A company can decrease their number of outstanding shares in two ways:
Stock buyback – in this case, a company will purchase shares of their stock that are being publicly traded. When this happens, the shares either have to be canceled or turned into treasury stock. In either case, by pulling shares off the market, the price per share will, at least temporarily, increase. This can be seen as a positive sign if the management and investors correctly feel the stock price was undervalued. However, some companies will do this as a way to make their performance look better than it really was, which can be a sign that the company is not doing well.
Reverse stock split – this is not as common and should be a little more concerning for investors. In this case, if a shareholder used to own 200 shares they will now own 100 shares. However, the value of their shares will increase. In reality, when a company engages in a reverse stock split, it usually puts the stock under additional selling pressure.