In an environment where companies are finding it difficult to survive, there is an exception. Red Hat's (NYSE: RHT) stellar numbers from its most recent reporting period make it Wall Street's star performer this quarter. Let's see what's working in favor for Red Hat.

Reasons for the smiles
 Red Hat posted a surge of 28% in quarterly revenues over the past year, which drove net income up a whopping 69%. This staggering growth was mainly because of enormous demand for its open-source solutions everywhere, especially in the financial services sector and local, state, and federal governments. Moreover, Red Hat's customers have been looking to modernize their data center infrastructure. This helped in growing revenues and highlighted customer loyalty. High demand for Red Hat's services, low service charges, and excellent reliability drove revenue growth.

A large portion of sales come from the necessary support services like maintaining the open-source software and other security services for which it is primarily known. It also charges for services like training and consulting on the software. By charging lower prices than competitors like Microsoft (Nasdaq: MSFT) and BMC Software (Nasdaq: BMC), Red Hat has been able to attract more customers and drive more value from existing customers.

Consider this: Red Hat's 25 largest customers have renewed their contracts for 150% of the previous year's contract value. Also, for the second time in the company's history, its top 30 deals are all above $1 million, including a few which are higher than $5 million.

The company's move into cloud services is where I'm betting big. The world seems to be moving toward cloud-based services. Though not a new phenomenon, these services have the potential to change the way businesses store information.

However, the journey won't be smooth in this segment. Established players like Amazon (Nasdaq: AMZN), IBM (NYSE: IBM) and Cisco (Nasdaq: CSCO) already own the lion's share of these services. Still, Red Hat is very much capable of pulling out the proverbial rabbit with its innovative approach.

In addition to strong growth, Red Hat has a great balance sheet. The company is sitting on a cash pile of almost $740 million even after making huge investments in marketing and R&D, which it believes is paying off. This hefty cash balance and zero debt in the books can help Red Hat in its future growth easily.

Foolish thought
 Red Hat is known for value and innovation and has very strong financials. It is an expert in its field and is growing rapidly as if it is a batch of yeast. The stock has returned 1,000% over the last 10 years, which is mindboggling. Linux-based services have their share of followers, and I don't see any real reason why this following should diminish. Foolish investors should keep an eye on this one.