By Yifan Wang

NetEase Inc.'s second-quarter net profit fell 22%, dragged by higher research spending and softer revenue growth from both its gaming and education businesses, sectors that are facing some of the most severe regulatory tightening from Chinese authorities.

The Chinese technology company on Tuesday posted net profit of 3.54 billion yuan ($547.4 million), while its revenue rose 13% to CNY20.52 billion.

The earnings decline came as NetEase stepped up marketing and research spending while its top-line growth slowed, both from a year earlier and the prior quarter.

Youdao Inc., the company's online-learning business and its fastest-growing segment, reported a doubling in revenue. But that growth pace was below some analysts' expectations and slowed from the first quarter.

The education unit, once a bright spot at the company thanks to soaring demand for online courses driven by the pandemic, has been hit hard by Beijing's move to ban after-school tutoring courses, which make up about 30% of Youdao's revenue. The stock has dived 61% so far this year.

NetEase's gaming revenue rose 5.1%, also slowing sequentially and from a year earlier.

Investors have turned cautious on China's online-gaming sector in recent weeks, after state media criticized the negative impact of internet games on minors. Analysts pointed out that young gamers contribute a tiny portion of NetEase's revenue, but the company's Hong Kong-listed shares still dropped 7.8% on the day the report was published.

On Monday, China rolled out new rules requiring companies to limit play time for young gamers to one hour a day on Fridays, weekends and public holidays.

Write to Yifan Wang at yifan.wang@wsj.com

(END) Dow Jones Newswires

08-31-21 0705ET