Why Shares In Quindell PLC Skyrocketed Today

quindellWhat: The share price of Quindell (LSE: QPP), the insurance technology outsourcing provider, is currently up 22% following the release of a pre-close statement and trading update for the six months to 30 June 2014.

So What: After being hammered by a shorting attack from the enigmatically named Gotham City Research, which wiped £1bn off its value, Quindell has now staged a minor recovery.

It comes on the back of trading update in which the company reported revenue up 117%, to around £355m, with the increase attributed to “strong organic and synergistic growth” — the company said that less than 10% of revenue came from businesses acquired in the past year.  

The strongest growth came from Quindell’s ‘solutions’ business, which increased revenue by 176%, to £62m, with ‘services’ recording a 108% rise in revenue, to £293m.  Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were up 187% at around £155, with adjusted pre-tax profit up 193%, at £154m, and adjusted earnings per share up 83%, at 30p. 

What Now: Quindell’s board says it’s “confident of meeting all its key performance indicators for full year market expectations“, with guidance for full-year revenue of a rather broadly ranged £800-900m. The board has also increased its guidance for future EBITDA margin to 35%–40%.

The company says that its strategic priority remains to “focus on integration, delivery of strategy and cash generation whilst strengthening management and enhancing corporate governance“, the latter presumably as part of its long-term (but recently thwarted) aim to secure a listing on the main market of the London stock exchange.

Despite this morning’s rise, Quindell’s share price remains some 50% down on its peak of earlier this year, in which time the FTSE 100 has remained flat. But longer-term shareholders have been rewarded by a stratospheric performance, with Quindell’s gain of 500% since listing May 2011 making the FTSE’s 12.5% rise over the same period seem utterly insignificant.

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Jon Wallis has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.