Small-Cap Idea: Pathos Communications Builds Repeatable PR Process

Traditional public relations firms are typically named for one or two individuals because those people are the product.

They know which section editor will answer an email at 8pm, which pitch is likely to become a story and which will be rejected in a features meeting. What they sell is access — and access is difficult to scale.

An agency can employ talented graduates to handle correspondence, but it cannot simply create another founder with the same network. As a result, the industry has traditionally charged for proximity rather than outcomes. Clients pay a retainer and wait, often unsure whether silence means the idea was weak or the promised call never happened.

Omar Hamdi spent almost seven years on that side of the industry, presenting and publishing for BBC One Wales, BBC Radio 2, The Independent and other outlets. He studied cognitive science at Leeds University School of Computing and has followed artificial intelligence since well before it became a mainstream obsession.

In his view, the underlying theory has changed little since 2006. What has changed is the arrival of sufficient computing power — and the tools built on top of it.

Hamdi founded Pathos Communications in 2019 after identifying a gap in the market. The PR service taken for granted by the chief executive of a listed company has rarely been available to a sandwich shop, consultant or small engineering business. The lack of access is not due to a lack of interest.

Ask almost any business owner whether they would like media coverage and the answer is likely to be yes. The professional machinery for securing it, however, was designed for larger organisations.

Hamdi compares the situation with corporate websites. Once, building a company website could cost six figures and was reserved for serious businesses. Templates then drove down the price, and today a company without a booking link can appear unprofessional.

He believes public relations is now at a similar point to websites two decades ago, with language models providing the technology capable of reducing the cost.

Paying for results, not access

Pathos floated on AIM in December and has built its model around reversing the traditional retainer. Customers pay only when an article appears in a named publication. One article costs $5,000, while three cost $15,000; returning customers can instead pay $949 for an annual membership, reducing the price per article to $3,500. The financial risk normally carried by the client is therefore taken on by the company.

Two products provide the technology behind the approach. PathosMind analyses more than 50,000 news sources, creates a profile of a prospective client and develops a possible angle before a call is made. Pressella listens in on client conversations, records notes and suggests ideas in real time.

Hamdi describes the system as human-led and AI-fed. Its purpose, he says, is not to eliminate staff but to give ordinary people access to capabilities that were once expensive. His strongest content executive had no previous PR experience, had most recently worked in a juice bar and generated $500,000 in revenue during one month.

Early trials suggest that Pressella has achieved a success rate seven times higher than that of a human colleague in sales development work. Both tools are expected to become generally available in the first half of 2027, when they will be sold as external products rather than used solely as internal systems.

The memory moat

Pathos also claims an institutional memory that would be difficult for a competitor to replicate: seven years of calls, emails and transcripts relating to PR for small businesses, an area no other company has covered at comparable volume. Synthetic data cannot replace that archive, while a rival starting to collect equivalent information in 2026 would have to wait years to build it.

In Warren Buffett’s terminology, that amounts to a competitive moat.

Pathos’s relationship with publishers is, to put it mildly, unconventional. It may unsettle some purists in the ‘fourth estate’, but it also reflects the changing economics of media in an era of zero-click search.

The company submits material in the manner of a freelance journalist, leaving an editor at the publication to accept or reject it. If it is approved, Pathos pays a licence fee that gives the client permission to reproduce the article and the publication’s masthead in its own marketing.

Cavendish, Pathos’s broker, characterises the payment as a contribution towards editorial costs. The Pathos name does not appear on the article. The company maintains that editorial decisions remain with the publication and that disclosure requirements in both the UK and US are being followed.

Whatever the view of the arrangement, the demand behind it is genuine and increasing. Publishers are losing search traffic as AI assistants answer users’ questions without directing them to news websites, making newsrooms more willing to consider approaches from Pathos.

On the client side, the same shift has raised the value of being written about. An AI model, or AI-enabled search, cites what has been published about a company. It’s no longer about the expensive on-page real estate sold by Google.

