Red Hat released its Wednesday for its 2012 fiscal year, ended Feb. 29. Revenue was US$1.13 billion, up 25 percent from the year earlier, and net income was $146.6 million, up from $107.3 million the year earlier, Red Hat said.

Passing the $1 billion milestone is "a statement about open source, and the relative ubiquity of open source. Very few companies have been able to reach that mark," CEO Jim Whitehurst said in an interview. "It's quite a statement that we've been able to achieve that with a radically different business model."

With a billion or more in annual revenue, Red Hat joins a somewhat elite league of midsized enterprise software companies, such as OpenText ( in 2011) and Nuance Communications ().

"The billion-dollar figure is a kind of a magic figure for technology companies," said Charles King, chief analyst at Pund-IT. Though an arbitrary milepost, it's a good indicator that the company executives have found a formula not only for success, but for maintaining success.

Perhaps more significantly, Red Hat's success validates the idea that open-source software can form the basis of a viable business model.