Knowles Corporation (KN): BCG Matrix [Dec-2025 Updated]

You're assessing Knowles Corporation's new shape after shedding the Consumer MEMS business, and honestly, the BCG Matrix lays out the strategy starkly. We see clear Stars in Precision Devices RF and EV capacitors, while the established Hearing Health business remains a powerful Cash Cow, projecting margins in the low 40% range and pulling in $36 million in Q2 cash. But it's not all smooth sailing; some AI-related audio efforts are genuine Question Marks, causing margin pressure even as revenue grows, so you'll want to see the full quadrant breakdown below to map out where Knowles must invest or hold steady going into 2026.

Background of Knowles Corporation (KN)

You're looking at Knowles Corporation (KN), a technology company headquartered in Itasca, Illinois, that designs and manufactures specialty electronic components for demanding applications. Honestly, the company's focus is on high-reliability, custom-engineered parts that serve critical functions across several key end markets. Knowles trades on the New York Stock Exchange under the ticker KN.

Knowles Corporation organizes its operations into two primary business segments: Precision Devices (PD) and MedTech & Specialty Audio (MSA). The Precision Devices segment is where the majority of the revenue typically comes from, focusing on high-performance capacitor products and Radio Frequency (RF) solutions used in defense and industrial sectors.

The MedTech & Specialty Audio segment, on the other hand, designs and makes advanced micro-acoustic microphones and balanced armature speakers. These components are essential for applications like hearing aids and implantable medical devices, markets that management notes have structural tailwinds and are somewhat insulated from general economic volatility.

Looking at the recent performance as of late 2025, Knowles demonstrated solid momentum following a strategic pivot away from more commoditized areas. For the second quarter of 2025, the company reported total revenue of $146 million, marking an 8% increase year-over-year, with Non-GAAP diluted earnings per share coming in at $0.24. By the third quarter of 2025, revenues from continuing operations climbed further to $153 million, representing a 7% year-over-year increase.

Drilling down into the segments for Q2 2025, the MSA segment brought in $67 million, a 10% jump from the prior year, while the PD segment posted $79 million in revenue, up 6% year-over-year. The PD segment, in particular, showed operating leverage with its non-GAAP gross margin improving to 38.7% in Q2 2025, driven by better factory utilization.

Financially, Knowles appears well-positioned. As of March 31, 2025, the company held $101.9 million in cash and cash equivalents against total debt of $188.8 million, resulting in a conservative net debt leverage ratio of 0.7x. Cash generation was strong, with operating cash flow reaching $36 million in Q2 2025, which supported a $30 million share repurchase that same quarter. As of October 24, 2025, the company's market capitalization stood at $2.06B based on 85.2 million shares outstanding.

Management has expressed confidence in the near term, projecting full-year organic revenue growth of 6% for 2025, supported by a healthy design activity and backlog entering the final quarter. The company continues to emphasize leveraging its core ceramic technologies to introduce new product lines, like specialty film capacitors and inductors, to capture more value in high-barrier markets.

Knowles Corporation (KN) - BCG Matrix: Stars

The Stars quadrant in the Boston Consulting Group Matrix represents business units or products characterized by high market share in a high-growth market. For Knowles Corporation, the Precision Devices (PD) segment, particularly its advanced components, fits this profile due to its leadership in enabling critical functions in expanding end markets.

The Precision Devices (PD) segment is a clear Star candidate, driven by its RF solutions for Defense and Aerospace markets, which are generally considered secure and growing segments. The segment's success is further underpinned by strong order activity and backlog across its end markets, suggesting sustained high demand.

The high-growth area within PD is the focus on high-performance capacitors for Electrification, specifically for EV and Industrial applications. Knowles Corporation received a $75 million+, multi-year order for these high-performance capacitors in the Energy market in Q1 2025, which provides strong visibility into future revenue streams. Management expressed confidence in growth expected in the second half of 2025 based on this order activity and the general strength of the backlog.

The financial performance for the segment in the most recently reported quarter confirms its growth trajectory. You can see the key figures below:

The segment's revenue of $79 million in Q2 2025 represented a robust 6% year-over-year increase. This growth, coupled with margin expansion to 38.7% non-GAAP gross margin, shows the unit is successfully scaling production, which is a key characteristic of a Star unit needing investment to maintain its lead. The overall company revenue for Q2 2025 was $146 million, up 8% year-over-year, with cash from operations at $36 million.

