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Adobe Pledges Billions in Buybacks, Defying Market Slump
4 Oct
Summary
- Adobe authorized a $25 billion stock buyback through April 2030.
- The company spent nearly 90% of its operating cash flow on buybacks.
- Fewer shares outstanding boosted earnings per share by half.
Adobe has committed to a substantial stock repurchase program, with its board approving a $25 billion authorization set to run through April 2030. This initiative is designed to reduce the overall share count over time. The company has actively engaged in buybacks, particularly as its stock experienced a significant decline in 2026.
In the first three quarters of fiscal year 2026, Adobe consistently repurchased shares, averaging approximately $2.3 billion per quarter. This strategy utilized close to 90% of the $7.65 billion generated from operations during that period. The company's cash flow from operations saw an increase of around 11% year over year.
The impact of these buybacks is evident in Adobe's reduced share count. By mid-September 2026, the outstanding shares had decreased, with management projecting a further reduction. This shrinking share count has been a key driver for earnings per share growth, accounting for roughly half of the reported increase in adjusted earnings per share for fiscal Q3 2026.
At current valuations, buying back stock at approximately 10 times adjusted earnings is considered a strategic use of cash for Adobe. While the buyback cannot offset slowing revenue growth, it aids in outperforming business growth. Adobe's subscription business continues to expand, and a falling share count is expected to support earnings per share growth.
