Shares of Monday.com (MNDY 0.67%) were soaring over 25% this week, according to data from S&P Global Market Intelligence. The low-code workplace management software platform posted strong revenue growth yet again in the first quarter of 2024, impressing Wall Street. The stock is now up 22% this year but still off 50% from all-time highs.

Here is why Monday.com stock was up this week.

Strong growth, healthy cash flow

Monday.com's software aims to be the communications and organizational plumbing of a business. It helps people delegate tasks and is a centralized hub for employee tasks. Essentially, its core use is for managers to assign workers jobs, and monitor their work, all in an organized manner.

As the first-quarter results show, Monday.com's product suite is getting quite popular. Revenue grew 34% year over year to $217 million in the quarter. Customers with over 10 users hit 55,500, and there are now 911 businesses paying Monday.com over $100,000 in revenue each year, up 55% from a year ago. The company is executing the classic software "land and expand" model with its customer base, as evident by how many businesses are now spending six figures with the company each year.

Profits are also inflecting higher. Eighteen months ago, Monday.com was at breakeven on a free-cash-flow basis. Over the last 12 months, it has generated $256 million in free cash flow. Cash flow is the lifeblood of a business, so this development likely has investors pleased. Next quarter, it aims to hit a free-cash-flow margin of over 20%.

Is the stock a buy at these prices?

After rising 25% this week, Monday.com stock now has a market cap of $11 billion. That gives it a multiple of approximately 44 times its trailing-free-cash-flow generation.

This may look expensive compared to the S&P 500 index's earnings average of 25 to 27, but investors should remember that Monday.com is growing and expanding its margins faster than the average publicly traded company. If Monday.com can keep growing revenue at 30% a year and expand its free-cash-flow margins to 30% -- not unheard of for a software-as-a-service (SaaS) company -- it will generate over $500 million in free cash flow in three years. That would be a much more reasonable free-cash-flow multiple of 22.

Monday.com stock may not look cheap at these prices, but if you believe it can keep growing at this current rate, the stock could be a buy for long-term investors.