Microsoft Corp. Chief Executive Officer Satya Nadella during an event with senior officials and chief executive officers in the East Room of the White House in Washington, DC, on Thursday, June 22, 2023.
Chris Kleponis | CNP | Bloomberg | Getty Images
Microsoft CEO Satya Nadella told fellow executives and board members last year that the software company is targeting $500 billion in revenue by fiscal 2030, more than doubling its current size.
The comments, which point to annual revenue growth of at least 10%, came in a memo released Monday as part of Microsoft’s federal court hearing on the pending case Activision Blizzard acquisition.
Microsoft, one of the most valuable companies in the world, doesn’t tend to make financial projections far into the future. In its latest earnings announcement, the company only provided guidance for the current period, which is its fourth fiscal quarter.
In the most recent disclosure, which is part of a 15-page memo with an accompanying 21-page document, Nadella said Microsoft aims to achieve its 2030 goal “through the execution of an evolving strategy that is growth-oriented and aligned with our enduring mission and… culture matches”.
Nadella also provided a forecast for shareholder returns, which will come in the form of dividends and buybacks.
“We believe this ambition and approach will help us deliver over 10% annualized returns to our shareholders over this period,” Nadella wrote in the June 7, 2022 document, weeks before the fiscal year ended.
Nadella detailed the “20/20” goal, which includes 20% year-over-year revenue growth and a 20% increase in operating income for fiscal 2022 and beyond. For 2022, Microsoft achieved revenue growth of 18% to $198.27 billion and operating income growth of 19%.
In the memo, Nadella used the phrase “Microsoft Plus” to describe products aimed at consumers. But he said the key driver of growth is Microsoft cloud, a term that refers to a wide range of products aimed at commercial customers, including the Azure public cloud (which competes with Microsoft cloud). Amazon web services and Google Cloud), parts of Microsoft 365 productivity software and parts of LinkedIn.
“Our priority is to maintain growth above the market rate to extend our lead over GCP and close the gap with AWS,” Nadella wrote in the accompanying document.
The Federal Trade Commission is trying to block Microsoft’s $68.7 billion purchase of games maker Activision.
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