Knowles Corporation is actively investing in this Star quadrant through new product introductions designed to expand the Total Addressable Market (TAM) in high-growth industrial sectors. These investments are crucial to ensure the segment matures into a Cash Cow when market growth inevitably slows.

Key growth drivers and investments supporting the Star status include:

• New specialty film product lines ramping up through 2025 into 2026.
• Introduction of a new inductor product line, expanding the TAM.
• Strong design activity and backlog pointing to continued growth.
• Full year 2025 organic revenue growth guidance of 6%.

The strategy here is clearly to invest heavily to maintain market share in these growing areas. If execution continues, Knowles Corporation expects organic growth rates to be at the high end of the range of 4-6% for the company in 2026. That sustained success is what turns a Star into a Cash Cow.

Knowles Corporation (KN) - BCG Matrix: Cash Cows

You're looking at the core engine of Knowles Corporation's financial stability, the units that generate more cash than they consume. These are the established leaders in mature spaces, and for Knowles Corporation, the MedTech & Specialty Audio (MSA) segment, particularly its hearing health components, fits this profile well.

The Core Hearing Health products, which include balanced armature speakers, are clearly a high-share area. In the second quarter of 2025, the entire MSA segment, which houses these products, posted revenues of $67,000,000, marking a 10% year-over-year increase. This segment's performance is what supports the rest of the company's strategic moves.

Profitability in this area is strong, reflecting that high market share advantage. Management projected that for the full year 2025, the MedTech & Specialty Audio segment's adjusted EBITDA margins would reach the low 40% range. This is a clear indicator of a mature, high-margin business unit.

The real proof of the Cash Cow status is the cash flow it pumps back into Knowles Corporation. In the second quarter of 2025, the company generated $36 million in net cash from operations, which was above the high-end of the guided range. This strong cash generation directly funded capital returns, as Knowles Corporation repurchased $30 million of its own shares during that same quarter.

Also fitting the Cash Cow mold are the established, high-reliability ceramic capacitor lines, which serve stable, mature industrial and medical implant markets. While these are part of the Precision Devices segment, that segment itself brought in $79,000,000 in revenue in Q2 2025, showing significant scale in these stable end-markets. Knowles Corporation even secured a $75 million-plus, multi-year order for high-performance capacitors in the Energy market in late 2024, showing continued demand in these stable industrial areas.

Here's a quick look at the key financial metrics supporting this positioning based on the second quarter of 2025 results:

You should see these units as the foundation, the source of the capital needed for growth elsewhere. The focus here is maintenance and efficient harvesting of gains.

• Core Hearing Health components are a key driver of MSA revenue.
• MSA segment revenue in Q2 2025 was $67,000,000.
• Net cash provided by operating activities in Q2 2025 was $36 million.
• The company executed $30 million in share repurchases in Q2 2025.
• Ceramic capacitors serve stable industrial and medical implant markets.

For Q3 2025, Knowles Corporation guided revenues between $144,000,000 and $154,000,000, showing confidence in sustaining this cash-generating momentum.

Finance: draft 13-week cash view by Friday.

Knowles Corporation (KN) - BCG Matrix: Dogs

You're looking at the units Knowles Corporation (KN) has strategically shed or is actively managing down because they operate in markets with low growth or have low relative market share, meaning they tie up capital without generating significant returns. These are the classic Dogs of the portfolio, and the action here is clear: minimize exposure.

The most significant recent action aligning with the Dog strategy was the divestiture of the Consumer MEMS Microphones (CMM) business. This was a low-margin, high-volume operation in a hyper-competitive space, making it a prime candidate for divestiture to focus on higher-value industrial technology markets. Knowles agreed to sell this business to Syntiant Corp for a total consideration of USD 150 million.

This transaction, which closed around the end of Q4 2024, was key to Knowles' transformation into a premier industrial technology company, focusing on the Precision Devices (PD) and MedTech & Specialty Audio (MSA) segments. Even after the sale, there were residual financial clean-up items; for instance, Q1 2025 net cash from operating activities included $21 million related to CMM supplier and TSA obligations, with the remaining $12 million expected to settle in Q2 2025.

