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 www.axis.com.

The first few months of 2016 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,

which is important for our future performance and in order to

capitalize on the opportunities available in the growing market.

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,

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

market.

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.

We will also continue to develop and broaden our offering going

forward. The market for network surveillance still has great

potential. We have a clear ambition to strengthen our market-

leading position by developing our partner network, attracting

skilled employees and releasing leading security solutions.

President’s comments

Interim reportJanuary-March 2016

Ray Mauritsson President

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.

2

Events during the first quarter The year started according to planSales 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 innovationDuring 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.

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 CitilogOn 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.

Q2 Q3 Q4 Q1 Q2 Q3 Q4 01 2014 2015 2016

1000105011001150120012501300135014001450150015501600165017001750180018501900195020002050210021502200

1784

1867

1941

20192061

21092139

2192

Number of employees

3

Comments on the income statement and balance sheetNet salesThe 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,

corresponding to growth of 14 percent. Growth amounted to 6 percent in local currency.

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.

Invoiced sales per product group (SEK M)

Q1 2016

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Video 1,546.9 1,347.5 1,607.6 1,885.5 1,738.8

Other 20.1 6.8 8.7 20.2 19.6

TOTAL 1,567.0 1,354.3 1,616.3 1,905.7 1,758.4

Invoiced sales per region (SEK M)

Q1 2016

Q1 2015

Q2 2015

Q3 2015

Q4 2015

EMEA 585.7 470.4 554.2 602.2 739.5

Americas 810.0 713.0 859.9 1,084.8 832.0

Asia 171.3 170.9 202.2 218.7 186.9

TOTAL 1,567.0 1,354.3 1,616.3 1,905.7 1,758.4

Sales

0100200300400500600700800900

10001100120013001400150016001700180019002000

0

10

20

30

40

50

60

70

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2015 2016

Sales SEK M

Total growth, %

Invoicing per region,Q1 2016

Americas

EMEAAsia

52 %

37 %11%

%

Sales per region, SEK M

EMEA Americas Asia

050

100150200250300350400450500550600650700750800850900950

100010501100

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2015 2016

SEK M

4

EarningsThe 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.

Condensed income statement (SEK M)

Q1 2016

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Net sales 1,567.0 1,354.3 1,616.3 1,905.7 1,758.4

Gross profit 785.5 710.1 821.7 973.6 867.1

Gross margin ,% 50.1 52.4 50.8 51.1 49.3Operating profit 153.1 144.8 116.5 388.7 231.2Operating margin, % 9.8 10.7 7.2 20.4 13.1Profit before tax 153.2 144.5 116.2 388.7 231.1

Cash flow, investments and financial positionCash 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, 2016.

EquityConsolidated equity amounted to SEK 1,858 M (1,213). The total number of shares at year-

end 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, 2016.

(SEK M) Share capital

Other contributed

capital

Otherreserves

Retainedearnings

Totalequity

Opening balance at Jan 1, 2015 0.7 279.2 -15.7 832.9 1,097.1Total comprehensive income for the period - - 11.9 104.1 116.0

Closing balance at Mar 31, 2015 0.7 279.2 -3.8 937.0 1,213.1

Opening balance at Jan 1, 2016 0.7 279.2 -1.8 1,463.4 1,741.5Total comprehensive income for the period - - 2.4 114.1 116.5

Closing balance at Mar 31, 2016 0.7 279.2 0.6 1,577.5 1,858.0

Parent CompanyThe 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).

Operating profit

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2015 2016

0

30

60

90

120

150

180

210

240

270

300

330

360

390

0

10

20

30

40

50

60

70

80

90

100

Operating profit SEK M

Gross margin %EBIT margin %

Mkr %

5

OutlookThe 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.

OtherRisks and uncertainties

Axis’ operations are subject to a further number of risks and uncertainties, which are described

in the 2015 Annual Report. No new material risks have arisen during 2016.

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 2015

Annual Report. The accounting policies are unchanged compared with those applied in 2015.

Annual General Meeting

Axis’ Annual General Meeting was held on April 13, 2016.

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 2016, 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 2016 fiscal year:

Interim report, January-June: July 12, 2016

Interim report, January-September: October 20, 2016

Lund, 14 April, 2016 Ray Mauritsson President

Audit

The company’s auditors have not performed an audit of the report for the first quarter in 2016.

