Microsoft CEO Satya Nadella said to his colleagues and board members last year that the software firm plans to hit the $500 billion mark by the 2030 financial year, more than doubling from its latest size.
The remarks, indicating annual growth of at least 10%, were revealed in a memo that was published on Monday as part of Microsoft’s federal court hearing over its pending Activision Blizzard acquisition.
Microsoft, one of the most valuable organizations worldwide, rarely makes financial forecasts that are too far out. In its recent earnings call, the firm gave guidance only for the current period, which is the financial fourth quarter.
In its recent disclosure, part of a 15-page memo along with a 21-page document, Nadella informed Microsoft that it plans to accomplish its 2030 goals “by implementing an evolving strategy that is growth-oriented and consistent with our enduring mission and culture.”
Nadella also put forth a prediction for shareholder returns, which appeared in the form of dividends and buybacks.
“We believe this ambition and approach will help us deliver in excess of 10% annual returns to our shareholders over that timeframe,” Nadella noted in the document dated June 7, 2022, weeks before the end of the financial year.
For the fiscal year 2022 and succeeding years, Nadella outlined a goal of “20/20,” which calls for a 20% increase in operating profitability and a corresponding 20% increase in revenue. Microsoft’s operating income increased by 19% and its top line increased by 18% in 2022, respectively, to reach $198.27 billion.
Nadella used the phrase Microsoft to describe customer-oriented goods in the memo. However, he mentioned that Microsoft Cloud, a term that denotes a broad range of products aimed at commercial clients, is the main driver of growth. Examples of Microsoft Cloud products include the Azure public cloud (which competes with Amazon Web Services and Google Cloud), some of the Microsoft 365 productivity software, and some 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 noted in the adjoining document.
The Federal Trade Commission is opposing Microsoft’s $68.7 billion acquisition of Activision.