A study quoted by Cavendish found more than 80 per cent of links surfaced by AI tools come from earned media. Gartner expects global PR budgets to double by 2027, while the addressable audience is put at 400 small- and medium-sized businesses globally.

Under the hood

Having looked at the business model, it is worth considering how this translates to the profit and loss account and balance sheet.

The first interesting observation is around the pay-on-results, which invites a particular kind of customer failure. That’s the client who approves the article, watches it publish and then declines to settle. Bad debts ran at 15 per cent to 25 per cent of revenue. The 2025 figures carry a $2.1million write-off, which is the reason a business with 75 per cent gross margins reported a loss.

The repair was straightforward (while the problem will be familiar to those working in a high-growth environment). 

A financial controller joined in April 2025 and a chief financial officer in July of the same year. Cards are taken and tested before publication, customers are screened at qualification, and commissions now follow cash rather than invoices. 

On contracts signed from the second quarter of 2025, bad debt runs at 3 per cent to 5 per cent. Cavendish assumes 8 per cent across this year.

The rest of the numbers more than pass muster. Revenue reached $13.1million in 2025, up 15 per cent, with adjusted EBITDA of $2.9million against $1.9million the previous year. Net cash was $6.2million.

Repeat revenue has moved from 20 per cent of the total in the first quarter of 2025 to 41 per cent of cash receipts a year later. July brought revenue above $1.8million, a record month, on new client sign-ups running 30 per cent higher after a sales reorganisation. 

The market is looking for $14million of revenue and $4million of adjusted EBITDA this year, with interims due in September. At the current run rate, the benchmark for the year looks eminently achievable.

The share price, down 21 per cent in the last month, belies that financial narrative. At 25p, the company is valued at just over £17million, of which £4.4million is cash. The operating business is therefore priced at just over four times the EBITDA it is expected to earn this year.

Cavendish keeps a 42p target. Brokers attribute the decline to one holder selling into an August market with nobody on the other side. The company has told investors it knows of ‘no reason for it’.

IPO the start of the journey, not the end

The float raised £5million and most of it, as we have noted above, remains intact. That said, Hamdi is itching to deploy those funds in pursuit of growth opportunities.

Organic expansion is repetition of what has begun to work. A reorganised sales floor has lifted new client sign-ups by 30 per cent a month, and an APAC team is in place.

Spanish-language selling has been tested in Latin America, with conversations under way in mainland China. Alongside that sits product breadth. The same writers and the same tools now produce books, podcast appearances and television placements, so a client who has tired of articles has somewhere else to spend.

Acquisitions are the second lever, but Hamdi resists the word roll-up. His is not a traditional media buy-and-build model. Two small deals sit inside the business already: Thought Leadership PR in 2024 and PodcastWise in 2025. 

What he looks for is a company with a good product where the sales process can be supercharged, on the reasoning that outreach is one of the things Pathos has industrialised. He observes that several listed peers now trade at levels where the operating business is close to free.

Hamdi’s back-of-the-envelope arithmetic observes that growth of 24 per cent a year for a decade carries revenue from $13million to $100million, with any deals on top. Less dull is where he wants it to happen. He has US resellers, US contacts and a US non-deal roadshow under discussion, and he could point the company at Nasdaq in time. His stated preference is to stay in London and follow the AIM companies that grew into the main market and the FTSE 250. He is not romantic about it. Value has to be realised somewhere, and he has said so himself.

A little due diligence

Now for the cautionaries. I am telling the story as told by management and after poring over and interpreting public documentation.

The risks are the ones you would expect of a founder-led small-cap. Hamdi holds the majority of the shares and embodies the strategy. Around 90 per cent of clients are in North America, so a US downturn would arrive before any European or Asian offset.

Sales floors are harder to scale than slides suggest, and software due in 2027 has a habit of arriving in 2028. That said, Hamdi remains confident on the rollout, and the execution thus far has been flawless. So, the recent share price weakness, which has been hard for management to rationalise, may prove to be an opportunity for those new to this story.

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