Will Twilio's dollar-based net expansion rate exceed 110% in any quarter by Q2 2026?

The DBNE trend plateau at 109% is the single most material data point. The 1pp/quarter improvement (107→108→109) ran for 3 quarters and then flatlined — this is exactly the 'cyclical rather than structural' outcome the Black Swan Beacon warned about. Q4 2025 was the most favorable quarter for crossing 110%: it had the strongest enterprise momentum ($500K+ deals at peak growth) and seasonal tailwinds from the nine-figure renewal. If DBNE couldn't cross 110% in Q4 2025 with those conditions, Q1 and Q2 2026 face headwinds: enterprise deal growth decelerating from 57% to 36%, FY2026 organic guidance of only 8-9% signaling management expects deceleration, and Segment CDP still structurally dragging the aggregate. The calibration feedback is also instructive — the ensemble overweighted optimistic scenarios on the guidance question (0.4624 Brier). Two remaining quarters with weakening tailwinds significantly reduces probability.

Second-order analysis of what the 109% plateau means structurally: if Communications DBNE had been accelerating, it would have overcome the Segment CDP drag (which actually improved slightly with 2% growth). The fact that aggregate DBNE stayed flat despite marginally less CDP drag implies Communications DBNE itself may have plateaued or even declined slightly. This is a bearish structural signal that the committee's Moat Mapper trajectory of 'Stable' rather than 'Widening' correctly anticipated. The 8-9% organic guidance for FY2026 is below the pace that would typically accompany DBNE expansion — at 8-9% growth, DBNE of 109% is roughly consistent (existing customers growing at market rate plus modest net expansion). To reach 110%, you'd need either accelerating growth or a meaningful composition shift, neither of which the guidance suggests. The calibration lesson from the guidance miss (ensemble assigned 68% to 10%+ guidance, actual was 8-9%) applies directly: our prior prediction of 55% likely overweighted the optimistic scenario.

While the trend break is clearly negative, I want to stress-test the bear case. The plateau could reflect Q4-specific dynamics — seasonal concentration of large renewals at existing contract rates rather than expansion pricing. Q1 and Q2 could see expansion from the nine-figure renewal's volume ramp, multiproduct cross-sell (now +26% YoY, accelerating), and self-serve growth (+28% YoY). The ISV channel growing +26% is a new expansion vector not present in earlier quarters. ConversationRelay and Voice AI (60%+ growth) add incremental DBNE from new product adoption within existing accounts. However, these positive factors existed in Q4 too and didn't push DBNE past 109%, so they'd need to accelerate meaningfully. With only 2 remaining quarters and the demonstrated difficulty of crossing the 110% threshold, probability should be meaningfully below the prior 55% but the path isn't completely closed.

The math is straightforward but unfavorable. DBNE was 109% in both Q3 and Q4 2025, meaning the improvement trend has clearly stalled. The prior prediction assumed 3 chances to cross 110% with momentum — now there are only 2 chances with no momentum. Enterprise deal growth decelerated from 57% to 36% YoY. FY2026 organic guidance of 8-9% is below the ~10-11% pace that would mechanically support DBNE expansion above 110%. Segment CDP at 2% growth is marginally better but still likely sub-100% DBNE, continuing its structural drag. The calibration feedback from the guidance miss (Brier 0.4624) suggests this ensemble tends to overweight bullish scenarios. Probability should be roughly halved from the prior 55% given the trend break and loss of one resolution quarter.

I'm weighting the remaining positive signals more heavily than pure trend extrapolation. Multiproduct customer growth accelerated from 20% to 26% YoY — cross-sell is the primary driver of DBNE expansion, and it's getting stronger. Self-serve grew 28% (up from 20%), suggesting the long-tail segment is improving faster than the aggregate DBNE reflects. Voice AI growing 60%+ adds incremental usage-based revenue within existing accounts. The SIGNAL conference in May 2026 could drive product adoption that impacts Q2 2026 DBNE. However, the fundamental problem remains: Q4 was a 'peak conditions' quarter and DBNE still didn't cross 110%. For DBNE to reach 110% in Q1 or Q2, something would need to change meaningfully from the Q4 dynamic — possible but not base case. I'm slightly above the most bearish estimates but still well below the prior.

The DBNE question reduces to a concrete math problem. At 109% aggregate with CDP drag, Communications DBNE is likely around 110-111%. For aggregate to print 110%, Communications DBNE needs to reach roughly 110.5-111%. That's very close to where it probably already is — meaning even a small improvement in Communications expansion could do it. But the fact that it didn't move from Q3 to Q4 despite strong enterprise trends suggests the Communications DBNE improvement may have also plateaued around 110-111%. The 8-9% organic growth guidance is the most telling signal: management is guiding for deceleration, and DBNE tends to track revenue growth with a lag. I expect DBNE to remain at 109% or potentially slip to 108% over the next 2 quarters, not improve to 110%.

The 1pp/quarter trend broke. DBNE stuck at 109% for 2 quarters. Only 2 chances left instead of 3. Enterprise deals decelerating (57% to 36%). FY2026 guidance of 8-9% suggests growth slowing. The prior 55% was too high — should be roughly halved. Still some chance from multiproduct acceleration and Voice AI growth, but base case is DBNE stays around 109%.

Pattern recognition: when a metric improvement trend breaks, it more often continues flat or reverses than resumes improving. DBNE plateauing at 109% with only 2 quarters left and decelerating growth guidance makes 110%+ unlikely. CDP still a structural drag. The calibration lesson from the guidance miss suggests we should be more conservative.

Two remaining quarters with no momentum give this market roughly 25-30% odds. Multiproduct growth accelerating to 26% and self-serve at 28% provide some upside potential, but these existed in Q4 and didn't push DBNE past 109%. Voice AI growth could add incremental expansion but it's from a small base. SIGNAL conference could catalyze product adoption. Slight upward bias from multiple expansion vectors but still clearly below prior.