6

Consolidated comprehensive income

(SEK M)Q1

2016Q1

2015Full-year

2015Q2 15-Q1 16

12 months

Net sales 1,567.0 1,354.3 6,634.7 6,847.4

Cost of goods and services sold -781.5 -644.2 -3,262.2 -3,399.5

Gross profit 785.5 710.1 3,372.5 3,447.9

Other revenues and changes in value 3.3 8.6 -32.6 -37.9

Selling and marketing expenses -295.2 -275.1 -1,180.8 -1,200.9

Administative expenses -74.2 -66.0 -292.2 -300.4

Research and development expenses -266.3 -232.8 -985.7 -1,019.2

Operating profit* 153.1 144.8 881.2 889.5

Net financial items 0.1 -0.3 -0.7 -0.3

Profit before tax 153.2 144.5 880.5 889.2

Tax -39.1 -40.4 -228.4 -227.1

Net profit for the period 114.1 104.1 652.1 662.1

Other comprehensive incomeItems that later may be transferred to the income statementExchange differences 2.4 11.9 13.8 4.3

Other comprehensive income for the period, net after tax 2.4 11.9 13.8 4.3

Total comprehensive income for the period 116.5 116.0 665.9 666.4

Total comprehensive income attributable to:

Parent company’s shareholders 116.5 116.0 665.9 666.4

Earnings per share for the period, SEK 1.64 1.50 9.39 9.53

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)Q1

2016Q1

2015Full-year

2015Q2 15-Q1 16

12 monthsCash flow from operating activities before change in working capital

115.1 115.8 860.1 859.4

Change in working capital -194.1 87.1 -56.9 -338.1

Cash flow from operating activities -79.0 202.9 803.2 521.3

Cash flow from investing activities -180.3 -22.1 -180.5 -338.7

Cash flow from financing activities -1.2 0.0 -21.5 -22.7

Cash flow for the period -260.5 180.8 601.2 159.9Cash and cash equivalents at the start of the period 1,015.8 414.6 414.6 595.4

Cash and cash equivalents at the end of the period 755.3 595.4 1,015.8 755.3

7

Consolidated balance sheet(SEK M) March 31, 2016 March 31, 2015 December 31, 2015Non-current assets* 590.6 378.3 452.9

Inventories 1,075.0 729.9 1,022.2

Trade receivables** 447.3 496.8 423.0

Other receivables 184.6 105.7 124.4

Cash and cash equivalents 755.3 595.4 1,015.8

Total 3,052,8 2,306,1 3,038,3

Equity 1,858.0 1,213.1 1,741.5

Non-current liabilities* 281.1 224.9 282.2

Trade payables 403.8 420.3 532.9

Other current liabilities 509.9 447.8 481.7

Total 3,052.8 2,306.1 3,038.3

*Deferred tax was reclassified from non-current liabilities to non-current assets by SEK 40 M at March 31, 2015 and by SEK 39 M at December 31, 2015.** This item includes receivables from contract manufacturers of SEK 5 M (47).

Key ratiosQ1

2016Q1

2015Full-year

2015Net sales growth (%) 15.7 19.9 21.7

Gross margin (%) 50.1 52.4 50.8

Operating margin (%) 9.8 10.7 13.3

Profit margin (%) 9.8 10.7 13.3

Depreciations/amortization (SEK M)* 109 81 104

Equity (SEK M) 1,858 1,213 1,742

Capital employed (SEK M) 1,862 1,213 1,742

Interest-bearing liabilities (SEK M) 4 0 0

Net interest bearing liabilities/net receivables (SEK M)** 751 595 1,016

Total assets (SEK M)*** 3,053 2,306 3,038

Return on capital employed (%)* 49.4 66.7 62.1

Return on total assets (%)* 29.2 34.9 33.6

Return on equity (%)* 38.5 53.2 48.4

Interest coverage ratio (times)* 1,271.3 1,125.9 801.5

Equity/asset ratio (%) 60.9 52.6 57.3

Proportion on risk bearing capital (%) 67.8 58.2 63.2

Capital turnover ratio (times) 3.8 4.8 4.7

Number of employees (average for the period) 2,164 1,995 2,065

Sales per employee (SEK M)* 3.2 2.8 3.2

Operating profit per employee (SEK M)* 0.4 0.4 0.4 * 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 dataMar 31, 2016 Mar 31, 2015 Dec 31, 2015

Share price at end of period (SEK) 337.10 340.20 343.40

Dividend (SEK) 0.00* 0.31 0.31

P/E ratio** 35 40 37

Earnings per share (SEK) 1.64 1.50 9.39

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.

