(Yicai) Feb. 21 -- NetEase reported the slowest annul revenue growth in two decades, despite the Chinese internet and gaming giant spending more than CNY10 billion (USD1.4 billion) on research and development last year for the fifth year in a row.

Revenue rose 1.7 percent to CNY105.3 billion (USD14.4 billion) in the 12 months ended Dec. 31, the Hangzhou-based company said in an earnings report released yesterday. R&D outlays totaled CNY17.5 billion, equal to nearly 17 percent of revenue. Net profit gained 1 percent to CNY29.7 billion, braking from over 20 percent growth in the previous three years.

Income from gaming and related value-added services, education technology, and cloud music inched up 2.5 percent, 3.7 percent, and 1.3 percent to CNY83.6 billion, CNY5.6 billion (USD773.6 million), and CNY8 billion, respectively.

NetEase’s shares [HKG: 9999] closed 1.2 percent higher at HKD160 (USD20.59) each in Hong Kong today, after its New York-traded stock [NASDAQ: NTES] fell 2.6 percent yesterday, ending at USD101.42.

Fourth-quarter revenue fell 1.4 percent to CNY26.7 billion, while net profit jumped 33 percent to CNY8.8 billion, reversing the decline seen in the second and third quarters.

Gaming revenue rose 1.5 percent to CNY21.2 billion in the three months. Income from edtech unit Youdao and NetEase Cloud Music fell 13 percent and 5 percent to CNY1.3 billion and CNY1.9 billion, respectively.

While mobile gaming revenue fell short of expectations, NetEase beat on earnings from computer games, according to research firm Dolphin Investment. Youdao and NetEase Cloud Music showed weakness, but overall profitability improved due to substantial cuts in expenses.

Concerning the recent changes to NetEase's domestic and overseas gaming studios and organizational structure, Chief Executive William Ding said on the firm’s earnings conference call that it carefully evaluates future models, quality, and production efficiency when allocating R&D resources.

Gaming projects that do not align with market demand will be shut down, while successful ones will receive additional investment, he explained.

During the call, NetEase also announced the integration of DeepSeek's artificial intelligence technology across multiple business segments, including Youdao, NetEase Cloud Music, NetEase Digital Intelligence, and mobile game Justice.

Editor: Futura Costaglione