Here's a quick look at the financial context of that divestiture:

Within the remaining portfolio, you see characteristics of a Dog in the low-margin volume associated with the Syntiant program under the MedTech & Specialty Audio (MSA) segment. While the overall MSA segment is performing better now, this specific volume is cited as a reason for margin pressure.

The MSA segment's margin performance in Q1 2025 clearly shows this drag. The EBIT margins for MSA fell by 500 basis points to 35.7%. This was attributed to product mix and that specific low-margin volume, even as the segment's revenue grew 1.2% year-over-year to $59.7 million. The expectation is that margins will improve as this low-margin volume scales more efficiently or normalizes.

For the Precision Devices (PD) segment, while the overall segment is showing strength in 2025, the Q4 2024 results indicated weakness, with revenues lower than expected due to the 'slower ramp up of our new Specialty Film product line'. This slower ramp suggests an area where investment might need to be minimal until market share or growth picks up, fitting the Dog avoidance strategy. The Q1 2025 adjusted EBITDA margin for PD was 18.2%.

You should watch for these indicators of potential or historical Dogs:

• Divestiture of businesses like CMM for $150 million.
• Product lines showing margin contraction, such as MSA's 500 basis point EBIT margin drop.
• Revenue performance below expectations, like PD's 2.4% year-over-year decline in Q1 2025.
• Areas requiring minimal investment due to slow adoption, like the Specialty Film ramp in late 2024.

Finance: review the Q3 2025 MSA margin report against the 35.7% Q1 2025 actual to confirm the low-margin volume impact is receding.

Knowles Corporation (KN) - BCG Matrix: Question Marks

You're looking at the business units that are currently burning cash but hold the promise of future market leadership. For Knowles Corporation, these Question Marks are characterized by high market growth potential coupled with a current low market share, demanding significant capital to either capture that growth or risk obsolescence.

Low-margin volume associated with the Syntiant program within MSA, which is a high-growth AI-related audio solution causing margin pressure.

The MedTech & Specialty Audio (MSA) segment, which houses Specialty Audio, saw its Q2 2025 revenue reach $67 million, representing a 10% year-over-year increase. However, this growth came with margin pressure. The adjusted EBITDA margin for the MSA segment declined by 240 basis points year-over-year to 42.0% in Q2 2025, which the company attributed to an unfavorable product mix. This mix issue is partly due to increased shipments of metal cans used in specialty audio applications under a cost-plus supply agreement to Syntiant, which are noted as being low-margin for now. Still, management noted sequential margin improvement of 280 basis points in the quarter.

New product categories leveraging core ceramics capabilities, which require significant R&D investment but have unproven market share.

Knowles Corporation is strategically focused on leveraging its proprietary ceramic materials expertise to develop next-generation components [cite: 10 in previous turn]. These new categories, which could include higher performance capacitors for emerging applications like SiC switches or EV charging, represent high-growth markets but are in the early stages of adoption, meaning their market share is currently unproven. This necessitates substantial, ongoing Research and Development investment to move from lab-scale testing to mass production and secure market penetration.

• These units consume cash to fund the necessary R&D to achieve scale.
• The goal is to quickly establish a dominant position before competitors solidify their offerings.
• Success here converts this unit into a Star.

Specialty Audio products facing margin contraction due to unfavorable customer mix, despite a 10% Q2 2025 revenue increase to $67 million.

The Specialty Audio portion within MSA is a clear example of a Question Mark. While the segment generated $67 million in revenue in Q2 2025, growing 10% year-over-year, the profitability is lagging. The segment's adjusted EBITDA margin fell to 42.0% in Q2 2025. This margin contraction, driven by an unfavorable customer mix, means the revenue growth isn't translating efficiently to the bottom line, a classic Question Mark trait where high demand exists but returns are low due to market position or cost structure.

Strategic investments in new product lines that aim to drive organic growth beyond 2025, but currently consume capital expenditure (3% to 5% of revenues).

The company is actively funding future growth areas, such as the ramp-up of the new Specialty Film product line within Precision Devices, which is expected to provide new revenue growth through 2025 and into 2026 [cite: 13 in previous turn]. This investment commitment is quantified in the capital allocation plan. Knowles expects capital expenditures for 2025 to be between 3% to 5% of revenues. This spending is the cash consumption required to build capacity and scale these new product lines, which are essential for achieving the desired organic growth beyond 2025. The company must see these investments quickly translate into market share gains to avoid becoming Dogs.