Nadella hails 'record-breaking year' for Microsoft

Annual report reveals CEO's salary rose by two thirds

Microsoft CEO Satya Nadella has hailed a "record-breaking" year for the vendor in its annual report, touting a strengthened public cloud position and growing adoption of Teams among the key successes of fiscal 2019.

Microsoft announced its full-year numbers in July, with revenue climbing 14 per cent to $125.8bn and operating income up 23 per cent to $43bn.

In a letter addressed to shareholders, employees, customers and partners of Microsoft - published in the annual report and on LinkedIn - Nadella praised the impact that the vendor is having on a global scale.

"Our commercial cloud business is the largest in the world, surpassing $38bn in revenue for the year, with gross margin expanding to 63 per cent.

"I am proud of how we are helping organizations of every size in every industry innovate and thrive using our platforms and tools," he said.

"And I am proud of how we are empowering everyone - consumers, students, teachers, and the more than two billion first-line workers around the world — with experiences to help them always feel confident, capable, and in control."

Nadella picked out Microsoft's commercial cloud arm for particular praise, highlighting its $38bn revenue and 63 per cent gross margin, and crowning it the largest of its kind in the world.

Microsoft does not disclose revenue generated by Azure, but the chief exec said that 95 per cent of the Fortune 500 use the platform for mission-critical workloads.

The annual report filing also revealed that Nadella's compensation rose by 66 per cent to $42.9m, comprising mostly of shares. He earned $84.3m in 2014 - the year he took over from Steve Ballmer.

Microsoft's independent directors highlighted Nadella's "strategic leadership, including his efforts to strengthen trust with customers, drive for a company-wide culture change, and successful entry and expansion into new technologies and markets" for the rise.

The CEO said that Microsoft's future success is dependent on working with leading companies in various verticals - not just on its own innovation.

"I believe the next big technology breakthroughs will come not only from technology companies like Microsoft, but from retailers, healthcare providers, and manufacturers, working in partnership with us," he said.

"Every day, we work alongside our customers and partners to help them build their own digital capability — innovating with them, creating new businesses with them, and earning their trust. We want them to become independent with us, not dependent on us."

He went on to explain that three concepts underpin Microsoft's approach to product development - privacy, cybersecurity and responsible artificial intelligence.

On top of this he highlighted Microsoft's commitments around sustainability, revealing that its datacentres will be 60 per cent powered by renewable energy by the end of the year, with plans to hit 70 per cent in the next four years.

The vendor is also carbon neutral across the globe and operates an internal carbon tax.

No single company is going to solve macro challenges like climate change alone, but as a global technology company, we are well-positioned to enable and accelerate digital transformations that lead to a low-carbon future," he said.

"That is why we are stepping up our commitment. Over the past year, we expanded our work through our operations, investments, partnerships, and advocacy across initiatives spanning both environmental and social responsibility."