8

Parent company income statement(SEK M) Q1

2016Q1

2015Full-year

2015Net sales 25.6 22.5 108.3

Gross profit 25.6 22.5 108.3

Administrative expenses -10.7 -14.5 -110.2

Operating profit 14.9 8.0 -1.9

Financial income 6.5 0.4 0.5

Financial expenses -0.2 -4.4 -3.2

Profit/loss after financial items 21.2 4.0 -4.6

Appropriations - - 614.4

Tax -4.7 -0.9 -135.1

Net profit for the period 16.5 3.1 474.7

Parent company balance sheet(SEK M) Mar 31, 2016 Mar 31, 2015 Dec 31, 2015Non-current assets 70.7 7.3 5.5

Current receivables from group companies 1,281.5 766.0 1,168.8

Trade receivables and other receivables 1.3 0.6 2.3

Tax receivables 15.8 13.7 0.0

Cash and cash equivalents 377.8 287.3 578.2

Total 1,747.1 1,074.9 1,754.8

Equity 893.1 426.5 876.6

Untaxed reserves 843.5 637.9 843.5

Liabilities to group companies 1.0 0.9 1.0

Current liabilities 9.5 9.6 33.7

Total 1,747.1 1,074.9 1,754.8

Quarterly dataInvoiced sales per product group (SEK M)

Q12016

Q42015

Q32015

Q22015

Q12015

Q42014

Q32014

Q22014

Q12014

Q42013

Q32013

Q22013

Video 1,546.9 1,738.8 1,885.5 1,607.6 1,347.5 1,496.2 1,458.3 1,354.0 1,121.2 1,296.6 1,318.8 1,112.8

Other 20.1 19.6 20.2 8.7 6.8 7.6 3.8 0.7 7.9 1.9 3.6 1.6

TOTAL 1,567.0 1,758.4 1,905.7 1,616.3 1,354.3 1,503.8 1,462.1 1,354.7 1,129.1 1,298.5 1,322.4 1,114.4

Invoiced sales per region (SEK M)

Q12016

Q42015

Q32015

Q22015

Q12015

Q42014

Q32014

Q22014

Q12014

Q42013

Q32013

Q22013

EMEA 585.7 739.5 602.2 554.2 470.4 596.1 522.9 478.7 401.5 537.1 511.1 362.5

Americas 810.0 832.0 1,084.8 859.9 713.0 692.7 758.2 700.4 591.4 580.0 653.0 617.9

Asia 171.3 186.9 218.7 202.2 170.9 215.0 181.0 175.6 136.2 181.4 158.3 134.0

TOTAL 1,567.0 1,758.4 1,905.7 1,616.3 1,354.3 1,503.8 1,462.1 1,354.7 1,129.1 1,298.5 1,322.4 1,114.4

Q12016

Q42015

Q32015

Q22015

Q12015

Q42014

Q32014

Q22014

Q12014

Q42013

Q32013

Q22013

Net sales growth (%) 15.7 16.9 30.3 19.3 19.9 15.8 10.6 21.6 15.0 10.1 22.5 6.8

Gross profit (SEK M) 785.5 867.1 973.6 821.7 710.1 784.4 760.9 706.9 569.8 660.6 696.2 568.1

Gross margin (%) 50.1 49.3 51.1 50.8 52.4 52.2 52.0 52.2 50.5 50.9 52.6 51.0

Operating profit (SEK M) 153.1 231.2 388.7 116.5 144.8 199.2 256.5 187.6 72.1 166.0 258.4 126.5

Operating margin (%) 9.8 13.1 20.4 7.2 10.7 13.2 17.5 13.8 6.4 12.8 19.5 11.4

9

NOTE 1 Acquisitions

1.1 Citilog SAOn January 31, 2016, 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, 2015, 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 Q1 2016.

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 equivalentsPurchase price paid, February 1 92.6

Less: acquired cash holdings -27.9

Impact on cash and cash equivalents 64.7

Fair value of identified assets and liabilities in Citilog on the acquisition dateNon-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 33.3Goodwill 59.3

Purchase price 92.6

1.2 Axis Stockholmsledet 11 ABOn February 3, 2016, 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 Q1 2016.

Purchase price analysis SEK M

Impact on cash and cash equivalentsPurchase price paid, February 3 38.6

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 dateNon-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 38.6Purchase price 38.6

For further information please contact:

Björn Hallerborn, PR & Corporate Communications Manager

Mail: pressoffice@axis.com

Phone: +46 46 272 18 00

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 08.00 CET on Thursday, April 14, 2016.

Axis AB

Corporate identity no. 556241-1065

Emdalavägen 14, 223 69 Lund

Phone: +46 46 272 18 00

www.axis.com