Looks like the assumption is $100 / year for each user, which with 50k users makes the $5 million ARR.

Then you have to pick a finger in the air multiplier for the value of the business. A stockmarket listed SaaS company that isn't over-inflated might be 10x the revenue, so that would be $50 million valuation.

Kagi is small, but it must still have good margins. So maybe really it is 5x revenue in value, depends on lots of things! Who selling to, and predictions for long term growth.