Interim report. January-March President s comments. The first quarter

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Interim report January-March The first quarter > > Net sales increased during the first quarter by 16 percent to SEK 1,567 M (1,354). Net sales increased by 13 percent in local currencies.

> > Earnings per share amounted to SEK 1.64 (1.50). > > On February 1, Axis announced the acquisition of the French company Citilog, which is specialized in intelligent transport solutions.

1 Interim report January-March The first quarter > > Net sales increased during the first quarter by 16 percent to SEK 1,567 M (1,354). Net sales increased by 13 percent in local currencies. > > Operating profit increased to SEK 153 M (145), which corresponds to an operating margin of 9.8 percent (10.7). > > Profit after tax amounted to SEK 114 M (104). > > Earnings per share amounted to SEK 1.64 (1.50). > > On February 1, Axis announced the acquisition of the French company Citilog, which is specialized in intelligent transport solutions. President s comments The first few months of were dominated by several releases of new products and solutions, and by the acquisition of the French transport and video analytics company Citilog. Both the acquisition and the product releases show how we are broadening our offering, Overall growth during the first quarter was in line with the expected development, but with some variation among the regions. We saw the best performance in EMEA, and particularly in Northern Europe and the Middle East. which is important for our future performance and in order to capitalize on the opportunities available in the growing market. We will also continue to develop and broaden our offering going forward. The market for network surveillance still has great For example, AXIS Site Designer Tool is a strategically important application that simplifies planning and design of video surveillance solutions. The continued advancement of our Zipstream technology, potential. We have a clear ambition to strengthen our marketleading position by developing our partner network, attracting skilled employees and releasing leading security solutions. which lowers bandwidth and storage requirements, is also important as it can be applied in more and more camera models. On February 1, we announced the acquisition of Citilog, which has specialist competence in intelligent video monitoring of traffic and transport. The acquisition strengthens both our offering in the transportation segment and our opportunities in the growing market for traffic analytics. We can now offer our customers an overall solution, which meets the strict demands of the traffic Ray Mauritsson President market. About Axis Communications Axis offers intelligent security solutions that enable a smarter, safer world. As the market leader in network video, Axis is driving the industry by continually launching innovative network products based on an open platform - delivering high value to customers through a global partner network. Axis has long-term relationships with partners and provides them with knowledge and ground-breaking network products in existing and new markets. Axis has more than 2,100 dedicated employees in more than 50 countries around the world, supported by a global network of over 80,000 partners. Founded in 1984, Axis is a Sweden-based company listed on NASDAQ Stockholm under the ticker AXIS. For more information about Axis, please visit our website

Events during the first quarter The year started according to plan Sales during the first quarter were in line with the expected market growth rate.

In February, Axis released the application AXIS Site Designer Tool.

installations. Later during the quarter, AXIS Camera Station 5 was introduced a professional video management system with an accompanying free mobile viewing app for ios and Android.

2 Events during the first quarter The year started according to plan Sales during the first quarter were in line with the expected market growth rate. Underlying demand in the network video market is expected to continue to be stable. Continued development and innovation During the first quarter, Axis unveiled several new products and solutions. In February, Axis released the application AXIS Site Designer Tool. The application offers system integrators and installation engineers an efficient and user friendly method for designing complete surveillance solutions that are intended for small and medium-sized installations. Later during the quarter, AXIS Camera Station 5 was introduced a professional video management system with an accompanying free mobile viewing app for ios and Android. In March, the AXIS M30 series was extended with a new camera for indoor use. The camera is so compact that it can fit in the palm of one s hand, and it can be painted in the desired color in order to blend in with the surroundings. Thus is it particularly well-suited, for example in hotels, restaurants and retail stores. Number of employees In March, Axis also released two new panoramic cameras with multi-sensors. The 8-megapixel AXIS P3707-PE featuring four varifocal camera heads enables 360 surveillance or a combination of overview and zoomed-in views in four different directions. The 15-megapixel AXIS P3708-PVE has three sensors that enable 180 surveillance, and technology for handling poor lighting conditions. These new models are ideally suited, for example in airports, train stations and surveillance of urban environments. At the end of the quarter, another version was released of the company s Zipstream compression technology. This technology has been specifically developed for video surveillance and can reduce bandwidth and storage requirements by more than 50 percent on average. Now, for instance, the technology has been optimized to be used together with PTZ cameras. Acquisition of the traffic and video analytics company Citilog On February 1, the acquisition was announced of the French traffic and video analytics company Citilog with 29 employees and headquartered in Paris. Citilog offers a suite of video analytics tools, which are used to assist traffic operators detect incidents and deviations in real-time and thereby improve road safety. Axis and Citilog have collaborated for many years. The acquisition means that Axis can now offer its customers an overall solution for video surveillance and analytics in the traffic and transportation area. The acquisition was completed for a preliminary purchase price of SEK 93 M. The transaction-related costs for the acquisition amounted to SEK 3 M, which were charged to first quarter earnings. For more financial information about the acquisition, see note 1.1 on page 9. 2

