Lifetime Value (LTV) on a Gross Profit basis is a summary metric that tracks total Gross Profit, net of CAC, generated by a cohort (a set of customers grouped by sign-up period) over time.
In the case where:
Example where n = Jan 2021 and y = 3:
For quarterly and annual aggregations, revenue, S&M, and COGS are summed for all months in the period, and S&M from period n is used.
LTV can also be looked at on a Gross Revenue basis. This is appropriate for early stage companies with low gross margins with a high certainly of improving over time.
In the case where:
Example where n = Jan 2021 and y = 3:
For quarterly and annual aggregations, revenue, S&M, and COGS are summed for all months in the period, and inputted S&M from period n is used.