TMT (Tech, Media & Telecom)
The textbook LTV formula divides gross profit by churn. What happens to that formula when a company's NRR exceeds 100%, and how do practitioners handle it?
Model answer
The formula LTV = ARPA x gross margin / churn assumes a constant decay rate, giving a finite geometric-series value. If the existing base GROWS (NRR above 100%), the implied 'churn' input is negative…
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