Lifetime value (LTV, or CLV) is the total gross profit you expect from a customer across the whole relationship. It is the number that decides how much you can afford to spend to acquire one, and it only means something next to CAC.
Why LTV is the ceiling on CAC
LTV sets what you can pay to win a customer. The common health check is the LTV:CAC ratio, with roughly 3:1 a durable target and the cost recovered inside about 12 months. A channel with a punishing CAC can still be worth it if LTV is high, and a cheap channel can be a trap if it brings low-value customers.
Use margin, not revenue
Base LTV on gross profit, not top-line revenue, or you will overstate what you can spend. For subscription businesses it is average revenue per account times gross margin times average lifetime; for ecommerce it leans on AOV, purchase frequency, and retention.