3 SEK M Sales % Comments on the income statement and balance sheet Net sales The first quarter Net sales for the first quarter amounted to SEK 1,567 M (1,354), which was an increase of 16 percent. Growth was 13 percent in local currency. Foreign currency effects impacted sales positively by SEK 42 M. Sales in the EMEA region amounted to SEK 586 M (470) during the first quarter, corresponding to growth of 25 percent. Growth amounted to 29 percent in local currency. The Middle East and Northern Europe displayed the largest growth in the region. Sales in the Americas region amounted to SEK 810 M (713) during the first quarter, Sales SEK M corresponding to growth of 14 percent. Growth amounted to 6 percent in local currency. Total growth, % Sales in the Asia region amounted to SEK 171 M (171) during the first quarter, corresponding to growth of 0 percent. Growth was -5 percent in local currency. Invoicing per region, Asia 11% Americas 52 % Sales per region, SEK M EMEA 37 % Invoiced sales per product group (SEK M) Video 1, , , , ,738.8 Other TOTAL 1, , , , ,758.4 Invoiced sales per region (SEK M) EMEA Americas , Asia TOTAL 1, , , , , EMEA Americas Asia 3

Earnings The first quarter In the first quarter, operating profit amounted to SEK 153 M (145), which corresponds to an operating margin of 9.8 percent (10.7).

4 Earnings The first quarter In the first quarter, operating profit amounted to SEK 153 M (145), which corresponds to an operating margin of 9.8 percent (10.7). Gross margin was still strong and amounted to 50.1 percent (52.4) during the first quarter. Profit before tax was SEK 153 M (145). Profit after tax amounted to SEK 114 M (104). Changes in foreign exchange rates did not have significant impact on earnings. Operating profit Mkr % Operating profit SEK M Gross margin % EBIT margin % Condensed income statement (SEK M) Net sales 1, , , , ,758.4 Gross profit Gross margin,% Operating profit Operating margin, % Profit before tax Cash flow, investments and financial position Cash flow from operating activities for the period amounted to SEK -79 M (203). Net investments totaled SEK 180 M (22), of which capitalized development costs amounted to SEK 16 M (7). Acquisitions during the period affected cash and cash equivalents with a total of SEK 130 M (see note 1 on page 9). Axis had SEK 755 M (595) in cash and cash equivalents at the end of the period, as well as unutilized credit facilities of SEK 50 M (1,000). Accordingly, the company had a total of SEK 805 M (1,595) at its disposal at March 31,. Equity Consolidated equity amounted to SEK 1,858 M (1,213). The total number of shares at yearend was 69,461,250 (69,461,250). Axis has no outstanding stock option programs. The group s equity/assets ratio was 60.9 percent (52.6) at March 31,. (SEK M) Share capital Other contributed capital Other reserves Retained earnings Total equity Opening balance at Jan 1, ,097.1 Total comprehensive income for the period Closing balance at Mar 31, ,213.1 Opening balance at Jan 1, , ,741.5 Total comprehensive income for the period Closing balance at Mar 31, , ,858.0 Parent Company The parent company s operations are primarily focused on company-wide administration. The parent company has no employees. During the period, sales amounted to SEK 26 M (23) and operating profit amounted to SEK 15 M (8). Cash and cash equivalents at the end of the period amounted to SEK 378 M (287) and borrowing was SEK 0 M (0). During the period, investment has been made by acquisition of Axis Stockholmsledet (see note 1.2 on page 9). 4

