Deceleration curve

The deceleration curve specifies how quickly we slow revenue or earnings growth over the explicit DCF forecast period. The default assumption is that no business sustains its current growth indefinitely — even excellent franchises converge toward GDP-plus growth over long horizons — and the question is how quickly. We use visibility-adjusted deceleration calibrated to forward-revenue visibility. High-visibility names with remaining-performance-obligation balances above 3x revenue (typical of large-enterprise software) decelerate at five percentage points per year; medium-visibility names with RPO between 1x and 3x revenue decelerate at seven to eight percentage points per year; low-visibility names without disclosed RPO decelerate at ten percentage points per year. The result is a forecast trajectory that is internally consistent with the leading indicator data the company actually publishes, rather than an arbitrary fade pattern. We document the deceleration assumption explicitly in each model and stress-test it in sensitivity analysis: a 200-basis-point change in the deceleration rate frequently moves fair value 10-15% in either direction.