFillColor(new ImagickPixel('black'));
         $draw->setFontSize($fontSize);
 
         $draw->setTextAlignment(\Imagick::ALIGN_CENTER);
         $draw->annotation($width / 1.97, ($height / 2) + ($fontSize / 3), $initials);
 
+        $punch->drawImage($draw);
+        $punch->negateImage(true, Imagick::CHANNEL_ALPHA);
+
         $image->newImage($width, $height, $background);
         $image->setImageFormat("png");
-        $image->drawImage($draw);
+        $image->compositeImage($punch, Imagick::COMPOSITE_COPYOPACITY, 0, 0);
 
         //$image->setImageCompressionQuality(9 - round(($quality / 100) * 9));
 
diff --git a/tests/e2e/Services/Avatars/AvatarsBase.php b/tests/e2e/Services/Avatars/AvatarsBase.php
index e631fd4391..e2ddc1a863 100644
--- a/tests/e2e/Services/Avatars/AvatarsBase.php
+++ b/tests/e2e/Services/Avatars/AvatarsBase.php
@@ -491,7 +491,6 @@ trait AvatarsBase
             'name' => 'W W',
             'width' => 200,
             'height' => 200,
-            'color' => 'ffffff',
             'background' => '000000',
         ]);
 
@@ -508,34 +507,33 @@ trait AvatarsBase
             'name' => 'W W',
             'width' => 200000,
             'height' => 200,
-            'color' => 'ffffff',
             'background' => '000000',
         ]);
 
         $this->assertEquals(400, $response['headers']['status-code']);
-
-        $response = $this->client->call(Client::METHOD_GET, '/avatars/initials', [
-            'x-appwrite-project' => $this->getProject()['$id'],
-        ], [
-            'name' => 'W W',
-            'width' => 200,
-            'height' => 200,
-            'color' => 'white',
-            'background' => '000000',
-        ]);
-
-        $this->assertEquals(400, $response['headers']['status-code']);
-
-        $response = $this->client->call(Client::METHOD_GET, '/avatars/initials', [
-            'x-appwrite-project' => $this->getProject()['$id'],
-        ], [
-            'name' => 'W W',
-            'width' => 200,
-            'height' => 200,
-            'color' => 'ffffff',
-            'background' => 'black',
-        ]);
-
-        $this->assertEquals(400, $response['headers']['status-code']);
+    }
+
+    public function testInitialImage()
+    {
+        $response = $this->client->call(Client::METHOD_GET, '/avatars/initials', [
+            'x-appwrite-project' => $this->getProject()['$id'],
+        ], [
+            'name' => 'W W',
+            'width' => 200,
+            'height' => 200,
+        ]);
+
+        $this->assertEquals(200, $response['headers']['status-code']);
+        $this->assertEquals('image/png', $response['headers']['content-type']);
+        $this->assertNotEmpty($response['body']);
+
+        $image = new \Imagick();
+        $image->readImageBlob($response['body']);
+        $original = new \Imagick(__DIR__ . '/../../../resources/initials.png');
+
+        $this->assertEquals($image->getImageWidth(), $original->getImageWidth());
+        $this->assertEquals($image->getImageHeight(), $original->getImageHeight());
+        $this->assertEquals('PNG', $image->getImageFormat());
+        $this->assertEquals(strlen(\file_get_contents(__DIR__ . '/../../../resources/initials.png')), strlen($response['body']));
     }
 }
diff --git a/tests/resources/initials.png b/tests/resources/initials.png
new file mode 100644
index 0000000000..08a61594c6
Binary files /dev/null and b/tests/resources/initials.png differ