5 Outlook The market activity and the inflow of new projects means that Axis view on the current market growth rate remains unchanged. An important factor for continued strong growth is increased penetration in installations for smaller systems and in emerging markets. In order to meet market demand and retain its position as the market-leading supplier of network video solutions, Axis will continue to develop and release a large number of innovative products, refine the partner network, recruit more employees and continue to expand globally. Other Risks and uncertainties Axis operations are subject to a further number of risks and uncertainties, which are described in the Annual Report. No new material risks have arisen during. Accounting policies This interim report is prepared in accordance with the Swedish Annual Accounts Act and IAS 34, Interim Financial Reporting. For information on the accounting policies applied, see the Annual Report. The accounting policies are unchanged compared with those applied in. Annual General Meeting Axis Annual General Meeting was held on April 13,. The Axis share The company s share is listed on Nasdaq Stockholm in the Large Cap segment, under the ticker AXIS. Axis share had a turnover of 1,243,280 shares during the period January- March, which gave an average turnover of 20,721 shares per trading day, to a value of SEK 6,931,996. The average price of the share during the period was SEK 342. Reporting dates Axis will report on the following dates during the fiscal year: Interim report, January-June: July 12, Interim report, January-September: October 20, Lund, 14 April, Ray Mauritsson President Audit The company s auditors have not performed an audit of the report for the first quarter in. 5

6 Consolidated comprehensive income (SEK M) Full-year months Net sales 1, , , ,847.4 Cost of goods and services sold , ,399.5 Gross profit , ,447.9 Other revenues and changes in value Selling and marketing expenses , ,200.9 Administative expenses Research and development expenses ,019.2 Operating profit* Net financial items Profit before tax Tax Net profit for the period Other comprehensive income Items that later may be transferred to the income statement Exchange differences Other comprehensive income for the period, net after tax Total comprehensive income for the period Total comprehensive income attributable to: Parent company s shareholders Earnings per share for the period, SEK Number of shares, average, thousands 69,461 69,461 69,461 69,461 *Net effects of changes in exchange rates in underlying receivables and liabilities in foreign currency have impacted operating profit positively by SEK 3 M (positively by SEK 9 M) during the first quarter. Consolidated statement of cash flows (SEK M) Cash flow from operating activities before change in working capital Full-year months Change in working capital Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Cash flow for the period Cash and cash equivalents at the start of the period 1, Cash and cash equivalents at the end of the period ,

7 Consolidated balance sheet (SEK M) March 31, March 31, December 31, Non-current assets* Inventories 1, ,022.2 Trade receivables** Other receivables Cash and cash equivalents ,015.8 Total 3,052,8 2,306,1 3,038,3 Equity 1, , ,741.5 Non-current liabilities* Trade payables Other current liabilities Total 3, , ,038.3 *Deferred tax was reclassified from non-current liabilities to non-current assets by SEK 40 M at March 31, and by SEK 39 M at December 31,. ** This item includes receivables from contract manufacturers of SEK 5 M (47). Key ratios Full-year Net sales growth (%) Gross margin (%) Operating margin (%) Profit margin (%) Depreciations/amortization (SEK M)* Equity (SEK M) 1,858 1,213 1,742 Capital employed (SEK M) 1,862 1,213 1,742 Interest-bearing liabilities (SEK M) Net interest bearing liabilities/net receivables (SEK M)** ,016 Total assets (SEK M)*** 3,053 2,306 3,038 Return on capital employed (%)* Return on total assets (%)* Return on equity (%)* Interest coverage ratio (times)* 1, , Equity/asset ratio (%) Proportion on risk bearing capital (%) Capital turnover ratio (times) Number of employees (average for the period) 2,164 1,995 2,065 Sales per employee (SEK M)* Operating profit per employee (SEK M)* * The key figures have been recalculated to rolling 12-months values where appropriate. **Refers to net of interest-bearing receivables and liabilities. *** Comparative figures for the balance sheet total were adjusted due to a reclassification of deferred tax. This has meant that certain key ratios have been adjusted for the comparative periods. Per share data Mar 31, Mar 31, Dec 31, Share price at end of period (SEK) Dividend (SEK) 0.00* P/E ratio** Earnings per share (SEK) Number of shares (thousands) 69,461 69,461 69,461 Number of outstanding shares (thousands) 69,461 69,461 69,461 *Proposed dividend **The P/E ratio has been recalculated to rolling 12-month values. 7

