What happened

Shares of open-source software specialist Red Hat (RHT) gained 72.3% in 2017, according to data from S&P Global Market Intelligence. It was one of those overnight successes that were years in the making.

So what

There was no major breakthrough in Red Hat's business plan last year, no game-changing acquisitions, no extraordinary event with the power of nearly doubling the share price. Instead, the stock rose thanks to many years of high-quality blocking and tackling.

In three out of four earnings reports published in 2017, Red Hat exceeded Wall Street's targets. In all four, the company smashed analysts' revenue projections. Keep in mind that the Street's targets often exceed management's official guidance forecasts, and you'll see that Red Hat likes to underpromise and overdeliver.

A large Red Hat banner behind a street name sign on Wall Street.

Image source: Red Hat.

Now what

The familiar pattern of crushing analyst estimates to send share prices surging again hit a snag in December. The company reported 22% year-over-year revenue growth in the third quarter along with 20% higher earnings, leaving analyst estimates behind in both cases.

Share prices fell as much as 7% on the news, ending the year on a soft note. But that was after a 21% gain in the previous three months (and a 42% increase in six months). Red Hat's shares were running a little hot, and some investors simply took some of their profits off the table before the end of the year.

Moreover, the company can't even point to a single client category, geographic market, or product line that's driving the top and bottom lines higher. In every earnings call, the story is the same.

"Overall, we continue to experience strong demand across our broad portfolio of technologies," said CEO Jim Whitehurst in the third-quarter call. That's a stable pattern.

Long story short, Red Hat is accelerating its growth in pretty much every category that matters to investors. The share price gains of 2017 were built on a foundation of solid business:

RHT Revenue (TTM) Chart

RHT Revenue (TTM) data by YCharts.