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What's happeningPacific Biosciences of California (NASDAQ:PACB) stock dropped around 11% today after the company reported a bigger than expected net loss during the second quarter. 

Why it's happening: The company reported second quarter revenue of $24.9 million, which sounds great, as that number represents growth of 118% over the $11.4 million in recorded over the same time period last year. However, this quarter's contractual revenue included a $10 million milestone payment from Roche, so product and services revenue grew a much smaller 17%. Net loss for the quarter came in at $0.16 per share, which was worse than the $0.14 that analysts were expecting. 

Consumable revenue was up 48%, and management noted that system utilization continues to be strong as average consumable revenue for each installed system is greater than $130,000 per year. Service and other revenue rang in at $2.5 million, up 27% over last year's quarter, and up 30% year to date.

On the down side, instrument revenue dropped to $4.3 million from last year's $4.7 million. Management was quick to remind investors that instrument sales are lumpy due to the timing of installations, and when you zoom out slightly and look over the first six months of the year, instrument sales are up 13%.

Management also reminded investors that they won't be receiving a milestone payment from Roche next quarter, so the company expects to report lower revenue than last year.

For the full year, management raised revenue guidance to growth of at least 40%, which is higher than the 25% growth they were previously expecting. Most of that guidance growth appears to be related to additional milestone payments, as the company currently expects to receive another $10 million milestone payment from Roche during the fourth quarter.  

Turning to the balance sheet, the company currently has $72.7 million in cash after burning through $28.6 million since the start of the year. The company expects to end the year with at least $50 million in cash, which it noted should be enough to fund the company for at least another full year.

Lumpy instrument installations and milestone payments are going to continue to make quarterly results fluctuate wildly. Long-term investors in the company should probably ignore the huge quarterly fluctuations and should focus their attention on six-month and full-year growth rates to better gauge how the business is performing.

Brian Feroldi has no position in any stocks mentioned. The Motley Fool recommends Pacific Biosciences of California. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.