8 Quarterly data Invoiced sales per product group (SEK M) Video 1, , , , , , , , , , , ,112.8 Other TOTAL 1, , , , , , , , , , , ,114.4 Invoiced sales per region (SEK M) EMEA Americas , Asia TOTAL 1, , , , , , , , , , , ,114.4 Net sales growth (%) Gross profit (SEK M) Gross margin (%) Operating profit (SEK M) Operating margin (%) Parent company income statement (SEK M) Full-year Net sales Gross profit Administrative expenses Operating profit Financial income Financial expenses Profit/loss after financial items Appropriations Tax Net profit for the period Parent company balance sheet (SEK M) Mar 31, Mar 31, Dec 31, Non-current assets Current receivables from group companies 1, ,168.8 Trade receivables and other receivables Tax receivables Cash and cash equivalents Total 1, , ,754.8 Equity Untaxed reserves Liabilities to group companies Current liabilities Total 1, , ,

9 NOTE 1 Acquisitions 1.1 Citilog SA On January 31,, Axis Communications AB acquired 100 percent of the shares in Citilog SA, a leading provider of video monitoring solutions for the transport sector. Through the acquisition, Axis broadens its product portfolio with reliable video analytics tools for transport and monitoring. The group can thus offer a more complete traffic solution, generating increased opportunities in the fast-growing traffic analytics market. At the time of the acquisition, Citilog had 29 employees. As per the latest audited financial statements on March 31,, the Citilog Group s balance sheet total amounted to EUR 6.3 M and its sales totaled EUR 5.8 M. The acquisition did not have a material impact on Axis sales and earnings. Expenses in connection with the acquisition of SEK 3.2 M were charged to earnings during. The preliminary purchase price amounted to SEK 92.6 M and was paid in cash. The goodwill from the acquisition is related to Citilog s strong position in the market. No portion of the goodwill is expected to be deductible for tax purposes. Preliminary purchase price analysis SEK M Impact on cash and cash equivalents Purchase price paid, February Less: acquired cash holdings Impact on cash and cash equivalents 64.7 Fair value of identified assets and liabilities in Citilog on the acquisition date Non-current assets 1.0 Inventories 4.1 Trade receivables 13.8 Other receivables 6.8 Cash and cash equivalents 27.9 Total assets 53.6 Non-current liabilities 3.5 Trade payables 1.7 Other current liabilities 15.1 Total liabilities 20.3 Total identifiable net assets at fair value 33.3 Goodwill 59.3 Purchase price Axis Stockholmsledet 11 AB On February 3,, Axis AB acquired 100 percent of the shares in the property company Axis Stockholmsledet 11 AB (former Sagax Stockholm 11 AB). The exclusive purpose of the acquisition was to acquire land for the construction of a new headquarters in Lund. The new headquarters will be located in close proximity to Axis existing premises. The purchase price amounted to SEK 38.6 M. In connection with the acquisition, the debt of SEK 27.0 M in the company was amortized. Expenses in connection with the acquisition of SEK 0.3 M were charged to earnings during. Purchase price analysis SEK M Impact on cash and cash equivalents Purchase price paid, February Plus: amortization of loans 27.0 Less: acquired cash holdings -0.1 Impact on cash and cash equivalents 65.5 Fair value of identified assets and liabilities in Axis Stockholmsledet 11 on the acquisition date Non-current assets 65.5 Cash and cash equivalents 0.1 Total assets 65.6 Non-current liabilities 27.0 Total liabilities 27.0 Total identifiable net assets at fair value 38.6 Purchase price

10 For further information please contact: Björn Hallerborn, PR & Corporate Communications Manager Mail: Phone: Axis AB Corporate identity no Emdalavägen 14, Lund Phone: This report contains future-oriented information that is based on the present expectations of Axis Management. Even if the Management believes that the expectations reflected in such future-oriented information are reasonable, no assurance may be given that these expectations will prove to be correct. Consequently, actual future outcomes may deviate significantly from what is reflected in the future-oriented information due to changed conditions relating to the economy, market and competition, changes in legal requirements and other political measures, fluctuations in exchange rates and other factors. Axis discloses the information provided herein pursuant to the Swedish Securities Markets Act and/or the Swedish Financial Instruments Trading Act. The information was released for publication at CET on Thursday, April 14,.

Year-end report. January-December President s comments. January - December. Fourth quarter

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