LTV (also called CLV or Customer Lifetime Value) is the total revenue — or more usefully, gross profit — a customer generates from sign-up to churn. The simplest formula: ARPU ÷ monthly churn rate. More precise models weight by cohort and account for expansion revenue.
LTV drives every growth decision: how much you can bid for ads, whether an enterprise sales team makes economic sense, and how aggressively you can discount to land logos. SaaS companies with strong expansion motions often find LTV inflates significantly in months 12–24 as upsell kicks in.