Secret memo reveals Microsoft's ambitious 2030 goal

Microsoft CEO Satya Nadella has revealed the company's ambitious target of reaching $500 billion in revenue by the 2030 fiscal year in a memo disclosed during the firm's federal court hearing on the pending Activision Blizzard acquisition.

This objective represents a significant expansion, more than doubling the company's current size, and implies an annual revenue growth rate of at least 10 per cent.

Microsoft, recognised as one of the world's most valuable companies, typically refrains from providing long-term financial projections. During its latest earnings call, the company only offered guidance for the current period, which is the fiscal fourth quarter. However, Nadella's comments, outlined in a 15-page memo accompanied by a 21-page document, shed light on Microsoft's growth-oriented strategy aligned with its enduring mission and culture.

In addition to the revenue target, Nadella also outlined a forecast for shareholder returns encompassing dividends and buybacks. The CEO expressed confidence that Microsoft's approach would deliver annual returns exceeding 10 per cent to shareholders over the specified timeframe.

Dubbed the "20/20" goal, Nadella articulated a plan for 20 per cent year-over-year revenue growth and 20 per cent expansion in operating income for the 2022 fiscal year and beyond. For 2022, Microsoft achieved 18 per cent top-line growth, resulting in $198.27 billion in revenue, along with a 19 per cent increase in operating income.

While the memo referred to Microsoft Plus as a consumer-focused product lineup, Nadella highlighted that the primary driver of growth is Microsoft Cloud. This term encompasses a wide range of products aimed at commercial clients, including the Azure public cloud (competing with Amazon Web Services and Google Cloud), various components of Microsoft 365 productivity software, and segments of LinkedIn.

Nadella highlighted the company's priority to maintain growth above the market rate, aiming to extend its lead over Google Cloud Platform (GCP) and narrow the gap with Amazon Web Services (AWS).

The Federal Trade Commission is currently seeking to block Microsoft's $68.7 billion acquisition of game publisher Activision, a development that has drawn considerable attention and scrutiny.