Disney Profits Soar After Three Rounds Of Layoffs, Millions In Tax Credits, And $100M Tariff Refund

Disney has plenty to celebrate in its latest earnings report, which covers the first full quarter under new CEO Josh D’Amaro. Revenue and operating income are both up substantially following three rounds of layoffs during the first seven months of 2026. The company has also secured more than $45 million in California tax credits for two upcoming animated features and received a $100 million tariff refund.

According to its report, Disney generated $25.25 billion in revenue during its fiscal third quarter, up 7% from the same period last year. Operating income across its divisions climbed 21% to $5.6 billion.

The entertainment division did particularly well, with operating income jumping 64% to nearly $1.7 billion. Disney credited much of that success to Toy Story 5, which has grossed more than $1 billion worldwide. The company emphasized that the film’s value extends beyond theaters, pointing to renewed interest in the franchise on Disney+, strong merchandise sales, and Toy Story attractions at its parks and cruise ships.

Disney Experiences, which includes the company’s theme parks, resorts, cruise line, and consumer products businesses, generated nearly $10 billion in quarterly revenue. Operating income rose 20% to $3 billion, helped by a $100 million refund of tariff payments made earlier in the fiscal year. The refund followed the Supreme Court’s ruling that President Donald Trump did not have the authority to impose the tariffs under emergency-powers law.

Today’s financial report arrived just two weeks after Disney’s third round of layoffs this year. Several hundred employees were affected in July across Pixar, ESPN, Disney Entertainment Television, studio operations, and corporate departments. Pixar took the biggest hit within Disney’s studios, just as Toy Story 5 was becoming the company’s latest billion-dollar release.

Two weeks before the layoffs, California announced publicly funded tax credits for two upcoming Disney animated features: $16.6 million for Walt Disney Animation Studios’ Hexed and $28.7 million for an unnamed Pixar film. Together, the projects stand to receive more than $45 million through California’s expanded Film and Television Tax Credit Program, provided they meet the program’s production-spending requirements.

When it was expanded to include animation, the program was billed as a necessity to keep productions and jobs in California. The timing of Pixar’s award and subsequent layoffs prompted Cartoon Brew co-founder and former publisher Amid Amidi to write to Governor Gavin Newsom, state legislators, and the California Film Commission. He called for stronger workforce-retention requirements and provisions allowing the state to reclaim credits from companies that cut jobs. Amidi published the letter on his must-read Substack.

Those July cuts followed approximately 1,000 Disney layoffs in April across marketing, studio, television, ESPN, products and technology, and corporate divisions. The company had also previously eliminated an undisclosed number of jobs in January while consolidating its marketing operations.

Disney described the reductions as part of an ongoing evaluation of how it manages resources and reinvests across the company. Disney shares jumped nearly 5% in pre-market trading after today’s report, while the company added another $1 billion to its stock-buyback plans, bringing this year’s total to at least $9 billion. Surely, the laid-off workers will take great comfort in knowing that their sacrifice helped improve things for the company’s shareholders.