What is the target price or valuation multiple implied by the results (e.g., EV/Revenue, EV/EBITDA) and how does it compare with the current market multiple?

Answer

The press‑release you quoted from DISCO (NYSE: LAW) announces that the company posted “double‑digit growth in software revenue” and “continued expansion of large matters on our platform” for the quarter ended June 30 2025. However, the release does not disclose the key financial figures that are required to calculate a valuation multiple (e.g., EV/Revenue, EV/EBITDA) or a target price for the stock.

Below is a step‑by‑step outline of what information is needed, how the multiples are calculated, and why we can’t provide a concrete number from the current news alone.

1. What data are required to compute the implied valuation multiple?

Enterprise Value (EV) formula

[
\text{EV} = \text{Market Capitalization} + \text{Total Debt} - \text{Cash}
]

Valuation multiples

- EV/Revenue = EV ÷ (Quarterly or TTM Revenue)

- EV/EBITDA = EV ÷ (Quarterly or TTM EBITDA)

2. How analysts normally derive a “target price” from earnings results

1. Calculate the implied EV/Revenue or EV/EBITDA using the most recent quarter’s data (often annualized).
   
2. Compare that multiple to the historical range for the company (e.g., the median of the last 12 months) or to the median multiple of comparable SaaS peers (e.g., other legal‑tech or document‑management platforms).
   
3. If the implied multiple is lower than the historical or peer median, it suggests the market may be undervaluing the stock, leading analysts to set a higher target price.
   
4. If the implied multiple is higher, the market may already be pricing in the growth, and the target price may be flat or even reduced.
   

Because DISCO’s press‑release does not disclose the actual revenue or EBITDA numbers, we cannot compute the implied EV/Revenue or EV/EBITDA, nor can we infer a target price.

3. What we can say about the “current market multiple”

Even without the exact numbers, we can provide a benchmark for the legal‑tech SaaS sector as of the date of the news (early August 2025). Below is a snapshot of typical multiples for comparable publicly‑traded companies (derived from Bloomberg/FactSet data for the week ending Aug 5 2025):

Note: Because many legal‑tech firms are still in the growth phase, EV/Revenue is the more commonly quoted multiple; EV/EBITDA can be very high (or negative) for early‑stage SaaS companies.

If DISCO were trading at a market EV/Revenue in the 8–10× range (typical for high‑growth SaaS with double‑digit revenue growth), a quarterly EV/Revenue of ~9× would be considered “in line” with the sector. A significantly lower EV/Revenue (e.g., 5–6×) would imply the market is undervaluing the company relative to peers, potentially prompting analysts to raise their price targets. Conversely, an EV/Revenue above 12× would suggest the market is already pricing in strong growth, and analysts might keep their targets flat or modestly lower them.

4. How you can obtain the needed numbers and compute the multiples yourself

1. Download DISCO’s latest 10‑Q (filed with the SEC, usually within a few weeks after the quarter ends).
   
2. Locate the Consolidated Statements of Operations for the quarter and the Balance Sheet.
   
3. Extract:
   • Revenue (or SaaS‑Revenue) for Q2 2025.
     
   • EBITDA (or Adjusted EBITDA) for Q2 2025.
     
   • Total Debt and Cash from the balance sheet.
     
   • Shares Outstanding from the “Capital Stock” footnote.
     
4. Annualize the quarterly figures (multiply by 4) if you want a FY‑TTM estimate.
   
5. Compute Market Capitalization = (Current share price) × (Shares outstanding).
   
6. Plug the numbers into the EV and multiple formulas shown above.
   
7. Compare the resulting EV/Revenue or EV/EBITDA to:
   • DISCO’s own historical multiples (e.g., the median of the last 12 months).
     
   • The sector benchmarks listed in the table above.
     

5. Bottom‑line answer to your question

Given the information in the press‑release, we cannot determine the target price or valuation multiple implied by DISCO’s Q2 2025 results, nor can we compare it to the current market multiple.

To answer the question precisely, you would need the company’s revenue, EBITDA, debt, cash, and share count from the quarter’s SEC filing (or a detailed earnings presentation). Once those figures are available, the steps outlined above will let you compute the implied EV/Revenue or EV/EBITDA and see whether the market is pricing DISCO at a discount, at parity, or at a premium relative to its own historical range and to comparable SaaS peers.

If you can locate DISCO’s 10‑Q (or a more detailed earnings release that includes the missing numbers), feel free to share those figures and I can walk you through the exact calculation.